2012 PLP (Trib (PTD)

SYED MUHAMMAD FAROOQ SHAH, JUDICIAL MEMBER.

This appeal has been directed at the instance of the department against the order dated 6-10-2010 passed by the learned CIR(A) pertaining to the Tax Year 2009, whereby the order passed by the Officer Inland Revenue under sections 161 and 205 of the Income Tax Ordinance, 2001 was not held sustainable in law.

2. The captioned appeal has been preferred on the following grounds:-- "(1) That the order passed by the learned CIR(A) is bad in law and contrary to the facts of the case; (2) That the learned CIR(A) was not justified in deleting the tax charged under section 161 and additional tax charged under section 205 of the Income Tax Ordinance, 2001 because reasonable opportunity of being heard was provided by the OIR which was not availed by the taxpayer intentionally; (3) That the learned CIR(A) erred in holding that the Officer Inland Revenue was not justified to treat the appellant as a taxpayer in default under sections 161/205 of the Income Tax Ordinance, 2001 because the action of the OIR based on the information received from the taxpayer himself which the taxpayer failed to reconcile and to furnish complete evidences in support of his claim; (4) That the learned CIR(A) was not justified in rejecting the information gathered by the OIR as "Definite Information" which is very much relevant with the facts of the case; (5) That the learned CIR(A) erred in violating the provision of section 128(5) of the Income Tax Ordinance, 2001 by accepting such documents/material evidences which not produced before the Officer Inland Revenue; (6) That the learned CIR(A) also erred in accepting and relying on the exemption certificate issued to Messrs Farooq Motors Limited, which is irrelevant to the facts of the case as this certificate was also not produced before the Officer Inland Revenue."

3. Ground No.1 is of formal nature. Ground Nos. 2 and 3 are interconnected to each other, hence taken together. On the agitated grounds, I have heard Mr. Rajabuddin, learned DR who supported the order passed under sections 161/205 of the Income Tax Ordinance, 2001 by the Officer Inland Revenue and asserted that the impugned order passed by the learned CIR(A) is not sustainable in law.

4. On the other side, Syed Azhar Nawab, Advocate argued that the Officer Inland Revenue was biased and did not discuss the merits of the case. It is argued that the Officer Inland Revenue has adopted unjust and unreasonable attitude by passing an illegal order.

5. Succinct facts leading to the instant case are that the respondent/assessee received a notice under section 176 of the Income Tax Ordinance, 2001 which has been duly replied. Subsequently, the company/assessee has been served with a show-cause notice on 21-4-2010 for compliance on 28-4-2010. On 29-4-2010 the Officer Inland Revenue passed an order under sections 161/205 of the Income Tax Ordinance, 2001. From perusal of the order passed under sections 161/205, it appears that on the due date i.e. 28-4-2010 neither the taxpayer nor AR appeared before the Assessing Officer but perusal of the order passed by Officer Inland Revenue transpires that the authorized representative of the taxpayer filed certain details and documents which were found illegible by the Officer Inland Revenue and observed at page 2, para-1 that "authorized representative of the taxpayer has committed the default under section 161 of the Income Tax Ordinance, 2001." Consequently the Officer Inland Revenue issued a final show-cause notice under sections 161/205 of the Income Tax Ordinance, 2001 for compliance on 28-4-2010 and on the due date in absence of any intimation or reply from the assessee he has passed an ex parte order which was impugned before the learned CIR(A).

6. It has rightly been contended by the learned AR that if the documents and details viz copies of audited account, return of income, annual statement filed along with acknowledgment of withholding tax paid challan and reconciliation statements were not found eligible then what was the fun of receiving those documents by the Officer Inland Revenue and what prevented him to call for the legible documents and details. The mentioned documents have also been perused and examined by the learned CIR(A) and observed that the Officer Inland Revenue was not justified to treat the taxpayer "a taxpayer in default". I very humbly disagree with the contention of learned DR that under the law the learned CIR(A) cannot admit any documentary evidence which was not produced earlier before the Adjudicating Officer as in the instant case the Officer Inland Revenue neither admitted the evidence produced before him nor he afforded sufficient opportunities to the taxpayer. The citation 2010 PTD (Trib.) 2463 is, therefore, not applicable in circumstances of the present case. In the mentioned citation, it appears that assessment proceedings stretched over a period of more than a year during which the assessee could have produce the evidence but he failed to do so, however, in the instant case the taxpayer has produced sufficient documentary evidence which has been discarded by the Officer Inland Revenue merely on the ground that he found documents illegible.

7. So far as the applicability of section 128(5) is concerned, neither the learned CIR(A) admitted fresh documentary evidence which has allegedly not produced before the Officer Inland Revenue nor he adopted an illegal approach but relied upon the details of documentary evidence earlier produced before the Officer Inland Revenue. It is an admitted position that the taxpayer was not under obligation to charge tax on the amount related to the purchase of motor vehicle from Messrs Dewan Farooq Motors Limited, to whom the department had issued an exemption certificate vide No.218 dated 31-12-2007, particularly the payment against the said vehicle was made during the period related to Tax Year 2008 and the delivery of the said vehicle was received in the period related to Tax Year 2009 but the same was added to the fixed assets. It is also an admitted fact that the Officer Inland Revenue may confront the taxpayer on the basis of annual statement electronically filed by the taxpayer on FBR's e-portal, if desired so. It is beyond understanding that why the Officer Inland Revenue arrived at the conclusion of income tax liability under this head by applying average rate of 20% on gross amount of salary claimed by the taxpayer. In this view of the matter, the learned CIR(A) has correctly observed that there was no urgency to pass the order in haphazard manner, was not going to be time barred.

8. Under the aforementioned provision of subsection (5) of section 128 of the Income Tax Ordinance, 2001 the Commissioner Inland Revenue (Appeals) has been empowered to admit fresh evidence if he found himself satisfied that the taxpayer was prevented by sufficient cause to produce the same before the Assessing Officer. It is a settled principle of law that mere technicalities should not be hindrance to do complete justice as laid down by the Hon'ble Supreme Court of Pakistan reported in PLD 1975 SC

678. Moreso, the exercise of the discretion in law by the competent authority would not be opened to any exception. In this regard reliance may conveniently be placed on the cases reported in (2006) 94 Tax 1451 (H.C.) (sic) and 2004 PTD 173.

9. In view of the aforementioned discussion, I reached at the irresistible conclusion that the grounds of appeal agitated by the department against the impugned order of the learned CIR(A) are not tenable in law and on facts. Suffice to say that judicious appellate order of the learned CIR(A) impugned before me does not suffer from any gross irregularity, illegality and infirmity which does not warrant any interference by this Tribunal. Consequently, the departmental appeal is having no merits for consideration and hereby dismissed. H.B.T./31/Tax(Trib.) Appeal dismissed.