Rectification

2026 CLD 444 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 119 & 126Members RegisterRectification

Applicant / shareholder contented that upon death of his father, shares inherited by him were not transmitted by respondent / Company

Applicant sought rectification of Members Register regarding number of shares held by his deceased father

Validity

On the date when father of applicant passed away, his shares devolved on his legal heirs as per Islamic law

Even if respondent / company or its CEO disputed shareholding of late father of applicant, they could not have cancelled that shareholding without any order of Court under S. 152 of the Companies Ordinance, 1984 (now S. 126 of the Companies Act, 2017)

Changes made by respondent / company to the Members Register were fraudulent

High Court directed respondent / company to reverse / rectify changes in Members Register and share certificates while shares transferred to CEO were not in issue

High Court further directed respondent / company to transmit shares to legal heirs of deceased after rectification of Members Register

High Court in exercise of S. 126(2) of Companies Act, 2017 awarded cost of Rs. 500,000 (Rupees Five Hundred Thousand only) to the applicant, payable by respondent / company and CEO personally at the rate of Rs. 250,000 each

High Court issued caution to CEO of the Company and Company Secretary but refrained from making reference against them for adjudication of an offence under S. 127 of Companies Act, 2017

Application was allowed in circumstances.

2025 PTD 101 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss. 120, 122, 113 & 221Assessment, amendment ofRectificationScope"Mistake apparent on record"Scope

Record showed that respondent-taxpayer filed income tax return for the tax year 2011 (by declaring sales at Rs.232,823,500/-, net income as Rs.90610/- and tax paid as Rs.23,645/-,) which was taken as deemed assessment in terms of S. 120 of Income Tax Ordinance, 2001 ('the Ordinance, 2001')

Subsequently, minimum tax as per S. 113 read with Part-III of Second Schedule to the Ordinance, 2001 was charged by invoking provisions of S. 221 of the Ordinance, 2001, taking it as a mistake apparent on the face of record

Undeniably, income tax return for the Tax Year 2011 was an assessment order as per S.120(1), therefore, the Commissioner by virtue of and in exercise of the powers contained in Ss. 120(1A), 121, 122(1), (4), (5) & (5A) and 177 of the Ordinance, 2001, subject to the conditions prescribed, can amend or further amend the original assessment instead of invoking provision of S. 221 which only prescribes procedure for rectification of a mistake in an order, which is apparent from the record, and the circumstances under which such exercise can be done

Provision of S. 221, thus, neither creates nor takes away any right or privilege in or from anyone, it rather provides for rectification of mistake(s) apparent from the record

Essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence

The mistake should be so obvious that on mere reading of the order, it may immediately strike on the face of it

Where an officer exercising such power enters into the controversy, investigates into the matter, reassesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of law and forms an opinion different from the order, then it will not amount to 'rectification' of the order

Any mistake which is not patent and obvious on the record, cannot be termed to be an order which can be corrected by exercising power under S. 221 of the Ordinance, 2001

If the return is complete in terms of S. 114(2), the same is taken as deemed assessment order within the contemplation of S. 120(1), on the day the return was furnished

However, when the return is not complete, the Commissioner shall issue notice to taxpayer confronting deficiencies in terms of S. 120(3) and if requirements of notice are satisfied, the return is treated as complete and provisions of S. 120(1) shall apply accordingly

Commissioner is also empowered to amend an assessment order treated as issued under S. 120 or 121, under S. 122(1) and in case of revised return, under S. 122(3)

Commissioner is also authorized to further amend the amended assessment order under subsections (4), (5) & (5A) of S. 122, as per conditions enumerated therein

Careful reading of Ss. 120, 122 and 221 of the Ordinance, 2001 makes it very clear that the powers under these provisions are not overlapping rather are independent clearly intended to operate within their respective compass

Section 221 of the Ordinance, 2001 relates to the rectification of mistakes which are apparent from the face of record

Words used in the said provision are very specific and purposeful "any order passed by him" and does not include an order which is deemed to have been issued by the Commissioner by fiction of law which is the case for assessment orders under S. 120 of the Ordinance, 2001

Words "an assessment order treated as issued under S. 120" used in S. 122(1) of the Ordinance, 2001 are clearly distinguishable from the words used in S. 221 of the Ordinance, 2001 which says "any order passed by him"

Act of passing of formal order by any Officer of Inland Revenue presupposes an application of mind and in most cases adjudication on merits after hearing the parties

Thus, there is a marked distinction between the deemed order and the order passed by the authority after fully applying its mind and giving proper opportunity of being heard to the person

Every word used in a statute has to be given effect to and no word or provisions of a statute is to be treated as surplus and redundant

Thus, rectification is permissible only to "amend any order passed by him" and not the order treated to have been issued under S. 120 of the Ordinance, 2001 because the deemed order does not amount to an order passed by the authority

Had it been the intention of the legislature, it would have become necessary to introduce the specific provisions or amendment with certain words to cater, for the eventuality of deemed order in S. 221 that a deemed order under S. 120 can be amended in case of a mistake apparent from record

Expression "subject to this section" used in subsection (1) of S. 122 ibid further restricts that the deemed order treated to have been issued under S. 120 can only be amended under the said section

Under the law, the tax liability of an assessee in the process of rectification cannot be altered on the basis of a consideration, which was not part of the original proceedings and the concept of rectification of mistake to correct the error committed in the assessment order, which is found floating on the surface of the record, may not be beyond the assessment already made

Such mistake should be apparent from the record i.e. floating on the surface and consequently there should not be any controversies or investigation into the matter or reassessment of any evidence in order to decide whether or not such mistake needs to be rectified

Powers under S. 221 are quite limited to the extent of mistakes apparent from record since there are other provisions of law which deal with the authority of department officials with regard to reopening of assessment, revision etc. in cases where the department is of the view that certain income had escaped from the chargeability of tax, but for exercising powers under S. 221 of the Ordinance, 2001, there must be a mistake apparently floating on the surface which is so obvious to strike one's mind without entering into long drawn process of reasoning, detailed deliberation etc.

Expression "mistake apparent on record" must be the error or mistake so manifest and clear which, if permitted to remain on record, might have material effect on the case, however, an error of fact or law, having direct nexus with the question of determination of rights of parties, affecting their substantial rights or causing prejudice to their interest, is not a mistake apparent on the record to be rectified under S.156 of Income Tax Ordinance, 1979; and that the mistake must be of the nature, which is floating on the surface of record and must not involve, an elaborate discussion or detailed probe or process of determination

Thus, proposed questions were answered against the applicant-department and in favour of respondent-taxpayer

Reference application, filed by Department was dismissed.

2024 CLD 1277 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 41RectificationScope

Term 'rectification' is not specifically defined in Copyright Ordinance, 1962 therefore, it entails ordinary dictionary meaning

In the context of Copyright Ordinance, 1962, term "rectification" means that Copyright Board can adjudicate all claims against grant or refusal of registration of copyright or an interest therein on application of the Registrar or an aggrieved person with or without allegations of infringement of intellectual property rights

Copyright Board apart from other functions is also conferred with jurisdiction to decide claims regarding infringement of copyrights under the Copyright Ordinance, 1962 which includes rectification applications based on infringement of intellectual property rights.

2024 PTD 1062 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 120, 122, 170 & 221Deemed assessment orderRectificationScopeRefund claim, self-adjustment ofProcedure / mechanism under law, non adopting ofScope and effect

Commissioner Inland Revenue (Appeal) rejected taxpayer's appeal and confirmed rectification order passed by the Officer Inland Revenue (OIR)

Contention of the appellant / taxpayer was that the action of the OIR rectifying the deemed assessment order by way of rejecting the refund claim/adjusted was beyond his lawful authority

Plea of the Respondent /Department was that the taxpayer had adjusted refund against tax liability for relevant tax year without proper verification and determination by the Commissioner, thus considering the same as mistake/error, the Officer Inland Revenue had rightly passed the rectification order

Validity

Rectification is a jurisdiction ancillary to the appellate jurisdiction intended to rectify a mistake of fact or law apparent on the face of record which does not require investigation appraisal of evidence, interpretation of law or an enquiry into facts

Scope of S. 221 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') is restricted to rectify the mistake apparent from the record

Where an officer exercising such power enters into the controversy, investigates into the matter re-assesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of law and forms an opinion different from the order, then it will not amount to 'rectification' of the order

Any mistake which is not patent and obvious on the record cannot be termed to be an order which can be corrected by exercising power under S. 221 of the Ordinance, 2001

Powers under Ss.120, 122 & 221 of the Ordinance, 2001 are not overlapping rather independent clearly intended to operate within their respective spheres

Powers under S.221 of the Ordinance, 2001 are quite limited to the extent of mistakes apparent form record since there are other provisions which deal with the authority of department officials with regard tore-opening of assessment, revision etc., in cases where the department is of the view that certain income had escaped from the chargeability of tax, but for exercising powers under S.221 of the Ordinance, 2001, there must be a mistake apparently floating on the surface which is so obvious to strike one's mind without entering into long drawn process of reasoning, detailed deliberation etc.

Hence, tax liability created by invoking the provisions of S. 221 of the Ordinance, 2001 in deemed assessment order is illegal and unlawful

However, in the present case , the Officer Inland Revenue declared the self-adjustment of refund as illegal without determination of overpaid tax by the Commissioner, and the appellant /taxpayer had also adjusted refund against his tax liability without filing any refund application under S. 170 of the Ordinance, 2001 for determination of his claim by the Commissioner, rather adjusted the refund against tax liability at the time of filing of return

Retention of money known to have been paid under mistake of law or not due under the law has been discouraged and such practice has been regarded as a shabby thing or dirty trick but the taxpayers cannot be allowed to self-adjust refunds against their tax liabilities without proper determination of overpaid amount by the relevant officer as it would amount to giving them jurisdiction and powers of Commissioners provided under S. 170 of the Ordinance, 2001

Without proper application on given pro-forma and without determination/approval, no refund can be adjusted by the taxpayers against their tax liabilities on their own

Declared version of refund can only be varied through an amendment under S. 122 of the Ordinance, 2001 while disposing of refund application

As the appellant /taxpayer had illegally adjusted the refund against its tax liability without properly filing application for refund and without any determination by the Commissioner, Commissioner (Appeal) was right to the extent that the taxpayer failed to get the refund determined by the Commissioner before the self adjustment, however, he failed to deliberate upon the very vital question of scope of rectification in deemed assessment orders

Thus, appellant/taxpayer committed wrong by adjusting the refund claim against tax ability without getting it determined by the Commissioner; and the OIR rather than dealing the matter under relevant provisions of Ordinance, 2001 proceeded to rectify the self-assessment order which could not be approved as the case of the appellant/taxpayer did not fall in the ambit of rectification

Appellate Tribunal Inland Revenue set-aside impugned orders having been passed without lawful authority and of no legal effect, and directed that the Department would be at liberty to initiate proceedings against the taxpayer for disallowance of refund adjustment after adopting due procedure under the relevant provisions

Appeal filed by the taxpayer was allowed accordingly.

2023 PTD 1158 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss.221 & 122(5A)Income Tax Ordinance (XXXI of 1979) [since repealed], Ss.62, 80-D, 156 & Third Sched., R.5Constitution of Pakistan, Art. 4Assessment orderRectificationChange of opinionScopeTaxation Officer, powers ofScopeInitial depreciation allowable on building and plant and machinery installed by 30th June, 2002Original assessment was finalized on 28-09-2002 and further proceeded under Ss. 156 & 80D of Income Tax Ordinance, 1979

Earlier two notices under S.122(5A) of Income Tax Ordinance, 2001, (ITO, 2001) having been issued in the year 2003 were still pending, another notice under S.221 of the ITO, 2001 was served upon the applicant (Refinery Company) alleging that initial depreciation on buildings and plant & machinery was incorrectly allowed

Appellate Tribunal treated notice under S.221 of ITO, 2001 as valid one

Applicant assailed order of the Tribunal contending that the impugned order amounted to "change of opinion" from assessment order passed in the year 2002, which could not be passed during pendency/disposal of two notices already issued under S.122(5A) of the ITO, 2001

Validity

Record revealed that initial depreciation was never claimed by the applicant/company , rather First Year Allowance @ 80% of the "capitalized assets" was claimed

Taxation officer allowed initial depreciation under R.5(1)(cc) of the Third Schedule of the Income Tax Ordinance, 1979, which provision was not relevant to the facts of the present case, because the same prescribed 40% depreciation allowance to machinery or plant given on lease by a Scheduled Bank, a Financial Institution or Modarba or leasing company duly approved by the FBR

Case of applicant/company for allowing initial depreciation being against the said provision of law, compelled the Taxation Officer to rectify the order in exercise of power under S.221 of the ITO, 2001

Incorrect statement of law was always open to rectification and penitence

Taxation Officer was empowered to rectify assessment order under S. 221 of ITO, 2001and rectification of the Assessment Order under S.221 of ITO, 2001, could be applied retrospectively

Expression "mistake apparent from the record" as used in S. 221 of ITO, 2001, meant that error or mistake was so manifest and clear, which if permitted to retain on record, could materially affect the case

Conditions precedent to amend an assessment order under S. 122(5A) of ITO, 2001, were different from the conditions laid down in S. 221 of ITO, 2001

For S. 122(5A) of Income Tax Ordinance, 2001, the order had to be erroneous insofar as prejudicial to the interest of revenue, whereas S. 221 of the ITO, 2001, empowered the Taxation Officer to amend the order to the extent of rectifying the legal or factual mistake apparent from the face of the assessment or if mistake was apparent, obvious and floating on the surface of order and could be rectified without long drawn arguments and proceedings for appreciating facts and interpretation of provisions of law

There was no involvement of any fresh investigation

Mistake was apparent on the basis of facts floating on record as well as the applicable law

Under the law Taxing Authority had power to correct a mistake in tax matter resulting in loss of revenue in blatant violation of law after terming such mistake to be apparent on face of record

Any other interpretation of the said provision would be against the spirit of Art. 4 of the Constitution guaranteeing equal treatment in accordance with law

Findings of facts given by the Appellate Tribunal were not open to further scrutiny by the High Court in reference jurisdiction when the same had not been shown either to be perverse or against record and the High Court had to give opinion in advisory jurisdiction, on the basis of facts as determined by the Appellate Tribunal

No adjudication on merit was made on the earlier notices, therefore, doctrine of res judicata was not applicable

Mere issuance of notices did not bar the Authority from either issuing fresh notice or exercise power of rectification within scope of S.221 of the Income Tax Ordinance, 2001

No interference was made out in the order passed by the Appellate Tribunal

Reference was dismissed accordingly.

2023 PTD 182 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss.133 & 221Sales Tax Act (VII of 1990), S.57Federal Excise Act (VII of 2005), S.70RectificationPrincipleTaxpayer was a retailer who was treated as manufacturer for the purposes of taxation

Taxpayer sought rectification of ex-parte order passed by Income Tax Appellate Tribunal, which was allowed and order passed by authorities was set aside

Validity

Rectification was a jurisdiction ancillary to appellate jurisdiction intended to rectify a mistake of fact or law apparent on face of record, which did not require investigation, appraisal of evidence, interpretation of law or inquiry into facts

Rectification jurisdiction could not be a substitute of tax reference, therefore, Tribunal was to check bona fide by seeking explanation for not filing rectification application soon after date of receiving certified copy of final order

After exercising original jurisdiction, Income Tax Appellate Tribunal had become functus officio with a little window for rectification of a mistake, which was an equitable remedy because law favoured justice to ensure an apparent and floating mistake, causing injustice was allowed to be rectified within limitation of five years

Appealable order attained finality on expiration of limitation for filing appeal or other remedy, such a finality could not be compromised by filing an application for rectification to manage rehearing or review the matter

Any injustice, because of an identified mistake, was rectifiable as envisaged in S.221 of Income Tax Ordinance, 2001, S.57 of Sales Tax Act, 1990 and S.70 of Federal Excise Act, 2005

High Court set aside order in question as jurisdiction was improper and remanded the matter to Income Tax Appellate Tribunal to decide application of rectification afresh

Reference was disposed of accordingly.

2022 CLD 932 ISLAMABAD Judicial Precedent

S. 201"Indoor management"Principle of 'ostensible authority'Board resolution, absence ofRectification

Contract made on behalf of a company without authority of board resolution can be ratified by company, including by its conduct

Provision of S. 201 of Companies Act, 2017, does not displace common law doctrines of "ostensible authority" and "indoor management" intended for protection of third parties entering into an agreement with a company in good-faith without notice of lack of authority of executant on behalf of a company.

2021 PLD 635 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 152Power of Court to rectify register of membersRectificationConnotation"Rectification" itself connoted some error, which had crept in requiring correction

Error would only mean that everything as required under the law had been done yet by some mistake a name was either omitted or wrongly recorded in register of the company.

2021 CLD 1229 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 152Power of Court to rectify register of membersRectificationConnotation"Rectification" itself connoted some error, which had crept in requiring correction

Error would only mean that everything as required under the law had been done yet by some mistake a name was either omitted or wrongly recorded in register of the company.

2021 CLD 967 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 152Power of Court to rectify register of membersRectificationConnotation"Rectification" itself connoted some error, which had crept in requiring correction

Error would only mean that everything as required under the law had been done yet by some mistake a name was either omitted or wrongly recorded in register of the company.

2020 PTD 2189 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss.121(1)(d), 122(9), 127, 131 & 221RectificationAppeal, pendency ofMerger, doctrine ofScopeTaxpayer was aggrieved of show-cause notice issued by authorities to conduct auditDuring pendency of appeal, Appellate Authority decided rectification applicationValidity

Provision of S.221 of Income Tax Ordinance, 2001, was restricted to rectify a mistake which must be apparent from record

Scope of rectification could not be construed as that of a statutory right of appeal provided under Ss. 127 & 131 of Income Tax Ordinance, 2001

When appeal was pending before a superior forum, application for rectification on the same subject at the same time could not be entertained by a subordinate forum as a rule

Appeal filed by authorities earlier was dismissed by Appellate Tribunal Inland Revenue whereby earlier order passed by Appellate Authority was confirmed and no reference under S.133 of Income Tax Ordinance, 2001, was filed against said order of Appellate Tribunal Inland Revenue

Such earlier order of Appellate Tribunal Inland Revenue had attained finality in terms of S.132(10) of Income Tax Ordinance, 2001

On the basis of doctrine of merger the earlier order of Appellate Authority was merged in the order of Appellate Tribunal Inland Revenue

Doctrine of merger was based on the principle that at one and the same time not more than one order could be operative

Appellate Tribunal Inland Revenue set aside order passed by Appellate Authority as application for rectification was not maintainable and authorities could not avail two parallel remedies for same relief

Appeal was allowed in circumstances.

2020 PTD 2163 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

S.221RectificationPrinciple

If a 'mistake apparent on the face of record' is brought to the notice, S.221 of Income Tax Ordinance, 2001, empowers authorities and Tribunal to amend the order passed under S.221 of Income Tax Ordinance, 2001

Amendment of an order does not mean obliteration of order originally passed and as substitution by a new order.

2015 MLD 965 KARACHI-HIGH-COURT-SINDH Judicial Precedent

O. VII, R. 11, O. VI, Rr. 14 & 15 & O. III, R. 2Specific Relief Act (I of 1877), S. 42Suit for declarationPlaint, rejection ofScope"Term barred by law "occurring in O.VII, R.11(d), C.P.C.ScopeDefective plaintRectificationScopeContention of defendants was that plaint had neither been signed nor verified by the authorized personValidity

Procedural formality or requirement could be allowed to be rectified if same were not restricted by law or had created certain legal rights in claim of rival party

Clause (b) and (c) of O. VII, R. 11, C.P.C. were with regard to procedural requirements

Plaint should not be rejected due to such situation unless plaintiff had failed to make compliance despite specific direction

Plaint failing to spell out a cause of action or being barred by law should be rejected under Cl. (a) or (d) of O. VII, R. 11, C.P.C.

Term 'barred by law' should not be available where there was a technical error, defect or irregularity which even if allowed to be corrected would not cause prejudice to other side rather same would make things straight for proper adjudication

Provisions of O.VI, Rr. 14 & 15, C.P.C. were directory in nature as no penal consequences in the event of failure to make compliance of such provisions had been provided

Object of such provisions was to make clear for the other party as to what was based on personal information of person, signing and verifying or what he had believed to be true

Procedural provision which carried no penal consequence could not result into considering the same as 'incurable'

Omission to verify or defective verification was a mere irregularity not affecting the merits which could be cured at subsequent stage

Curable irregularity should not be confused with the term 'barred by law'

Defective plaint with regard to power of attorney could be rectified by the principal

Plaintiff had placed on record the copy of power of attorney and he had rectified and reaffirmed the status of the person who had signed and verified the pleadings; defect if any, which had caused no prejudice to the defendants stood complied with

Mere irregularity with regard to compliance of O. VI, Rr. 14 & 15, C.P.C. would not bring a case within meaning of Cl. (d) of O. VII, R. 11, C.P.C.

Application for rejection of plaint was dismissed in circumstances.

2015 PTD 1926 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 113, 114, 120, 122 & 221Filing of return of incomeAssessmentRectification proceedingsScope

Taxpayer who was deriving income from distribution of products of principal companies, filed return of income for relevant year declaring his income, which was deemed to be treated as an assessment in terms of S.120 of the Income Tax Ordinance, 2001

Subsequently rectification proceedings were initiated under S.221 of the Income Tax Ordinance, 2001, by issuing show-cause notice alleging therein that the taxpayer had failed to deposit the tax required under S.113 of the Income Tax Ordinance, 2001

Taxpayer filed reply to the show-cause notice and also revised the return of income, but department rejected submission of the taxpayer as well as revision of the return, and assessment order, issued under S.120 of the Income Tax Ordinance, 2001, was rectified under S.221 of the Ordinance

Appellate Authority dismissed appeal of the taxpayer

Validity

Issue requiring consideration and adjudication was as to whether the order passed under S.221 of the Income Tax Ordinance, 2001 was beyond the scope of rectification

Only those mistakes could be rectified which were apparent and floating on the face of record/return

Error of law or fact, having direct nexus with the question of determination of rights of parties affecting their substantial rights, or causing prejudice to their interest, was not a mistake apparent on record to be rectified under S.221 of the Income Tax Ordinance, 2001

Mistake must be of the nature which was floating on the surface of record; and must not involve an elaborate discussion or detailed probe/inquiry or process of determination in the light of amendment, law or fact

Determination of minimum tax liability, was a material question which could not be brought within the purview of S.221 of the Income Tax Ordinance, 2001 for the purpose of rectification

Department/Revenue Authority carried on amendment in the garb of rectification, which could not be endorsed as being legally sacrosanct

Matter in issue, in circumstances, fell outside the scope of rectification

Adjudicating Authority had unlawfully enlarged the scope of S.221 of the Income Tax Ordinance, 2001 to the extent of erroneousness and prejudicial to the interest of Revenue as provided under S.122 of Income Tax Ordinance, 2001

Rectification order, was annulled, in circumstances.

2015 PTD 954 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 45-B, 46 & 57Error apparent on recordRectificationPowers of Appellate Authorities to rectify such errorScope

Failure by the Appellate Authority to consider an argument advanced by either party for arriving at a conclusion, was not "an error apparent on the record", though it could be an error of judgment

No scope for rectifying an "error of judgment" by invoking provisions of S.57 of Sales Tax Act, 1990.

2009 PTD 1187 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

Correct application of lawJurisdiction of Appellate TribunalRectification

Appellate Tribunal as well as all the judicial forums have to correctly apply the law and if the law has not been correctly applied due to any mistake, on the application of the aggrieved parties as well suo motu action should be taken and that illegality should be rectified

Appellate Tribunal is well as all other judicial forums are very much within the jurisdiction to rectify the order where law had not been properly applied.

2009 PTD 1218 FEDERAL-TAX-OMBUDSMAN-PAKISTAN Judicial Precedent

Ss.55 & 156Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9(2)(b) & 2(3)(i)(a)Consolidated ex parte AssessmentRectificationJurisdictionMaladministrationVisual inspectionCommissioner (Appeals) had passed an arbitrary order resulting in injusticeMaladministration in adopting a process to reach the decision had been identifiedJurisdiction to investigate

Complainant's appeal was dismissed in a summary manner without taking into consideration the facts of the case and the grounds of appeal

Inspection note of the Assessing Officer was not produced to show the nature of machinery

Visual inspection was not relevant and sufficient to support the assessment

Legal question was not adverted to

Federal Tax Ombudsman directed the complainant to file an application to Commissioner of (Appeals) for rectification of the Appellate Order and Commissioner (Appeals) shall decide same by a speaking order.

2008 PTD 1162 FEDERAL-TAX-OMBUDSMAN-PAKISTAN Judicial Precedent

Ss.62, 50 & 156Income Tax Ordinance (XLIX of 2001), S.122Establishment of Office of Federal tax Ombudsman Ordinance (XXXV of 2000), Ss.9(2) & 2(3)Deduction of tax at sourceAssessment on basis of evidenceRectificationAmendment of assessmentJurisdictionMaladministration

Complainant Company was aggrieved by issuance of notice under section 122 of the Income Tax Ordinance, 2001 by the Additional Commissioner/Taxation Officer Audit Division

Allegation of the Complainant was that the return of year (1998-99) was filed declaring loss; assessment was completed under S.62 of the Income Tax Ordinance, 1979 which was rectified under S.156 of the Ordinance and credit of tax paid under section 50 of the Ordinance was allowed

Feeling dissatisfied complainant filed appeal against the assessment order and Commissioner of Income Tax by his Appellate Order had remanded the case to Assessing Officer with certain directions

Such order was challenged by the complainant by filing second appeal before the Income Tax' Appellate Tribunal who confirmed the orders of commissioner Income Tax

Case was transferred to Large Taxpayers Unit and Additional Commissioner/Taxation Officer issued notice under section 122 of the Income Tax Ordinance, 2001 along with notice under Rule 68 of Income Tax Rules 2002

Complainant alleged that it was maladministration

Departmental Representative had asserted that since Commissioner of Income Tax and Income Tax Appellate Tribunal had confirmed the order of the Assessing Officer, no appeal effect was required to be given under Ss.132 and 135 of the Income Tax Ordinance, 1979

Validity

Complainant's appeals before Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal had partly succeeded and appeal effect had to be given under section 132 and 135 of the Income Tax Ordinance, 1979

Jurisdiction under S.122(1) of the Income Tax Ordinance, 2001 could be invoked to correct or amend assessment orders issued under Ss.120 and 121 of the Income Tax Ordinance, 2001 or issued under Ss.59, 59-A, 62, 63 or 65 of the Income Tax Ordinance, 1979

Since S.132 or 135 was not included in S.122 of the Income Tax Ordinance, 2001, action of Additional Commissioner/Taxation Officer of issuing notice under S.122(1) of Income Tax Ordinance, 2001 was not in accordance with law.

2008 PTD 896 FEDERAL-TAX-OMBUDSMAN-PAKISTAN Judicial Precedent

Ss.22, 23, 61, 62, 63, 66A, 132, 156(3) & 102-Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)

Refund

Ex parte assessment

Best judgment assessment

Deductions

Notice

Rectification

Compensation on delayed refund

Complainant had challenged non-issuance of refund for the assessment year 1997-98 along with compensation and it was alleged that in ex parte assessment deductions were not made

Complainant filed rectification application which was not decided within statutory time "and therefore the mistake was deemed to be rectified and refund was created=

Department, in reply had alleged that rectification application was never filed and tax deducted was adjusted against demand and no refund was created

Validity

Claim of filing the rectification application was not established

Commissioner Appeal had directed to compute the income under sections 22 and 23 of the Income Tax Ordinance, 1979

No appeal was filed before the Income Tax Appellate Tribunal by the Department

Ex parte assessment was made after a lapse of more than nine months from the date of non-compliance of statutory notice

Such order was served after a lapse of two and half years

No expenses were allowed against substantial receipts in the ex parte order

Ex parte assessment must be best judgment assessment

Order passed by the Assessing Officer under sections 63/132 of the Income Tax Ordinance, 1979 on 20-6-2000 was arbitrary, unreasonable, unjust and oppressive

Federal Tax Ombudsman therefore recommended that Central. Board of Revenue to direct the concerned Commissioner of Income Tax to set aside the order passed under sections 63/132 dated 20-6-2000 for Assessment year 1997-98 and to pass fresh order strictly following the directions given in Appellate Order in presence of complainant.