Interpretation applicability

2017 PTD 1911 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN KARACHI Judicial Precedent

Ss. 122(5-A) & 177Amendment of assessmentInterpretation applicabilityScope and object of S.122(5-A) of the Income Tax Ordinance, 2001

Question of law for determination was that as to "whether S.122(5-A) of the Income Tax Ordinance, 2001, allowed the Commissioner/Additional Commissioner to make enquiries and seek information and details from the taxpayer in the manner which was akin to the audit proceedings under S.177 of the Income Tax Ordinance, 2001; so as to establish that an order (including deemed order) was erroneous in so far as prejudicial to the interest of Revenue"

Department had started fishing and roving enquiries as if provision of S.122(5-A) of the Income Tax Ordinance, 2001 had conferred unlimited powers to the department

Contention of Authorized Representative of the taxpayer was that if the unlimited inquiry was allowed, there would be no difference between Ss.177 & 122(5-A) of the Income Tax Ordinance, 2001

Under S.177 of the Income Tax Ordinance, 2001, Taxing Officer was empowered to call books of account, record, information, evidence, explanations, probe the matter indepth and conduct unlimited enquiries

Two/twin mandatory requirements i.e. there should be some illegality in the existing order and there should be apparent loss of revenue, must be before the Tax Officer to proceed further under S.122(5-A) of the Income Tax Ordinance, 2001

Inquiry should be on the apparent said two conditions and sense of inquiry should not be in respect of calling of information

Section 122(5-A) & S.177 of the Income Tax Ordinance, 2001, were two entirely different provisions with distinct purposes

Department had nothing to fulfill the requirements with regard to the said two mandatory conditions to invoke S.122(5-A) of the Income Tax Ordinance, 2001 in the matter of inquiries

Calling of information and thereafter finalizing the order under S.122(5-A) of the Income Tax Ordinance, 2001, without the presence of two mandatory conditions, was not permissible

Distinction was to be drawn for conduct of enquiries

Enquiries were to be restricted to the extent of two/twin mandatory conditions as prescribed in the S.122(5-A) of the Income Tax Ordinance, 2001

Use of word 'enquiries' could not be read in isolation and it did not mean calling for information from the taxpayers and thereafter proceeding to finalize the order under S.122(5-A) of the Income Tax Ordinance, 2001

Enquiries conducted without the presence of said twin mandatory conditions, were not permissible and would come within the ambit of "fishing and roving enquiries" which were to be dispelled

Roster was directed to fix all appeals as well as other such appeals before the respective Benches of the Tribunal for order on merits.