Law: Income Tax Ordinance, 2001

Section: 153,161,205,153(7)(h)(i),153(1)(a)

Income Tax Ordinance (XLIX of 2001)---Ss. 161, 205,153(7)(h)(i) & 153(1)(a)---Failure to pay tax collected or deducted---Status of taxpayer---Taxpayer was an Association of Persons whose annual turnover exceeded 50 million Rupees---Association of Persons having turnover of fifty million Rupees or above in tax year 2007 and onwards fell in the definition of "Prescribed Person"---Taxpayer being a withholding agent was obliged to deduct income tax and deposit into government exchequer which it had failed to do---Assessing authority issued different letters requiring the taxpayer to provide party-wise details and evidence of tax deduction on raw material purchased locally during the tax year 2009---Taxpayer contended that business for the year under consideration was conducted in individual capacity as such provisions of S.153(7) of the Income Tax Ordinance, 2001 did not attract and submitted certain documents as evidence---Taxpayer was treated as taxpayer in default for non-deduction of tax---Order under Ss. 161/205 of the Income Tax Ordinance, 2001 was annulled by the First Appellate Authority---Revenue contended that order was bad in law and contrary to the facts of the case; that First Appellate Authority was not justified in holding that status of the taxpayer was an individual on the basis of return filed by member of Association of Persons after the completion/finalization of the tax proceedings under Ss. 161/205 of the Income Tax Ordinance, 2001, ignoring the return already filed by the Association of Persons itself on e-portal of Federal Board of Revenue---Validity---Since taxpayer had filed a dissolution deed of Association of Persons and since return for tax year 2009 was filed in the status of individual therefore return filed in the status of Association of Persons for the tax year 2009, was revised to a return of an individual---Taxpayer being an individual was not obliged to deduct tax under S.153(7)(h) or (i) of the Income Tax Ordinance, 2001---Order was not sustainable in the eyes of law---Besides, since clause (i) of S.153(7) of the Income Tax Ordinance, 2001 was inserted through Finance Act 2010, same would be applicable in tax year…

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