Law: Income Tax Ordinance, 2001

Section: 4,5,6,7,8,113,114,114(6),114(6A),115,115 (3),115(4),120,120(1),121,122,122C,122(3 ),122(5A),123,125,127,137,138,138A,139,1 40,141,142,143,144,145,146,148,151,152,1 53,153(1)(a),153(5)(a)(i),156,156A,161,1 61(1),162

Law: Income Tax Act, 1922

Section: 18

Law: Income Tax Ordinance, 1979

Section: 50

INCOME TAX ORDINANCE, 2001 (XLIX OF 2001) Sections: 120, 127, 161 & 205 - Failure to pay tax collected or deducted - Purchases by taxpayer - Failure to deduct tax - Show Cause Notice - Legal objections for initiating proceedings u/s 161/205 after filing of return u/s 120 turned down by ACIR - Taxpayer treated in default - Charge of tax along with additional and surcharge tax - Annulment of order by CIR(A) in appeal - Validity - FACTS Brief facts of the case as gleaned from the record are that an order under section 161 read with 205 was passed. Perusal of order passed under section 161 read with section 205, shows that purported action was taken after examination of return of income in which the ACIR observed that taxpayer has made purchases for the period from July 2009 to June 2010 at Rs. 114,968,668. He has mentioned in the order that on such purchases the taxpayer was liable to deduct tax and has failed to deduct the same, which prompted him to issue a show cause notice dated 14.4.2011. In reply to such show cause notice, a legal objection was taken while filing the explanation along with evidences. The said legal objection is reproduced below for ready reference. The ACIR after examination of the explanation filed by the taxpayer/respondent, rejected such legal objection. However, on merits a liability was created by passing order under section 161. Being not satisfied with the explanation of the taxpayer, the Inland Revenue Officer concerned treating the taxpayer in default by passing order bearing No.36/172 U/s 161/205 dated: Nil of the Income Tax Ordinance, 2001. Against such order the taxpayer/respondent preferred an appeal under section 127 of the Income Tax Ordinance, 2001 where similar plea was taken. The learned CIR(A), who decided the appeal of the taxpayer in his favour by annulling the order of the OIR vide Order No.395 dated 27-09-2011. ARGUMENTS Mr. Ashok Kumar, the learned D.R vehemently argued that the learned CIR (A) has fallen in error in granting relief on the ground that that the assessment under section 120 is in the field, when the ACIR had rightly pointed out and established that the respondent taxpayer has failed to establish…