Law: Income Tax Ordinance, 2001

Section: 111,122(5A),133

Income Tax Ordinance (XLIX of 2001)——Ss. 111, 122(5A), 133—Constitution of Pakistan, Fourth Schedule, Entry No. 50—Agriculture income—Late payment—Penalty, imposing of—Principle—Authorities sought recovery of tax under S. 111 of Income Tax Ordinance, 2001—Income Tax Appellate Tribunal vacated order passed by authorities as the taxpayer had paid agriculture tax— Plea raised by authorities was that as agriculture tax was paid beyond specified date, therefore, penalty was to be imposed on taxpayer— Validity—Amount declared as agriculture income, though not taxable under Income Tax Ordinance, 2001, would be credited in books of account of taxpayer, therefore it fell in the category (a) under S.111 of Income Tax Ordinance, 2001—Taxpayers claim of agriculture income would fail if on explanation sought, proof for payment of provincial agriculture income tax was not produced and amount so credited in books of accounts was to be taxed under Income Tax Ordinance, 2001, as income from other sources and not as agriculture income— Agriculture income could not be taxed under Income Tax Ordinance, 2001, as the same was beyond competence of Federation under Entry No. 50 of Fourth Schedule to the Constitution—Matter during proceedings could not be taken to be past and closed transaction, if agricultural income tax was paid during appeal before Appellate Tribunal and effect of charging provision in S. 111, Income Tax Ordinance, 2001 would be obliterated—Penalties or default surcharge for late payment of agriculture tax could only be imposed under the relevant provincial law, levying tax on agriculture income—Reference was dismissed accordingly. SHAHID JAMIL KHAN, J.- The question for examination and our opinion is:- “Whether tax charged under Section 111 of the Income Tax Ordinance, 2001, for non-payment of Agricultural Tax, would sustain, if the tax and Agricultural Income Tax is paid during proceedings of appeal before the Appellate Tribunal Inland Revenue?” 2. Appellate Tribunal Inland Revenue (“Appellate Tribunal”), in the order dated 16.06.2022, impugned before us, has vacated the order under Section 111 of the Income Tax Ordinance, 2001 (“the Ordinance of 2001”) on payment…

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