Law: Income Tax Ordinance, 2001

Section: 153,153(1)(c),161

[Income Tax Ordinance (XLIX of 2001)].....Sections. 153(1)(c) & 161...Payments for goods and services...Failure to pay tax collected or deducted...Assessee in default... Tehsil Municipal Administration...District Government...Appeal barred by limitation...Assessee, Tehsil Municipal Administration, was obligated to deduct tax from payments released to Citizen Community Boards for development projects but failed to discharge its statutory responsibility...Taxpayer was treated as 'taxpayer in default' for not discharging legal obligation to deduct and deposit tax into Government Treasury...Assessment was passed requiring the taxpayer to deposit such amount...Taxpayer contended that funds had been allocated by the District Government but the said Government failed to deduct/recover withholding tax...Assessing Officer instead of seeking an explanation from the concerned EDO, raised an irrational demand against the taxpayer for non-deduction of withholding tax on account of Citizen Community Boards to whom funds had been released by the District Government--Validity--Withholding tax on payments made to Citizen Community Boards was not deducted by the taxpayer and it was well established that the taxpayer violated the provisions of S.153(1) of the Income Tax Ordinance, 2001...Further contention was that demand should have been enforced against the EDO, District Government rather than the Tehsil Municipal Administration--Validity...In the aftermath of dissolution of elected Tehsil Administration, the Tehsils in Punjab were no longer separate administrative and financial entities...Tehsil Municipal Administration headed by an Administrator appointed by the provincial government was pretty much part of the district administration and functions under the administrative control of the DCO...Any tax liability was an internal affair of the district administration of which Tehsil Municipal Administration was a component...District as well as the Tehsil Municipal Administration receive their respective financial allocations or funding directly from the provincial government, hence de novo initiation of the process of recovery of withholding tax from the EDO would be…

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