Law: Income Tax Ordinance, 2001

Section: 214C, 177, 122(9), 174, 214A, 214C, 122/ 74

Law: Sales Tax Act, 1990

Section:

Brief facts

Income Tax Ordinance 2001.Ss. 122, 174, 177, 214A & 214C---Audit---Reopening of case---Limitation---Past and closed transaction, principle of---Subsequent extension of time---Effect---Petitioner taxpayer was aggrieved of selection of his case for audit after period of limitation---Contention of authorities was that the case was reopened on the basis of subsequent extension of time---Validity---Time limit in the case of petitioner expired on 30-6-2019, whereas mandatory condition for maintaining accounts ended on 31-12-2019---Case of petitioner was selected for audit in year 2016 but the proceedings never culminated and no order under S.122 of Income Tax Ordinance, 2001, was ever passed by authorities---Federal Board of Revenue by exercising its powers under S. 214C of Income Tax Ordinance, 2001, on 04-12-2019 i.e. after expiry of the period, as prescribed under S. 122 of Income Tax Ordinance, 2001, and some 26 days prior to the expiry of time limit as prescribed under S. 174 of Income Tax Ordinance, 2001, i.e. on 04-12-2019 extended time for finalization of audit proceedings up to 30-6-2020, for the tax year 2014---As per S. 122 of Income Tax Ordinance, 2001, time limit for finalizing assessment had already expired, whereas time limit with regard to S. 174 of Income Tax Ordinance, 2001, had remained available for few days only---Even after extension of period by FBR, authorities made no attempt to finalize the audit---There was no authority to proceed against a person when the matter was already time barred---After lapse of prescribed time limit matter had become past and closed transaction---Subsequent extension of time by FBR did not fulfill parameters as enshrined under the law and spelt out under Ss.214A & 214C of Income Tax Ordinance, 2001---Authorities should have finalized audit proceedings on or before 30-6-2020, which was not done---High Court vacated notice for audit pertaining to tax year 2014, as the same was issued after expiry of prescribed period---Constitutional petition was allowed accordingly.

       Muhammad Moizuddin and another v. Mansoor Khalil and another 2017 SCMR 1787; Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 SCMR 991; Khushi Muhammad through L.Rs. and others v. Mst. Fazal Bibi and others PLD 2016 SC 872; Federal Board of Revenue through its Chairman, Islamabad and others v. Abdul Ghani and another 2021 SCMR 1154; Sami Pharmaceutical (Pvt.) Ltd. and others v. Province of Sindh through Chief Secretary and others 2021 PTD 731; Mir Hassan v. Province of Sindh, through Secretary and 3 others 2017 PLC (C.S.) 864; Commissioner Inland Revenue, Zone-IV, Lahore v. Messrs Panther Sports and Rubber Industries (Pvt.) Ltd. and others 2022 SCMR 1135; Commissioner of Inland Revenue and others v. Jahangir Khan Tareen and others 2022 SCMR 92; The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Muhammad Din and Sons and others 2017 PTD 1756; Haji Abdul Sattar and others v. Farooq Inayat and others 2013 SCMR 1493; Messrs Universal Business Equipment (Pvt.) Limited through Chief Executive v. Deputy Collector of Customs, Customs House, Karachi and another 2014 PTD 1944; The Taxation Officer / Deputy Commissioner of Income Tax, Lahore 2018 SCMR 1131; Messrs/s Attock Cement Pakistan Ltd., through Senior Manager Finance v. Additional Commissioner Inland Revenue 2016 PTD 1872; The Taxation Officer/ Deputy Commissioner of Income Tax, Lahore v. Messrs Rupafil Ltd., and others 2018 SCMR 1131; Messrs Universal Business Equipment (Pvt.) Ltd., through Chief Executive v. Deputy Collector of Customs, Customs House, Karachi and another 2004 PTD 1944; Pepsi Cola International (Private) Limited through Authorized Representative v. Federation of Pakistan through Secretary Revenue Division, Islamabad and another 2022 PTD 51 and D.G. Khan Cement Co. Ltd., through Chief Financial Officer and others v. Federal Board of Revenue through Chairman and 5 others 2020 PTD 2111 ref.