Law: Income Tax Ordinance, 2001

Section: 133(1), 114, 120, 122, 122(5), 114(6), 120(1), 122(5)

CASE SUMMARY

Court: Lahore High Court
Judges: Khalid Ishaq, J. & Hassan Nawaz Makhdoom, J.
Case Type: Income Tax Reference Application under Section 133(1) of the Income Tax Ordinance, 2001
Tax Year: 2009
Date of Impugned Tribunal Order: 10.05.2016
Judgment Date: Not explicitly mentioned (reported)
Subject: Law on amendment of original vs amended assessment order

1. FACTS

• Applicant: Commissioner of Income Tax (Department)
• Respondent: Taxpayer
• Dispute: Whether further amendments by the Commissioner under Section 122 should be made to the original deemed assessment under Section 120(1) or the first amended assessment under Section 122(5).
• Tribunal held: Further amendments should be made on the amended assessment under Section 122(5), not the original deemed assessment.

2. LEGAL ISSUE

• Whether the Commissioner is required to amend the original assessment under Section 120(1) even if an amended assessment under Section 122(5) exists, or whether amendments should only be made on the amended assessment.

3. ARGUMENTS

• Applicant (Department):
• Tribunal erred in holding amendment should be on amended assessment.
• Cited Section 122(4): “original assessment” can be amended multiple times.
• Relied on: Commissioner Inland Revenue v. Ch. Muhammad Akram (2013 PTD 1578)

Respondent (Taxpayer):

• Once the deemed assessment under Section 120(1) is amended, only the amended assessment is open for further amendment.
• Cited: Commissioner Inland Revenue, Faisalabad v. M/s Zahid Jee Fabrics Ltd. (2021 PTD 1705) and Azgard Nine Ltd.

4. COURT’S ANALYSIS

• Ch. Muhammad Akram case relied upon by applicant was about limitation, not relevant here.
• Reading Section 114(6), Section 120, and Section 122(3) together:
• A return filed under Section 120(1) is a deemed/fictitious assessment.
• Once amended under Section 122 or revised under Section 114(6), the amended assessment replaces the deemed assessment.
• Legal fiction of deemed assessment dilutes once tangible amendment occurs.
• Revised/Amended return under Section 114(6) and Section 122(3) → treated as amended assessment order for all purposes.
• Any further amendments under Section 122(5A) must be made on the amended assessment, not the original deemed assessment.

5. LEGAL SECTIONS INVOLVED

• Section 120(1), Income Tax Ordinance, 2001 – Deemed assessment of return filed by taxpayer.
• Section 114(6) – Revision of return with prior approval of Commissioner.
• Section 122(3) – Amended assessment order issued by Commissioner; revised return considered amended assessment.
• Section 122(4) – “Original assessment” can be amended multiple times (interpreted in light of above).
• Section 122(5A) – Further amendments to an amended assessment order.
• Section 133(1) & 133(8) – Reference Application and sending copy of judgment to Tribunal.

6. HOLDING / DECISION

• Tribunal correctly held that further amendments should be made on amended assessment, not original deemed assessment.
• Reference Application is dismissed.

7. KEY PRINCIPLES

• Deemed assessment under Section 120(1) is a legal fiction; once amended, it loses efficacy.
• Amended/revised assessment becomes the operative “assessment order” for further amendments.
• Commissioner cannot revert to original deemed assessment for further amendments.
• Legal amendments flow from Section 114(6) + Section 122(3) + Section 122(5A).
• Courts distinguish between fictional vs. amended assessment to avoid legal uncertainty.

ORDER;