Law: Income Tax Ordinance, 2001

Section: 120(1), 122(2), 122(5A), 124(1), 124(6), 129, 67

Law: Income Tax Rules, 2002

Section: 13(2) & 13(3)

 Summary

The Appellate Tribunal Inland Revenue allowed the taxpayer’s appeal and annulled:

• The amended assessment order passed under Section 122(5A), and
• The appeal effect order passed under Sections 124/129 of the Income Tax Ordinance, 2001, on the ground that both were barred by limitation.

Findings:

1. Original Amendment u/s 122(5A) — Time Barred

• The return for Tax Year 2005 was filed on 31-12-2005, treated as a deemed assessment under Section 120.
• Under Section 122(2) (as it stood prior to Finance Act, 2009), amendment could be made within five years — i.e., up to 30-12-2010.
• The amended order was passed on 23-12-2011, beyond limitation.
• Relying on 2018 SCMR 991 (Eden Builders case), the Tribunal held that the pre-amendment limitation applied and could not be extended retrospectively.

2. Appeal Effect Order u/s 124/129 — Also Time Barred

• CIR(A)’s order was passed on 31-03-2012.
• Under Section 124(1), appeal effect had to be given within two years from the end of the financial year in which the order was served (i.e., by 30-06-2014).
• The order was passed on 12-04-2016, thus void ab initio.
• Limitation is mandatory and must be considered by the authority suo motu (Civil Appeals 1388–1392/2017; 2015 PTD 1068).

3. Proration of Expenses