Law: Income Tax Ordinance, 2001

Section: 131(5)

SUMMARY This case from the Inland Revenue Appellate Tribunal (2025) highlights a significant legal disagreement between two tribunal members regarding the power to grant a stay of tax recovery beyond the typical statutory limit. 1. Case Overview Parties: Messrs A. Rahim Foods (Pvt.) Ltd. vs. Commissioner Inland Revenue, LTO, Lahore. The Request: The taxpayer sought an extension of a stay order to prevent the tax department from recovering money while their main appeal was still pending. The taxpayer had already been on stay for 270 days. The Conflict: A recent directive from the Lahore High Court’s Directorate of District Judiciary (April 2025) instructed judicial officers not to extend stay orders beyond the legally stipulated period (usually 90–180 days). 2. The Two Conflicting Views Member 1: Nasir Mahmud (The "Strict" View) He voted to dismiss the application. Reasoning: He cited the new directions from the High Court, which stated that stay orders must automatically vacate upon expiry of the legal period. He argued that since the 90-day limit had passed, the Tribunal had no authority to extend it further, especially given the threat that non-adherence would affect judicial performance reviews. Member 2: Rao Muhammad Nasir Jamil (The "Dissenting" View) He argued in favor of the taxpayer. The Law (Section 131): He pointed to the 3rd Proviso of Section 131(5) of the Income Tax Ordinance. This specific law states that if an appeal is not decided within the statutory period through no fault of the taxpayer, the stay should not expire until the appeal is finalized. No Fault of Taxpayer: The delay was due to the Tribunal's own administrative issues (a bench was not functioning). He argued it is unfair to penalize a taxpayer for the court's inability to hear the case. Inherent Powers: He cited High Court precedents (e.g., 2020 PTD 1702) establishing that tribunals have "inherent power" to grant stays to prevent irreparable loss, and that time limits in tax laws are often "directory" (guidelines) rather than "mandatory" (fixed rules). 3. Key Legal Question: Who has jurisdiction? Member 2 raised a…