Law: Constitution of Pakistan 1973

Section: 199

Law: Income Tax Ordinance, 2001

Section: 148, 159, 177 & 177(6), 122 & 122(9), 111(1), 214C

Case Summary 

The petitioner challenged a notice dated 17.09.2021 issued under Sections 122(9) and 111(1) of the Income Tax Ordinance, 2001, seeking amendment of the petitioner's assessment for Tax Year 2016. The petitioner argued that under Clause 72B, Part IV, Second Schedule of the Ordinance, the tax audit had to be completed within the same financial year in which the exemption certificate under Sections 148 and 159 was issued. Since the audit continued beyond 30.06.2017, the petitioner claimed that all subsequent proceedings, including the impugned notice, were illegal.

The High Court rejected this contention. It held that Clause 72B only requires initiation/conduct of the audit during the relevant financial year to determine tax liability for future exemption certificates. It does not require the audit to be completed within that financial year, particularly where delay resulted from the taxpayer's own failure to timely provide records and cooperate with the audit.

The Court further observed that the petitioner had supplied documents after the close of the financial year, failed to raise objections to the audit report under Section 177(6), and instead directly challenged the assessment proceedings. Since the audit was validly conducted and the assessment proceedings were initiated within the statutory limitation period under Section 122, there was no jurisdictional defect in the impugned notice.