COMMISSIONER INLAND REVENUE vs ZIA-UR-REHMAN Ss — 2024 PTD 1029 LAHORE-HIGH-COURT-LAHORE

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COMMISSIONER INLAND REVENUE VS ZIA-UR-REHMAN Ss. 120, 122 & 177(6a) [as substituted / inserted/ amended through Finance act, 2019]---Constitution of Pakistan, art. 10-a---audit proceedings---audit report, non-issuance of---Effect---Substituted subsection (6) and newly inserted subsection (6a) of S.177 of the Income Tax Ordinance, 2001, applicability of---Retrospective effect---Scope---Subsection (6a) of S.177 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001'), empowers the Commissioner to amend the assessment under subsection (1) or subsection (4) of S. 122 of the Ordinance, 2001, after issuing the audit report and providing an opportunity of being heard to the taxpayer under subsection (9) of S.122 of the Ordinance, 2001---Issuance of the audit report is a precondition or sine qua non for the exercise of authority to amend the assessment under said subsection (6a) and the requirement to grant opportunity of hearing is meant to ensure satisfaction of the due process requirement guaranteed under art. 10a of the Constitution---There is nothing in the language of the said provision which suggests retrospective application of subsection (6a) of Section 177 of the Ordinance, 2001; which means that cases where audit exercise was already completed and proceedings to amend the assessment were completed or initiated with the issuance of Show Cause Notice prior to the said legislative enactment, subsection (6a) of the Ordinance, 2001 cannot arguably be pressed into service---There is, however, nothing in the language of said subsection (6a) which restricts application of the said provision to cases where audit was pending completion or still underway on 01.07.2019, which is the case here as manifest from the facts of the present case---There is nothing in the text of the said provision that restricts its application to the cases selected for audit after any particular tax year---Indeed, the date of selection for audit hardly provides any basis for regulating applicability of the amended subsection (6a) of S. 177 of the Ordinance, 2001 , which clearly would apply to all cases where audit was to be completed after the said enactment and proceedings for the amendment of assessment were yet to commence---Impugned order of the appellate Tribunal Inland Revenue was based on the determination that no audit report was issued in the present case, and that the amended assessment order passed under S. 122(4) of the Ordinance, 2001 without issuance of audit report under S.177(6) of the Ordinance, 2001 was not sustainable in the eye of law, which finding was unexceptionable---Questions raised by the applicant/department were answered against the applicant/department and in favour of the respondent / taxpayer---Reference application filed by the Department was dismissed.

COMMISSIONER INLAND REVENUE vs ZIA-UR-REHMAN Ss — 2024 PTD 1029 LAHORE-HIGH-COURT-LAHORE

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