COMMISSIONER INLAND REVENUE, LEGAL ZONE CORPORATIVE TAX OFFICE, ISLAMABAD vs T.F — 2024 PTD 129 ISLAMABAD

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COMMISSIONER INLAND REVENUE, LEGAL ZONE CORPORATIVE TAX OFFICE, ISLAMABAD VS T.F. PIPES LIMITED COMPANY LIMITED Ss. 174, 161 & 133---Income Tax Rules, 2002, R.44(4)---Failure to provide record/information---Failure to pay tax collected or deducted---Withholding obligations---Scope---Tax Department contended that the proceedings were initiated against the taxpayer/company in wake of its failure to provide information, which contention had been denied by the taxpayer throughout---Validity---Regarding the requisite information, there was no clarity in the impugned order passed by the Inland Revenue Appellate Tribunal ('the Tribunal') as it had not been explicitly stated that whether the same (requisite information) was submitted or not; and that the Tribunal on such basis determined that no demand could be generated in terms of S.161 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Tribunal appeared to have misunderstood that the demand generated might have been generated in terms of the best judgment rule applicable under S. 121 of the Ordinance, 2001 as opposed to being generated in view of the taxpayer's failure to discharge withholding obligation under S.161 of the Ordinance, 2001---Tribunal did not take into account the fact that within the Show Cause Notice the application was also put to notice to file a reconciliation statement under R. 44(4) of the Income Tax Rules, as it had observed that Tax Department did not bother to obtain a reconciliation statement for said purpose, which finding was incorrect in view of available record---Question, in the present case, related to the obligation of both the Tax Department and the taxpayer with regard to withholding obligations for the purpose of the Ordinance. 2001 and the manner in which onus could shift from one party to the other depending on whether tax payer had filed requisite record within the Tax Department---Question of fact and the manner in which the Tax Department could generate a demand against a taxpayer also remained to be addressed---Commissioner Inland Revenue might observe record (the response filed by the taxpayer, assessment order, database) to identify the individual transactions in relation to which the taxpayer had allegedly failed to discharge his withholding obligations for the purpose of S. 161 of the Ordinance, 2001 and generate a demand in the event that such delinquency was made out from the record---Order passed by the Tribunal was not sustainable in the eyes of law, in circumstances---High Court remanded the matter to the Commissioner for said determination in view of law laid down in the judgment reported as Commissioner Inland Revenue Zone-I, LTU v. MCB Bank Limited (2021 SCMR 1325)---Reference application was disposed of accordingly.

COMMISSIONER INLAND REVENUE, LEGAL ZONE CORPORATIVE TAX OFFICE, ISLAMABAD vs T.F — 2024 PTD 129 ISLAMABAD

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