SARDAR MUHAMMAD SHAFIQ TAREEN vs The COMMISSIONER-IR, ZONE I, RTO, QUETTA Ss

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SARDAR MUHAMMAD SHAFIQ TAREEN VS The COMMISSIONER-IR, ZONE I, RTO, QUETTA Ss. 111(1)(b) & 122(5) [as inserted /amended through Finance Act, 2020]---Concealed income---Proceedings for the relevant tax year, non-conducting of---Credit entries in the bank account/statement of taxpayer---Definite information ---Scope---Officer Inland Revenue (OIR) treated taxpayer's bank credit entries as "definite information" in terms of S.122(5) of Income Tax Ordinance, 2001 ('the Ordinance, 2001') and added it to declared income of the taxpayer as concealed income, which findings were upheld upto the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---In the present case, for the (relevant) Tax Year 2015, the OIR had incorrectly applied amended provisions of S. 122(5) of the Income Tax Ordinance, 2001, which were brought on the statute through Finance Act, 2020---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application, filed by taxpayer, was allowed. Citation Name: 2024 PTD 1584 QUETTA-HIGH-COURT-BALOCHISTANBookmark this Case SARDAR MUHAMMAD SHAFIQ TAREEN VS The COMMISSIONER-IR, ZONE I, RTO, QUETTA Ss. 122(5), 122(9), 111(1)(b) & 111(5), Explanation---Concealed income---Separate notice(s)---Scope---Officer Inland Revenue (OIR) treated taxpayer's bank credit entries as "definite information" in terms of S. 122(5) of Income Tax Ordinance, 2001 (' the Ordinance, 2001') and added it to declared income of the taxpayer as concealed income, which findings were upheld upto the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---In the present case, the OIR had issued a combined notice under Ss. 122(5), 122(9) & 111(1)(b) of the Income Tax Ordinance , 2001 (' the Ordinance, 2001')---Prior to insertion of Explanation to S. 111(5) of the Income Tax Ordinance, 2001, separate notice under S. 111 of the Ordinance was mandatory---OIR was duty bound to issue separate notice under S. 111 of the Ordinance 2001 for the Tax Year 2015---Hence, the proceedings conducted were unlawful---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application filed by taxpayer, was allowed. Citation Name: 2024 PTD 1584 QUETTA-HIGH-COURT-BALOCHISTANBookmark this Case SARDAR MUHAMMAD SHAFIQ TAREEN VS The COMMISSIONER-IR, ZONE I, RTO, QUETTA Ss.111(1)(b) & 122(5)---Concealed income---Credit entries in the bank account/statement of taxpayer---Definite information---Scope---Term "definite information" means information which is complete and does not require further processing---Bank credit entries or bank deposits in itself do not constitute "definite information" as it requires further processing to relate it to net income of a taxpayer chargeable to tax---Only that part of the credit entries or bank deposits is chargeable to tax which can be termed as net profit or income---Whole of the credit entries or bank deposits in a bank account run by a businessman can never be his net profit or income chargeable to tax---Instead such credit entries or bank deposits may, at best, represent gross business receipts which after deduction of expenses will constitute net income or profit liable to tax---Thus, in the present case, the action of the Officer Inland Revenue (OIR) treating entire credit entries or bank deposits as amount liable to tax was neither lawful nor logical---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application, filed by taxpayer, was allowed. Citation Name: 2024 PTD 1584 QUETTA-HIGH-COURT-BALOCHISTANBookmark this Case SARDAR MUHAMMAD SHAFIQ TAREEN VS The COMMISSIONER-IR, ZONE I, RTO, QUETTA Ss. 122(5) & 111(1)(b)---Concealed income---Credit entries in the bank account/statement of taxpayer---Definite information---Scope---Officer Inland Revenue (OIR) treated taxpayer's bank credit entries as "definite information" in terms of S. 122(5) of Income Tax Ordinance, 2001 ('the Ordinance 2001') and added it to declared income of the taxpayer as concealed income, which findings were upheld upto the Appellate Tribunal Inland Revenue ('Tribunal')---Whether there was "definite information" in the possession of the OIR or not---Held, that record revealed that the OIR invoked S. 122(5) of the Ordinance 2001 to make addition of said bank credit entries of PKR 10,544,681/- to the declared income as concealed income---Provision of law under S.122(5) of the Ordinance, 2001 lays down that only such "definite information " is relevant which is obtained through audit or through a process similar to audit---In the present case , the OIR had not conducted any audit in the case of applicant/taxpayer, hence, the so-called "definite information" regarding bank credit entries could not be made a basis for invoking S. 122(5) of the Ordinance 2001---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application filed by taxpayer, was allowed.

SARDAR MUHAMMAD SHAFIQ TAREEN vs The COMMISSIONER-IR, ZONE I, RTO, QUETTA Ss — 2024 PTD 1584 QUETTA-HIGH-COURT-BALOCHISTAN

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