SKF PAKISTAN (PVT.) LTD. vs FEDERATION OF PAKISTAN through Secretary (Law and Justice Division) Ss

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SKF PAKISTAN (PVT.) LTD. VS FEDERATION OF PAKISTAN through Secretary (Law and Justice Division) Ss. 122, 174, 177, 214a & 214C---audit---Reopening of case---Limitation---Past and closed transaction, principle of---Subsequent extension of time---Effect---Petitioner taxpayer was aggrieved of selection of his case for audit after period of limitation---Contention of authorities was that the case was reopened on the basis of subsequent extension of time---Validity---Time limit in the case of petitioner expired on 30-6-2019, whereas mandatory condition for maintaining accounts ended on 31-12-2019---Case of petitioner was selected for audit in year 2016 but the proceedings never culminated and no order under S.122 of Income Tax Ordinance, 2001, was ever passed by authorities---Federal Board of Revenue by exercising its powers under S. 214C of Income Tax Ordinance, 2001, on 04-12-2019 i.e. after expiry of the period, as prescribed under S. 122 of Income Tax Ordinance, 2001, and some 26 days prior to the expiry of time limit as prescribed under S. 174 of Income Tax Ordinance, 2001, i.e. on 04-12-2019 extended time for finalization of audit proceedings up to 30-6-2020, for the tax year 2014---as per S. 122 of Income Tax Ordinance, 2001, time limit for finalizing assessment had already expired, whereas time limit with regard to S. 174 of Income Tax Ordinance, 2001, had remained available for few days only---Even after extension of period by FBR, authorities made no attempt to finalize the audit---There was no authority to proceed against a person when the matter was already time barred---after lapse of prescribed time limit matter had become past and closed transaction---Subsequent extension of time by FBR did not fulfill parameters as enshrined under the law and spelt out under Ss.214a & 214C of Income Tax Ordinance, 2001---authorities should have finalized audit proceedings on or before 30-6-2020, which was not done---High Court vacated notice for audit pertaining to tax year 2014, as the same was issued after expiry of prescribed period---Constitutional petition was allowed accordingly.

SKF PAKISTAN (PVT.) LTD. vs FEDERATION OF PAKISTAN through Secretary (Law and Justice Division) Ss — 2024 PTD 716 KARACHI-HIGH-COURT-SINDH

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