PETER C/o Messrs PETER & CO. vs COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD S

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PETER C/o Messrs PETER & CO. VS COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD S.172---Non-resident person---authorized / statutory representative of taxpayer, role of---Scope---Business or fiduciary relationship with the non-resident person, absence of---a non-resident company conducted business through a branch office in Pakistan, which had been represented by a Chartered accountants Firm, however, later non-resident company closed its business---Chartered accountants (appellant) assailed orders passed by the Tax authorities (the Commissioner Inland Revenue and the assistant Commissioner Inland Revenue) treating them (appellant) as a representative of said non-resident Company under S.172(3)(f) of the Income Tax Ordinance, 2001 ('the Ordinance 2001')---Validity---Section 172(5) of the Ordinance 2001, has provided that the declaration of a representative under S.172(3) is subject to subsections (4) and (5)---For the purposes of the present controversy, relevant subsection (5) mandates that an opportunity for a hearing must be provided to the person being declared as a representative---a person who has been afforded this opportunity must demonstrate to the Commissioner that they have not been in any fiduciary or business relationship with the non-resident person for whom they have been appointed as a representative---The grounds available to such a person are outlined in S.172(3)(a) to (e), which allow them to show that they have no business or fiduciary relationship with the non-resident person---However, when subsection (3)(f) is read in isolation, the plain reading of the provision may leave the person without any grounds to present during the hearing, which would render the opportunity for a hearing redundant, which could not have been the intention of the legislature---Therefore, it is essential that some reasoning be provided to a person appointed as a representative under S.172(3)(f) to ensure that the hearing serves a meaningful purpose---Thus, the reasoning available to such a person should align with that enumerated in subsections (a) to (e), allowing them to present to the Commissioner during the hearing that they have no business relationship with the non-resident person, or that the information available to the Commissioner is inaccurate or irrelevant---In said manner, the true intent of subsection (5), which provides an opportunity for a hearing, will be fully realized---Thus, status of appellant did not automatically qualify them for appointment as a representative under S.172(3)(f) of the Income Tax Ordinance, 2001, but the same required a distinct fiduciary relationship and financial connection with the non-resident company---appellate Tribunal Inland Revenue annulled the orders passed by the Tax authorities---appeal was allowed, in circumstances .

PETER C/o Messrs PETER & CO. vs COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD S — 2025 PTD 1904 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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