UNITED CARPETS LTD. vs PAKISTAN through Secretary (Revenue Division) Ex-Officio Chairman, Federal Board of Rev

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UNITED CARPETS LTD. VS PAKISTAN through Secretary (Revenue Division) Ex-Officio Chairman, Federal Board of Revenue, Islamabad S.214D 1(a) & (b) [inserted through Finance Act, 2015 and deleted through Finance Act, 2018]---Audit proceedings, selection for---Scope---Petitioners (Taxpayers) filed constitutional petitions assailing impugned notices issued under S. 214D read with S.177 or 122 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') as being unlawful---Argument of the petitioners was that S. 214(D) was inserted through Finance Act, 2015, but was deleted through Finance Act, 2018, thus, after its omission, no further audit proceedings could continue as in view of the judgment passed in case titled Shah Nawaz (Pvt.) Ltd. v. Pakistan reported as 2011 PTD 1558 ('Shah Nawaz case'), a vested right has accrued to the petitioners---Validity---Provisions under S.214-D of the Income Tax Ordinance, 2001, remained available in the Ordinance till 30.6.2018, therefore, it applies to the period starting from 01.07.2015 to 30.06 2018: the pertinent words used in said S. (214-D) is that a person shall be automatically selected if the person falls within any of the condition(s) so provided in subsection 1(a) & (b) of S.214-D---It is neither a case of accrual of any vested right as to a particular tax-year, nor of selection for audit on the basis of any criterion, and therefore, any reliance placed on the Shah Nawaz case was entirely misconceived---Admittedly, all petitioners failed to meet the threshold of S.214D(1)(a)(b) i.e. either failed to file the returns on the stipulated / extended time, or did not pay the tax determined under S.137; hence, they stood automatically / deemed to have been selected for audit immediately thereon when they defaulted in said terms---Therefore, the period of default would be from 01.07.2015 to 30.6.2018---Undisputedly, all petitioners had defaulted in the said period, hence, they were deemed to have been selected for audit for respective tax-years---Any omission of the provision-in-question from 2018 onwards, would not have any bearing on their selection for audit which became past and closed on their default as per S.214D(1)(a)(b)---In fact, in some of the cases pertaining to Tax year 2015, audit was conducted and responded by the petitioners and thereafter, notices to amend the assessment orders under S. 122(9) had also been issued---No right or vested right had accrued to the petitioners---Constitutional petitions were dismissed, in circumstances.

UNITED CARPETS LTD. vs PAKISTAN through Secretary (Revenue Division) Ex-Officio Chairman, Federal Board of Revenue, Islamabad S — 2025 PTD 267 KARACHI-HIGH-COURT-SINDH

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