COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA vs KHALID HUSSAIN Ss

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COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA VS KHALID HUSSAIN Ss. 41 &111(1), proviso to---agricultural tax, non-payment of---Tax charged, sustainability of---Scope---agricultural tax a Provincial matter---Whether the tax charged under S. 111 of Income Tax Ordinance, 2001 ('the Ordinance, 2001') for non-payment of agricultural tax would sustain if the agricultural tax is paid during proceedings of the appeal before the appellate Tribunal Inland Revenue---Held, that S. 111 of the Ordinance, 2001, inter alia, envisaged explanation of source of any income or asset to the satisfaction of the Commissioner concerned, however, the proviso to subsection (1) of S. 111 of the Ordinance, 2001 makes it obligatory by using the word shall to accept the explanation, if agricultural tax paid under the relevant provision of law for the amount credited or the investment made, money or valuable articles owned or funds from which the expenditures was made, by way of agricultural income, such explanation shall be accepted to the extent of the agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law---In the present case, the taxpayer has shown agricultural income in return for tax year 2018--- The applicant/Department issued notice on 18.01.2021 under S. 122(9)(5a) of the Ordinance, 2001 in absence of proof for payment of provincial agricultural tax---The taxpayer produced relevant challan dated 10.05.2023 for agriculture tax of the year 2018 (of Rs.1572010/-) in favour of Deputy Commissioner Quetta before the appellate Tribunal Inland Revenue which was not disputed by the applicant/Department by way of filing counter affidavit---It is clear that the taxation of agricultural income is not a matter under the Ordinance, 2001 ; which is a Provincial matter and its collection and consequence of delayed payment/nonpayment are to be governed by the Provincial law, and such delay of payment and its consequence are not subject matter of the Ordinance, 2001---Moreover, agricultural income driven by a person shall be exempt from tax under S. 41 of the Ordinance, 2001---The matter during proceedings cannot be taken to be past and closed transaction, therefore, if agricultural tax is paid during appeal before appellate Tribunal Inland Revenue ; it nullifies the effect of S. 111 of the Ordinance, 2001 and the assessment under this provision can no longer be sustained---Said distinction safeguards taxpayer from being penalized under an incorrect unwarranted legal frame work and reinforces the principle that Provincial law exclusively govern agricultural income taxation---Thus proposed question was answered against the Department---Income Tax Reference, filed by the Department, was dismissed, in circumstances.

COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA vs KHALID HUSSAIN Ss — 2025 PTD 936 QUETTA-HIGH-COURT-BALOCHISTAN

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