Income Tax Ordinance, 2001: General condonation of time limit under Section 214A declared illegal

ISLAMABAD: The Appellate Tribunal Inland Revenue, Islamabad has declared that the Federal Board of Revenue (FBR) cannot suo motu extend the time limit or condone the delay under Section 214A of the Income Tax Ordinance, 2001 without an application by any person.

The Appellate Tribunal IR, Islamabad has passed an order on an appeal filed by the National Highways Authority (NHA) against the Commissioner IR Corporate Tax Office (CTO), Islamabad.

The Appellate Tribunal IR, Islamabad has declared the FBR’s letter dated June 30, 2020, illegal, pertaining to the general condonation of time limit under Section 214A of the Income Tax Ordinance, 2001.

According to the tribunal order, the only mechanism available with the government was to frame the Relaxation Ordinance or Relaxation Act for giving extension of time limits for taking actions and making compliances.

Issuing any letter or notification touching the provisions of the Income Tax Ordinance, 2001 was not part of the delegation at all. The subordinate legislation cannot be permitted to amend the provisions of the parent Act or the Ordinance. Accordingly, the letter/notification dated June 30, 2020 issued by the FBR is contrary to the statutory provisions of the law and the principles laid down by the apex court.

The order said that the legislature has used the expression “extension of time limit” and “condonation of time limit” under a different context in the Income Tax Ordinance, 2001.

Therefore, it cannot be called that these are synonymous expressions. The expression “condonation of time limit” has only been used in section 214A of the Income Tax Ordinance 2001. Thus, the intent of the legislature is clear that whenever it requires extension of time in a particular situation the legislature has specifically used the expression “extension of time limit” where any act or thing is to be done in a particular time that has been lapsed then the statute has used expression “condonation of time limit”. Further the event of condonation of delay incurs after the lapse of the specific period whereas, on the other hand, the provision of extension of time arte triggered before the expiry of the statutory time. Hence both the expressions are used in the statute in a different way and intent.

The AT IR has further observed that such provisions, as the case may be, are pressed into service when a person applies to the competent authority. The competent authority cannot suo motu extend the time limit or condone the delay without an application by any person. The language of the letter/notification shows that the Board has condoned the delay suo motu.

“Before taxing any person it must be shown that he falls within the ambit of charging section by clear words used in the section and if the words are ambiguous and open to two interpretations, the benefit of the interpretation is given to the subject. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of legislature’s failure to express itself clearly”, the tribunal ruled.

The appeal of the NHA has been accepted and the orders passed by the lower authorities are annulled.

Copyright Business Recorder, 2022