Justice Qazi Faez Isa's counsel has submitted that there is no concept of money trail in the tax law which was used for the first time in the Panama Papers case and has been "imported" in the present case.
Babar Satter, who is representing the apex court judge in a tax matter, said the issue of money trail is for offshore companies where the name of original owner of the company is not known.
Money trail is not relevant in the present case because the properties abroad are owned by the petitioner's spouse Zarina M Isa and children. As the properties are not in the petitioner's name; therefore, he was not supposed to disclose them in his wealth statement.
A 10-member bench headed by Justice Umar Ata Bandial, on Wednesday heard identical petitions challenging the Presidential Reference against Justice Qazi Faez for allegedly not disclosing his foreign properties in wealth statements. Besides the apex court judge, Pakistan Bar Council, Supreme Court Bar Association, Bar Councils & Association of Punjab, Sindh and Balochistan and Abid Hassan Minto and IA Rehman have also challenged the Presidential Reference.
Justice Baqir questioned if the assistant commissioner Income Tax can give opinion regarding tax record of the taxpayers without the assessment under Section 116 of ITO. Babar maintained that first he has to undertake exercise to inspect the record and after assessment and verification he can give the opinion. But in this case this exercise was conducted by an assistant commissioner.
He said if the petitioner has concealed or omitted anything in his tax return/wealth statement then the commissioner should have first issued him a notice. However, there was no re-assessment done of the tax record of the petitioner and his spouse under Section 116. Justice Maqbool Baqir noted this foundation is also missing. The counsel pleaded that the tax return and the wealth statement are filed on a prescribed form and, therefore, they should have been verified in a prescribed manner.
The counsel contended that nowhere in the tax law is a taxpayer required to be answerable to the assets of other taxpayer. The tax liability is the matter between the citizen and the state. A taxpayer is bound to disclose the assets of the spouse in two situations - if she is dependent and second the money has been given for the assets of spouse by him.
However, Justice Muneeb Akhtar said the onus lies on the taxpayer to prove that the spouse is dependent or independent. Sattar said the federation in its reply has also filed the tax-returns of the petitioner and his spouse. According to them, Zarina M Isa has filed the tax returns and declared the assets. If she has mis-declared in her tax-returns and wealth statement then the department should have issued notice to her.
Sattar argued that non-disclosure of asset which is not created from one's income will not create any additional tax liability. If there is omission in the tax returns of a person then the tax authorities have to ask questions from that person. He contended that there was no breach of Section 116 of Income Tax Ordinance (ITO) by Justice Qazi.
The case was adjourned until Monday (November 19).
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