Babar Sattar, the counsel for Justice Qazi Faez Isa, has contended before a 10-judge larger bench if his client's wife is paying more tax than Prime Minister Imran Khan then how she is dependent and the Premier, who is paying less tax than her is independent.
Sattar is representing Justice Isa, a Supreme Court judge, in a tax matter. He contended that according to the income tax returns of Justice Qazi and his spouse, filed by the federation, the petitioner's wife, Zarina M Isa, had paid Rs 104,000 as income tax in 2009, Rs 143,055 in 2010 and Rs 147,883 in 2011. However, the PM Khan paid Rs 103,763 as income tax in 2017.
The bench headed by Justice Umar Ata Bandial on Monday 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 Bandial remarked that the issue before the bench is not that she is paying less or more tax, but it is whether she had sufficient funds to purchase the properties abroad.
Sattar argued that incumbent FBR Chairman Shabbar Zaidi had written an article in Business Recorder in December 2017. According to that article, wealth statement has no relation with the tax return. Income Tax Ordinance (ITO) is the law of income tax and not of the wealth return.
Justice Bandial told him that they have understood him that if the case is time-barred then there is no tax implication. Justice Faisal Arab noted that wealth is generated from the income and without income tax a wealth statement is not possible. He said if someone receives a gift or gets an inherited property then he has to explain it to the authorities how his assets have enhanced.
Sattar explained the regimes of Section 116(1) and 116(2) of ITO, saying one is related to commissioner notice, while the other deals with regular way of filing a return of income for any tax year. He argued that the section does not require a taxpayer to disclose the assets of his independent spouse and children unless those were created from the taxpayer's income of that year. If the commissioner discovers some assets have not been declared in the wealth statement then he puts a taxpayer on notice for explanation, adding in this case the petitioner has not received any notice from the tax authorities so far.
Justice Bandial said: "We are not sitting here to decide the vires of Section 116 of ITO, but the issue is some assets are held by the spouse which have not be declared. We have to see whether the reference filed is legal. Where is the source of funds? We are not going for the forum mentioned in Section 116. We have heard you enough. We are not chartered accountant to see the statement."
Sattar argued that the case of the federation is that the petitioner has to declare the asset of his spouse. The reference is why Justice Isa has not disclosed his spouse's assets. Under Section 116(1) the petitioner was not supposed to disclose the assets held in the name of independent spouse and the children.
Justice Arab said neither foreign assets nor the sources of income to purchase properties have been explained and therefore there is an impression that the money for that properties was sent abroad through money laundering.
Sattar said a taxpayer is not responsible to disclose the assets of other taxpayer. Justice Mansoor Ali Shah noted if a taxpayer has not disclosed certain properties in his wealth statement then it is the function of the department (FBR) to issue notice and seek explanation.
The counsel also contended that under Section 122(2) of the Ordinance, the time limit of five years from the end of the financial year has been described. He said the petitioner's wife purchased properties in 2004 and 2013. He said even if at later stage unexplained income or assets come to the knowledge of the tax authority then a notice is issued.
Copyright Business Recorder, 2019
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