ISLAMABAD: The Supreme Court dismissed the Federal Board of Revenue (FBR)’s appeal requiring M/panther Sports and Rubber Industries (Pvt) Ltd to furnish a reconciliation statement under Rule 44(4) of the Income Tax Rules, 2002.

A three-judge bench, headed by Justice Umar Ata Bandial, on Tuesday, heard the FBR appeal against the Lahore High Court (LHC) verdict.

Commissioner Inland Revenue, Lahore, had filed the appeal against the LHC order dated 5th March 2018.

The proceedings under section 161 of the Income Tax Ordinance, 2001 for tax year 2007 and 2009 were initiated against M/s Panther Sports and Rubber Industries (Pvt) Ltd (respondent) requiring to furnish a reconciliation statement under the Rule 44(4) of the Income Tax Rules, 2002.

M/s Panther challenged the notices by relying upon section 174(3) of Income Tax Ordinance2001 calling it ultra vires the powers of the officers as they have been issued beyond the period of six years requiring the respondent to maintain the records.

The LHC judge held that Panther Sports and Rubber Industries shall not be compelled to produce the record not required to be maintained in terms of Section 174(3).

The LHC had set aside the notices relying on the Maple Leaf Cement Factory vs FBR.

The Board through advocate Muhammad Zafar Iqbal approached the apex court and sought the indulgence of the apex court, over applicability by single judge of the LHC, that the provision of section 174(3) of the Ordinance 2001 could not be invoked.

It prayed to the Supreme Court to set aside the LHC order on the ground that it is contrary to the law and facts of the case.

Justice Bandial said that in the Maple Leaf judgment there is mention of time limit i.e. six years to maintain the record.

Justice Mansoor Ali Shah said after 10 and eight years the notices were sent. He said according to the Habib Bank Limited vs Federation judgment; the reasons have to be mentioned for delay in notices.

Justice Bandial said the power under Rule 44 (4) should not be unchecked; adding for the reconciliation statement the time period mentioned is five years; therefore, the FBR’s appeal is dismissed.

He said the FBR has not challenged the SC judgment, wherein, five-year time given for maintaining the record.

Copyright Business Recorder, 2021