ISLAMABAD: The Supreme Court asked the Federal Board of Revenue (FBR) to act fairly in dealing with the taxpayers and to abide by the law governing it.

A two-judge bench, headed by Justice Qazi Faez Isa and comprising Justice Yahya Afridi observed it on the appeal of Commissioner Inland Revenue, LTO, Karachi against the Sindh High Court (SHC)’s judgment.

The judgment authored by Justice Qazi Faez said if any benefit accrues to the taxpayers under the law, it must not be withheld and the assessee’s and its own time and resources should not be needlessly wasted. “This frivolous litigation also wasted the time of the Tribunal, the High Court and of this Court; time which would have been better spent in resolving legitimate disputes,” he added.

The department assailed the order of the SHC, Karachi, dated 5th November 2020. On the last date of the hearing, the bench had directed the Commissioner (petitioner) to file the show cause notice, through which the whole process was re-initiated and show cause notice dated 23 May 2011 has been filed through, which shows that it was issued “under section 66A read with section 66 of the Income Tax Ordinance, 1979 for the assessment year 97-98…”.

The two questions framed by the department for consideration of the High Court in the Income Tax Reference were as under: Whether under the facts and circumstances of the case, the learned Tribunal was justified to hold that order u/s 66-A of the repealed Income Tax Ordinance, 1979, was barred by time limit?

Whether under the facts and circumstances of the case, the learned Tribunal was justified to decide the appeal against the department in the context of case law cited as 2008 PTD 1316?.

The Department before the High Court had relied upon section 66-A of the Income Tax Ordinance (and not section 66). Under the said section 66-A, a notice can only be issued within a period of four years by a Civil Petition No 4-K of 2021 2 Inspecting Additional Commissioner of Income Tax from the date of an order passed by the deputy commissioner.

The apex court, therefore, enquired when was the order passed by the deputy commissioner and were told that it was passed on 16 March 1998 (filed with CMA No 25-K/2022). The said show cause notice dated 23 May 2011 was issued more than 13 years after the said order and as such was time-barred as it was well beyond the prescribed period of four years.

Reference was then made to a notice dated 12 June 2013. Leaving aside the relevancy of this notice we note that it too was issued after four years. The department could not have initiated action under the said section 66-A after four years. The bench declined the appeal and dismissed the petition with costs in the sum of 20,000 rupees.

Copyright Business Recorder, 2022