LAHORE: A commissioner Inland Revenue (Appeals) has disapproved the assessment order after finding that the tax assessing officer had chosen the figures at random while framing it from the details provided by the taxpayer, said sources.

Also, they said, the assessing officer had failed to assign any reasons to his assessment, which was not acceptable to him. Therefore, he preferred to give another chance to the department to establish default against the taxpayer.

The taxpayer was a private limited company deriving income from manufacturing of agriculture and forestry products. The assessing officer had initiated proceedings against him to monitor the compliance as withholding agent. In response to a show-cause notice, the taxpayer furnished details and documents such as purchase invoices, copies of ledger accounts and proof of tax deduction/exemption certificate wherever applicable.

The assessing officer found portion of payments to some extent as below taxable limit, however, details of payments made for purchase of some items were not accepted by the officer concerned. Therefore, the assessing officer proceeded to hold the taxpayer as personally liable to deduct the tax and pay the same to government exchequer.

But the commissioner Appeals annulled the assessment order by stating that the arguments adduced by the assessing officer have been considered. Although, he has given some reasons for holding the taxpayer as personally liable, yet it is observed that withholding default cannot be established unless the exact names and addresses of the persons to whom payments attracting the withholding provisions of law are made. The amount of payment and tax to be withheld thereon is also to be established. Therefore, it is deemed appropriate to annul the order and the Officer may call record to determine exact amount of default under the law after providing adequate opportunity of hearing.

He further pointed out that the approach of the assessing officer was not in consonance with the practicing proceedings because a tax is to be levied and charged on a clear and definite verdict and assessment.

The approach made by the commissioner Appeals was upheld by the relevant forum by stating that despite observing legal flaw in framing the assessment order, the commissioner Appeals has given a fair chance to the department to establish the default against the taxpayer by giving a chance of audience and examining his record before creating a demand.

Copyright Business Recorder, 2024