The provisions of the Income Tax Ordinance, 2001 are not retrospective in nature and could not be applied before the assessment year 2002-03, the Appellate Tribunal Inland Revenue (ATIR) recently ruled by rejecting the action taken by the tax department. Sources told Business Recorder here on Friday in a recent judgement that the tribunal has compared Income Tax Ordinance 2001 with the repealed Ordinance of 1979 regarding applicability of provision of section 205 (default surcharge/additional tax).
The ATIR Lahore has interpreted the applicability of provisions of section 205 of the Income Tax Ordinance, 2001 with reference to non-payment of advance income tax payable under section 53 of the repealed Income Tax Ordinance, 1979 and hold that Section 205 of the Ordinance, 2001 is not applicable retrospectively.
When contacted, a Lahore-based tax lawyer Waheed Shahzad Butt told this correspondent about the brief facts and legal implications of appeals recently decided by the ATIR. The taxpayer in this case is a government owned company by status and quite surprisingly, the field formation of FBR charge tax under section 205 of the Income Tax Ordinance, 2001 for the assessment year 1987-88 in the year 2009, which shows period ended June 30, 1987 was charged to tax after lapse of only 22 years.
The unit contested the arbitrary action before the appellate forum wherein demand of tax was quashed, however, the guardian of state ie, FBR functionaries filed appeal before the ATIR to defend the timely action of filed formation. The ATIR rejected the departmental stance with the observation Section 205 of the Ordinance, 2001 is not applicable retrospectively.
In a taxing statute, one can only look at the language used in the law, since there is no room for presumption in the interpretation of law. The action of the filed formation with regard to taxing the unit even after lapse of 22 years is patently illegal that''s why it has crumbled down by the both appellate forums in the hierarchy of IRS, he said.
Waheed further added that creation of bogus tax demand would not only result in unnecessary hardships for the genuine taxpayers but the revenue shall also stand to lose, therefore, taking cognisance of the fact, it has been decided by the FBR that whereas good assessments framed with care and caution which yield additional revenues to the Government, would be adequately rewarded, Disciplinary Proceedings shall be initiated against an assessing officer if five of his assessments are reversed by the Appellate Authorities.
It is the duty and function of public functionaries to obey command of Constitution and nobody should be penalised by inaction of public functionaries and public functionaries are also duty bound to act in accordance with law. Mere reading of the assessment order and grounds of appeal before ATIR reveals that the Respondents acted beyond their lawful jurisdiction just to harass the taxpayers of the country even the state-owned units have not been spared. As the Respondents have dragged the state-owned taxpayer of country unnecessarily into futile litigation, which is a clear abuse of law and misuse of the powers of IRS official that resulted in wastage of public resources (taxpayer''s money), therefore, it is inevitable that misconduct/disciplinary proceedings may be initiated against the concerned IRS officials, tax lawyer added.