ISLAMABAD: While dismissing an appeal moved by the Federal Bureau of Revenue (FBR) against a high court order, the Supreme Court on Wednesday asked the FBR to act fairly in dealing with taxpayers and to abide by the law governing it.

If any benefit accrues to taxpayers under the law, the tax department must not withhold it so that the assessee’s and department’s own time and resources should not be needlessly wasted, observed Justice Qazi Faez Isa in a judgement he wrote.

Since frivolous litigation matters waste the time of the tribunal, the high court as well as the apex court, the time should be better spent in resolving legitimate disputes.

Dismisses challenge to high court decision; observes notice was issued 13 years after deputy commissioner’s order

The observations by a two-judge SC bench comprising Justice Isa and Justice Yahya Afridi came while deciding an appeal moved by Commissioner Inland Revenue (CIR) Karachi assailing the Nov 5, 2020 Sindh High Court (SHC) order.

The judgement recalled how on the last date of hearing, the SC had ordered the CIR to furnish the show-cause notice issued against the Messrs Packages Limited, through which the entire process was re-initiated and show-cause notice of May 23, 2011 was filed, showing that it was issued under Section 66-A read with Section 66 of the Income Tax Ordinance (ITO) 1979 for the assessment year 1997-98.

The two questions framed by the tax department for SHC consideration in the income tax reference were: whether under the facts and circumstances of the case, the tribunal concerned was justified to hold that order under Section 66-A of the repealed ITO 1979 was barred by time limit and whether under the facts and circumstances of the case, the tribunal was justified to decide the appeal against the department in the context of relevant case law.

The judgement said the department before the SHC had not relied upon Section 66 but Section 66-A of the ITO under which a notice could be issued only within a period of four years by an inspecting additional commissioner of income tax from the date of an order passed by the deputy commissioner.

When asked about the date of issue of the order by the deputy commissioner, it was stated that the order was passed on March 16, 1998, whereas the show-cause notice of May 23, 2011 was issued more than 13 years after the DC’s order and as such was time-barred as it was well beyond the prescribed period of four years, it observed.

“Leaving aside the relevancy of this notice we note that it too was issued after four years,” the judgement said, adding the department could not have initiated action under Section 66-A after four years. “Therefore, leave to appeal is declined and, consequently, this petition is dismissed with costs in the sum of Rs20,000.”

Published in Dawn, January 20th, 2022

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