2014 SLD 881 Equiv.

Citation: 2014 PTD 1268 = = =

2014 PTD 1268

INLAND REVENUE APPELLATE TRIBUNAL

I.T.As. Nos. 1842/LB and 1843/LB of 2012, decided on 21-01-2014

PRESENT:
CH. ANWWAR UL HAQ., JUDICIAL MEMBER
SAJJAD ALI, ACCOUNTANT MEMBER

PETITIONERS: MESSRS FAWAD TEXTILE MILLS LIMITED, LAHORE

VS
RESPONDENTS: COMMISSIONER INLAND REVENUE, R.T.O., LAHORE

Muhammad Shabbir Sh. for Appellant.

Muhammad Nazir Rizvi, D.R. for Respondent.

Law: Income Tax Ordinance (XLIX of 2001)

Sections: 161, 128(5)

ORDER

CH. ANWAAR UL HAQ, (JUDICIAL MEMBER).---The titled appeals pertaining to tax years
2009 and 2010, have been preferred at the instance of taxpayer calling in question the
impugned consolidated order dated 13-8-2012 passed by the learned CIR (A), Lahore.

2. The relevant facts in brief are that the taxpayer, a private limited company, is a
prescribed withholding agent for deduction/collection of tax. In order to check the
taxpayer's compliance with the statutory withholding tax provisions, the assessing officer
issued statutory notices and confronted the taxpayer on the certain transactions on point
of deduction of tax. Allegedly, the taxpayer had failed to file the requisite
information/documentation. Accordingly, the Assessing Officer proceeded ex parte and had
observed that under heads; Local raw material, Salaries and wages , store/spare, repair
and maintenance, others, Travelling/ Conveyance, Communication, repair and
maintenance, professional charges and selling expenses, the taxpayer had failed to deduct
the required tax, therefore, the company was treated as taxpayer-in-default' under section
161 of the Ordinance. Consequently, tax demand under section 161 amounting to
Rs.28,640,637 and Rs.2,398,807 along with default surcharge under section 205 at
Rs.13,813,418 and Rs.725,162 was created for the tax years 2009 and 2010 respectively.
Being aggrieved, the taxpayer went in appeal before the learned CIR (A) and contended
that the alleged notices issued were never served upon the taxpayer and submitted the
requisite information/documentation. However, the learned CIR (A) has upheld the ex
parte action of the assessing officer and refuse to entertain the documentary evidences
produced by the taxpayer in terms of section 128(5) of the Income Tax Ordinance, 2001.
Consequently, both the appeals of the taxpayer are rejected by the learned CIR (A).

3. The learned AR of the appellant submitted before us that the CIR(A) was not justified to
confirm the illegal orders passed by the assessing officer. It is submitted by the AR before
us that the taxpayer-company where-ever required had deducted the tax and deposited
the same into government treasury and the learned CIR(A) was not justified to cancel the

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 illegal order of the assessing officer in respect of tax levied under sections 161/205,
whereas most of the payments made by the company were below the threshold limit for
withholding tax. It is explained by the learned AR that the assessing officer while
determining default under different heads of expenditure had acted merely on guesswork
which is not permissible under the law. It is further submitted by the learned AR that
proper opportunity as envisaged under the law was not provided to explain his case. On
the contrary, the learned DR on behalf of Revenue vehemently argued before us that the
assessing officer had rightly charged tax under sections 161/205, as the taxpayer had
failed to comply with the provisions of withholding tax and failed to deduct tax on
payments made by him.

4. We have heard the arguments put forth by the learned representatives of both the sides
and have carefully gone through the available record. After due consideration, we find that
the assessing officer has issued notices under section 161 on the, basis of amounts
appearing in the accounts of the company and somehow failed to engage the taxpayer in
the proceedings to present their case. From the perusal of the available record, it reveals
that proper opportunity, as envisaged under the law, is not accorded to the taxpayer to
substantiate their stance that the payments made under the different heads of expenditure
are mostly below the threshold limit of withholding tax and that tax wherever required was
duly deducted/deposited and necessary documentary evidences are available with the
taxpayer. These documentary evidences available with the taxpayer needs scrutiny/
verification/thorough examination and the assessing authority is best placed for the
purpose. Under such circumstances, we deem it necessary to remand the matter back to
the assessing authority for de novo decision. It is strictly directed that every effort should
be made to engage the taxpayer in the proceedings and matter be decided in accordance
with law. It is also directed to the taxpayer to cooperate with the department in the re-
assessment proceedings in his own interest. Order accordingly.

5. Both the appeals of the taxpayer are disposed of in the above manner.

SD/-
CH. ANWWAR UL HAQ
JUDICIAL MEMBER

SD/-
SAJJAD ALI
ACCOUNTANT MEMBER

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