2021 S C M R 437
[Supreme Court of Pakistan]
Present: Maqbool Baqar and Qazi Muhammad Amin Ahmed, JJ
COMMISSIONER INLAND REVENUE MULTAN---Petitioner
Versus
Sh. MUHAMMAD AMIN ARSHAD---Respondent
Civil Petition No. 2732-L of 2016, decided on 7th
January, 2021.
(Against
the judgment dated 9.6.2016 passed by the Lahore High Court Multan Bench Multan
in T.R. No.26/2013)
Income Tax Ordinance (XLIX of 2001)---
----Ss. 39, 122(5) & 182(2)---Income on account
of supplies made to a company---Amendment of assessment by
Commissioner---"Definite information"---Scope---Respondent-tax payer,
who was a commission agent/broker, declared an income of Rs.34,42,374/- on
account of supplies to a company; he assessed his income tax as Rs.3,42,437---Deputy
Commissioner (Inland Revenue), however, detected receipt of payments through
bank cheques far beyond the declared amount, running to the tune of
Rs.56,12,36,365---Deputy Commissioner initiated proceedings against the
respondent-tax payer under Ss. 122(5)(9) & 111(1) of the Income Tax
Ordinance, 2001 ("the 2001 Ordinance"), considering the detection as
"definite information" and determined tax
liability---Legality---Respondent-tax payer did not deny the payments, the
modes thereof and productwise quantum of the purchases---Respondent failed to
substantiate his contention qua business activities with the company, to which
it had made supplies, in the light of banking transactions---Department had
rightly determined the income of the respondent under S. 39 of the 2001
Ordinance along with income tax chargeable and penalty consequent thereupon
under S. 182(2) thereof---Orders passed by the Commissioner Inland Revenue
(Appeals) and the Deputy Commissioner (Inland Revenue) being well within the
remit of law were restored---Petition for leave to appeal was converted into
appeal and allowed.
Ch.
Muhammad Shakil, Advocate Supreme Court for Petitioner.
Sheikh
Zafar-ul-Islam, Advocate Supreme Court for Respondent.
Date
of hearing: 7th January, 2021.
ORDER
QAZI
MUHAMMAD AMIN AHMED, J.---The
respondent, a Commission Agent/Broker, declared an income of Rs.34,42,374/- on
account of supplies to M/s Shujabad Oil Mills Pvt. Ltd; he assessed his income
tax as Rs.3,42,437/-. The Deputy Commissioner Inland Revenue, however, detected
receipt of payments through bank cheques far beyond the declared amount,
running to the tune of Rs.56,12,36,365/- to set in motion through notice dated
24.9.2012, proceedings under sections 122(5)(9) and 111(1) of the Income Tax
Ordinance, 2001 (hereinafter referred to as "the Ordinance"),
considering the detection as definite information and pursuant to a show cause
notice determined tax liability vide order dated 18.2.2013 as under:
|
Income determined
under section 39 |
Rs.56,12,36,365/- |
|
Income Tax Payable @
25 % |
Rs.14,03,09,091/- |
|
Income Tax Deducted as
FTR as per Block A |
Rs.3,42,437/- |
Appeal filed by the respondent before the
Commissioner Inland Revenue (Appeals) Multan met with no better fate vide order
dated 18.3.2013, however, reversed by the Appellate Tribunal Inland Revenue
Lahore Bench Multan (Camp at Multan) vide order dated 16.05.2013, assailed by
the Department through Tax Reference No.26 of 2013. The High Court declined to
answer the reference in affirmative, vide impugned order dated 9.6.2016, on the
ground that in the absence of "any definite information" that too
without confrontation to the assessee involving a factual controversy, the
Department could not invoke the advisory jurisdiction.
2. Learned counsel for the petitioner contends
that the learned High Court failed to consider facts of the case in their
contextual backdrop that unambiguously constituted "definite
information" within the contemplation of section 122(5) of the Ordinance,
duly confirmed by documented transactions through banking channel, additionally
verified by no other than the recipient i.e. Messrs Shujabad Oil Mills Pvt.
Ltd. The impugned order being slipshod calls for interference, concluded the
learned counsel. Learned counsel for the respondent has, however, defended the
view taken by the Appellate Tribunal Inland Revenue, by maintaining that
refusal by the High Court to decline interference being well within the remit
of law did not admit space for a probe into factual controversy.
3. Heard. Record perused.
4. Definite information within the
contemplation of section 122(5) of the Ordinance contemplates an assessment in
respect of a relevant tax year by the Commissioner, upon satisfaction of the
conditions:
i. any income chargeable to tax has escaped
assessment; or
ii. total income has been under-assessed, or
assessed at too low a rate, or has been the subject of excessive relief or
refund; or
iii. any amount under a head of income has been
misclassified.
Position taken
by the department has a substance inasmuch as the respondent did not deny
payments, the modes thereof and product wise quantum of the purchases. Learned
counsel for the respondent failed to substantiate his contention qua business
activities with Messrs Shujabaad Oil Mills Private Limited in the light of
banking transactions. The department has rightly determined the income of the
respondent under section 39 of the Ordinance along with income tax chargeable
and penalty consequent thereupon under section 182(2) thereof. The learned High
Court failed to appreciate the law on the subject and passed the impugned order
in a slipshod manner; the same, therefore, cannot sustain; the orders passed by
the Commissioner Inland Revenue (Appeals) and the Deputy Commissioner Inland
Revenue being well within the remit of law are restored. Petition is converted
into appeal and same is allowed.
MWA/C-2/SC Petition
allowed.