Benefits to taxpayers must not be withheld: SC

Top court says time and resources should not be needlessly wasted

ISLAMABAD:

The top court has told the Federal Board of Revenue (FBR) that if any benefit accrues to taxpayers under the law, it must not be withheld.

“Income Tax Department, which is now the Federal Board of Revenue, must act fairly in dealing with taxpayers and to abide by the law governing it,” read a two-page order authored by Justice Qazi Faez Isa while hearing an appeal filed by the FBR against Sindh High Court’s judgment.

“If any benefit accrues to taxpayers under the law, it must not be withheld and the assessee’s and its own time and resources should not be needlessly wasted. This frivolous litigation also wasted the time of the tribunal, the high court and of this court; time which would have been better spent in resolving legitimate disputes,” it added.

 The bench had directed the FBR to file a show cause notice, through which the whole process was re-initiated. The show cause notice, dated May 23, 2011, had been filed which showed that it was issued under section 66A read with section 66 of the Income Tax Ordinance, 1979 for the assessment year 97-9.

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The two questions framed by the department for consideration of the high court in the income tax reference as  to whether or not under the facts and circumstances of the case, the tribunal was justified to hold that order under section 66-A of the repealed Income Tax Ordinance, 1979, was barred by time limit.

Likewise, it was also questioned as whether or not under the facts and circumstances of the case, the tribunal was justified to decide the appeal against the department in the context of case law.

The SC order read that the department had relied upon section 66-A of the Income Tax Ordinance before the SHC.

Under Section 66-A, a notice can only be issued 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.

“Therefore, we inquired when was the order passed by the deputy commissioner and were told that it was passed on 16 March 1998,” the order read.

The court noted that the show cause notice dated May 23, 2011, was issued more than 13 years after the order and as such was time-barred as it was well beyond the prescribed period of four years. A reference was then made to a notice dated June 12, 2013.

“Leaving aside the relevancy of this notice we note that it too was issued after four years. 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 twenty thousand rupees.”