20-03-2026, 01:42 PM
Head Notes:
2023 S C M R 534
[Supreme Court of Pakistan]
Present: Ijaz ul Ahsan, Munib Akhtar and Sayyed Mazahar Ali Akbar Naqvi,JJ
COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAXOFFICE,(RTO) LAHORE---Petitioner
Versus
MIAN LIAQAT ALI PROPRIETOR, LIAQAT HOSPITAL,Respondent
Civil Petitions Nos. 648-L, 649-L and 650-L of 2021, decided on 31st May, 2022.(Against order dated 26.01.2021 passed by the Lahore High Court, Lahore in I.T.Rs. Nos. 4919, 4922 and 4923 of 2021)
(a) Income Tax Ordinance (XLIX of 2001)-------Ss. 111(1)(d) & 122(5)---Concealment of business income from sales---Amendment of deemed assessment order---Words "chargeable to tax" as used at the end of sub-clause (i) of section 111(1)(d) of the Income Tax Ordinance, 2001 ['the sub-clause (i)']---Said words applied to the whole of the sub-clause (i), i.e., also to the suppressed production and/or sales---If "any amount" can be brought within the scope of sub-clause (i) only if, and to the extent, that it is "chargeable to tax" (i.e., constitutes "income" properly so called), then production and sales must be given the same treatment---Thus, it is only production or sales chargeable to tax that can be brought within the ambit of clause (d) to section 111(1) of the Ordinance---Both under section 122(5) and section 111(1)(d) of the Ordinance, the taxpayer is exposed to the same tax liability in respect of the income that has escaped assessment, or been suppressed, i.e., he is liable to tax on the "net" amount, or "income" properly so called---Appeals were dismissed. Waris Meah v. The State and another PLD 1958 SC 157 and Jibendra Kishore Achharya Chowdhury v. Province of East Pakistan PLD 1957 SC 9 ref.
(b) Income Tax Ordinance (XLIX of 2001)-------Ss. 111(1)(d) & 122(5)---Concealment of business income from sales---Amendment of deemed assessment order---Words "chargeable to tax" as used at the end of sub-clause (i) of section 111(1)(d) of the Income Tax Ordinance, 2001 ['the sub-clause (i)']---Said words applied to the whole of the sub-clause (i), i.e., also to the suppressed production and/or sales---Directions given by the Supreme Court to the Federal Board of Revenue to align sections 122(5) & 111(1)(d) of the Income Tax Ordinance, 2001 closely with the principles laid down in the case reported as Waris Meah v. The State and another PLD 1958 SC 157 stated. In order to further align sections 122(5) and 111(1)(d) of the Income Tax Ordinance, 2001 closely with the principles laid down in the case reported as Waris Meah v. The State and another PLD 1958 SC 157, Supreme Court directed that the Federal Board of Revenue (FBR), in exercise of its powers under the Income Tax Ordinance, 2001 ('the Ordinance') (whether under section 206 and/or section 237 or any other enabling provision), shall forthwith issue appropriate guidance and provide the necessary yardstick, measure, guidelines and standard to the tax authorities, consistent with the present judgment, inter alia as to when and how, and in which circumstances and against what taxpayers, action can be initiated under the first clause of section 122(5) on the one hand, or the two sub-clauses of clause (d) of section 111(1) of the Ordinance on the other; that in issuing such guidelines, the FBR must take into account, and appropriately incorporate therein, the following points:
(i) If the tax authorities intend to take action against a person within the time period permissible under section 122, then such action must ordinarily be taken in terms of subsection (5) (or any other applicable subsection, as the case may be) thereof and in a manner compliant therewith, rather than under section 111(1)(d). If at all during the said period the designated Officer of Inland Revenue (OIR) nonetheless intends to proceed under the latter provision then clear reasons must be given why this is being done. In respect of such reasons to be given, the onus will lie on the tax authorities to justify such action and the threshold will be a high one. Furthermore, the reasons will be subject to judicial scrutiny in terms, inter alia, of the hierarchy of remedies provided by and under the Ordinance.
(ii) If the tax authorities intend to take action under section 111(1)(d) against a person beyond or after the time period stipulated under section 122, and the taxpayer shows that the information on which such action is based was, or ought reasonably to be regarded either as being or such as could have been, in the knowledge of the tax authorities within the said time period, then the tax authorities will have to give reasons as to why action was not taken under section 122 --- The reasons to be given by the OIR if the taxpayer meets the initial burden cast upon him will be subject to judicial scrutiny in terms, inter alia, of the hierarchy of remedies provided by and under the Ordinance.
2023 S C M R 534
[Supreme Court of Pakistan]
Present: Ijaz ul Ahsan, Munib Akhtar and Sayyed Mazahar Ali Akbar Naqvi,JJ
COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAXOFFICE,(RTO) LAHORE---Petitioner
Versus
MIAN LIAQAT ALI PROPRIETOR, LIAQAT HOSPITAL,Respondent
Civil Petitions Nos. 648-L, 649-L and 650-L of 2021, decided on 31st May, 2022.(Against order dated 26.01.2021 passed by the Lahore High Court, Lahore in I.T.Rs. Nos. 4919, 4922 and 4923 of 2021)
(a) Income Tax Ordinance (XLIX of 2001)-------Ss. 111(1)(d) & 122(5)---Concealment of business income from sales---Amendment of deemed assessment order---Words "chargeable to tax" as used at the end of sub-clause (i) of section 111(1)(d) of the Income Tax Ordinance, 2001 ['the sub-clause (i)']---Said words applied to the whole of the sub-clause (i), i.e., also to the suppressed production and/or sales---If "any amount" can be brought within the scope of sub-clause (i) only if, and to the extent, that it is "chargeable to tax" (i.e., constitutes "income" properly so called), then production and sales must be given the same treatment---Thus, it is only production or sales chargeable to tax that can be brought within the ambit of clause (d) to section 111(1) of the Ordinance---Both under section 122(5) and section 111(1)(d) of the Ordinance, the taxpayer is exposed to the same tax liability in respect of the income that has escaped assessment, or been suppressed, i.e., he is liable to tax on the "net" amount, or "income" properly so called---Appeals were dismissed. Waris Meah v. The State and another PLD 1958 SC 157 and Jibendra Kishore Achharya Chowdhury v. Province of East Pakistan PLD 1957 SC 9 ref.
(b) Income Tax Ordinance (XLIX of 2001)-------Ss. 111(1)(d) & 122(5)---Concealment of business income from sales---Amendment of deemed assessment order---Words "chargeable to tax" as used at the end of sub-clause (i) of section 111(1)(d) of the Income Tax Ordinance, 2001 ['the sub-clause (i)']---Said words applied to the whole of the sub-clause (i), i.e., also to the suppressed production and/or sales---Directions given by the Supreme Court to the Federal Board of Revenue to align sections 122(5) & 111(1)(d) of the Income Tax Ordinance, 2001 closely with the principles laid down in the case reported as Waris Meah v. The State and another PLD 1958 SC 157 stated. In order to further align sections 122(5) and 111(1)(d) of the Income Tax Ordinance, 2001 closely with the principles laid down in the case reported as Waris Meah v. The State and another PLD 1958 SC 157, Supreme Court directed that the Federal Board of Revenue (FBR), in exercise of its powers under the Income Tax Ordinance, 2001 ('the Ordinance') (whether under section 206 and/or section 237 or any other enabling provision), shall forthwith issue appropriate guidance and provide the necessary yardstick, measure, guidelines and standard to the tax authorities, consistent with the present judgment, inter alia as to when and how, and in which circumstances and against what taxpayers, action can be initiated under the first clause of section 122(5) on the one hand, or the two sub-clauses of clause (d) of section 111(1) of the Ordinance on the other; that in issuing such guidelines, the FBR must take into account, and appropriately incorporate therein, the following points:
(i) If the tax authorities intend to take action against a person within the time period permissible under section 122, then such action must ordinarily be taken in terms of subsection (5) (or any other applicable subsection, as the case may be) thereof and in a manner compliant therewith, rather than under section 111(1)(d). If at all during the said period the designated Officer of Inland Revenue (OIR) nonetheless intends to proceed under the latter provision then clear reasons must be given why this is being done. In respect of such reasons to be given, the onus will lie on the tax authorities to justify such action and the threshold will be a high one. Furthermore, the reasons will be subject to judicial scrutiny in terms, inter alia, of the hierarchy of remedies provided by and under the Ordinance.
(ii) If the tax authorities intend to take action under section 111(1)(d) against a person beyond or after the time period stipulated under section 122, and the taxpayer shows that the information on which such action is based was, or ought reasonably to be regarded either as being or such as could have been, in the knowledge of the tax authorities within the said time period, then the tax authorities will have to give reasons as to why action was not taken under section 122 --- The reasons to be given by the OIR if the taxpayer meets the initial burden cast upon him will be subject to judicial scrutiny in terms, inter alia, of the hierarchy of remedies provided by and under the Ordinance.