ORDER SHEET

IN THE HIGH COURT OF SINDH AT KARACHI

Present: Mr. Justice Aqeel Ahmed Abbasi

Mr. Justice Aziz-ur-Rehman, JJ

I.T.R.A. No.146 of 2012

___________________________________________________________ Date Order with signature of Judge

___________________________________________________________

Hearing of Case:

For hearing of main case.

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09-08-2017

Mr. Muhammad Aqeel Qureshi, Advocate for Applicant.

Ms. Lubna Pervez, Advocate for Respondent.

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AQEEL AHMED ABBASI, J : -- Through instant reference application, the applicant has proposed the following question, which according to the learned counsel, is a question of law arising from the impugned order dated 06.05.2012 passed by the Appellate Tribunal Inland Revenue (Pakistan) Karachi in ITA No.934/KB/2011 (Tax Year 2007): -

“Whether on facts and in the circumstances of the case, the Hon’able Appellate Tribunal Inland Revenue was justified in law to uphold annulment of amended assessment u/s 122(1)(5) of the Income Tax Ordinance 2001 by treating, definite information from the Directorate of Intelligence, FBR as ` interpretation of law, guess work, gossip or estimate, whereas taxpayer had admitted bogus purchases evaded by voluntarily paying the amount of sales tax involved?”

Before the learned counsel for the applicant could refer to the impugned order passed by the Appellate Tribunal in respect of the aforesaid question of law, learned counsel for the respondent, at the very outset, has placed on record a copy of order dated 25.7.2016 passed by the Division Bench of this Court in ITRA No.176 of 2012 in respect of the case of present respondent for the Tax Year 2008 and submits that the controversy agitated through the instant reference application and the question proposed therein has already been decided and answered by the Division Bench of this Court in the aforesaid Reference Application in the case of present respondent for the Tax Year 2008, whereas, according to the learned counsel, the information, which has been treated as a `definite information` by the department for the Tax Year 2007, is similar, which constituted the basis of reopening of the case of respondent for the Tax Year 2008.

According to the learned counsel for respondent, since this Court in the aforementioned reference application has already held that the information available with the department was not `definite information` within the meaning of Section 122(5) of the Income Tax Ordinance, 2001, therefore, the instant reference application may also be disposed of in terms of the order passed by this Court in the aforesaid reference in the case of present respondent.

Learned counsel for the applicant, after perusal of the aforesaid order passed by the Division Bench of this Court, does not controvert such factual and legal position, which has emerged in the instant reference application and submits that instant reference application may also be disposed of in the similar terms.

We have heard the learned counsel for the parties, perused the record with their assistance and have also examined the decision of the learned Division Bench of this Court in the aforesaid reference application.

It appears that subject controversy, which has been agitated through the instant reference application and the question proposed therein, are identical to the question as proposed in ITRA No.176/2012, wherein the Division Bench of this Court has been pleased to decide the same in the following terms: -

“9. To sum up, there can be two situations. Firstly, it could be that at the time of initiation of the amendment proceedings, there is only a bare allegation against the taxpayer in terms of the other fiscal statute. That is not enough. It is only an actual finding or determination made under the other fiscal statute in accordance with the terms thereof that can constitute “definite information” within the meaning of s. 122(5). Of course, such finding or determination must otherwise come within the scope of the definition in subsection (8). A bare allegation cannot constitute “definite information”. The initiation of proceedings in terms of s. 122(5) on such basis would be bad in law, and any notice issued or amendment of the assessment would be liable to be set aside. Furthermore, in such circumstances it would be irrelevant if after the amendment proceedings have been launched on such basis and/or are still pending (at whatever level) there is a finding or determination under the other fiscal statute. Such subsequent finding or determination will not cure or remedy the initial lacuna and illegality. Secondly, if there is a finding or determination under the other fiscal statute, then it can be used as “definite information” even if the taxpayer has an appeal or other proceeding pending against the finding or determination. (It is again emphasized that such finding or determination must otherwise come within the scope of the definition in subsection (8). But if subsequent to the initiation of the amendment proceedings and/or during the pendency thereof (at whatever level), the taxpayer wins in appeal or other proceedings at any subsequent stage under the other fiscal statute, then there will be no finding or determination in law against him, and hence no “definite information” within the meaning or for the purposes of s. 122(5) or (8). It will be irrelevant that the Department may have an appeal or other proceedings pending against the decision that has gone in favor of the taxpayer. In other words, at any given time, the crucial question is the statute of the order, finding or determination actually in the field in terms of the other fiscal statute.

10. In the present case, it will be seen that the Department’s case fails on both counts. The amendment proceedings were initiated by the Deputy Commissioner on the basis of a bare allegation under the 1990 Act and before there was a finding or determination in terms thereof. That was in itself sufficient to vitiate the amendment proceedings. But even otherwise, the respondent won its appeal against the order in original and therefore in terms of the 1990 Act the operative order in the field was in favor of the taxpayer. On either basis therefore, there neither was nor is any “definite information” within the meaning of s. 122.

11. In light of the foregoing discussion, Question No.1 is answered against the Applicant Department and in favor of the respondent. Since the second question was not pressed, it need not be considered. Accordingly, the reference application fails and is hereby dismissed.”

Accordingly, instant reference application is also disposed of in the aforesaid terms.

J U D G E

Farhan/PS