M/S Gold Roof (Pvt) Ltd. Islamabad | Appellant | |
Vs | ||
The Commissioner Inland Revenue, RTO, Islamabad | Respondent | |
Appellant by | Mr. Allah Ditta, ACMA | |
Respondent by | Ms. Naheed Akhtar Durrani, DR | |
Date of hearing | 09.05.2019 | |
Date of order | 09.05.2019 |
O R D E R
M. M. AKRAM (Judicial Member): This appeal has been filed by the appellant/taxpayer against the order-in-Appeal No.774/2018 dated 09.05.2018 passed by the learned Commissioner Inland Revenue (Appeals-II), Islamabad for the Tax Year 2016 on the grounds as set forth in the memo of appeal.
2. Brief facts of the case are that the appellant is liable to deduct tax at the time of making payments under provisions of the Income Tax Ordinance, 2001 (“the Ordinance”). The appellant has not fully discharged its legal duty of withholding agent while making payments. The appellant was confronted with certain anomalies through notices asking for various details/documents liability and after considering the reply, the Assessing Officer passed the order against the appellant creating thereby a tax demand of Rs.13,072,647/- for the tax year 2016. The appellant preferred the appeal before the learned CIR(A) who vide order dated 09.05.2018 rejected the appeal of the appellant by passing a non-speaking order, without adjudicating upon the grounds of appeal duly incorporated in the impugned order. Being aggrieved, the appellant has now come up before this forum and has assailed the impugned order on a number of grounds.
3. The learned counsel appearing on behalf of the appellant/taxpayer has mainly focused on the issue regarding denial of an adequate opportunity of being heard by the appellant. He has appraised the court that before passing impugned orders, the notices issued by the Assessing Officer were never served on the taxpayer. He has stressed that if the taxpayer would have been afforded an adequate opportunity of being heard by way of proper services of notices, he could plead his case better being in possession of complete documentary evidence to satisfy the revenue authorities.
4. On the other hand, the learned DR appearing on behalf of the department has fully supported the impugned order on the issue regarding the opportunity of being heard. He has contended that prior to the passing of the impugned order, four notices issued on different dated i.e, on 12.10.2017, 25.10.2017, 14.11.2017, and 11.12.2017 were properly served not only through electronic mail but also sent through UMS on the taxpayer, which justifies that the taxpayer of the case in hand was not condemned unheard but he failed to substantiate his stance with documentary evidence.
5. Arguments heard and relevant record available on file
carefully perused. The careful perusal of the impugned order reveals that first
notice under section 161(1A) of the Ordinance read with Rule 44(4) of the
Income Tax Rules, 2002 was issued on 12-10-2017 for compliance by 19-10-2017
followed by subsequent reminders dated 25-10-2017, 14-11-2017 and 11-12-2017,
which lead us to conclude that all the notices have been issued with a short
span of time providing the very limited opportunity of being heard to the
taxpayer, which is contrary to the spirit of the law. The well-renowned
principle of ‘Audi alteram partem i.e.
nobody should be condemned unheard’ as held by the Apex Court of Pakistan
in a number of judgments (including the well-known case of ‘Mirza Aslam Beg and another
vs Saghir Iqbal’ (PLD 1988
SC 24) and the honourable Peshawar
High court judgment reported as 2014 PTD 1959 holds that the
maxim audi alteram partem should be deemed to be part of every statue [2009 PTD 37 (S.C. Pak)] by express
words or by necessary implication in the statute, applicable to both the
judicial and non-judicial proceedings. It has
also held in a number of judicial pronouncements that expeditious disposal of
cases are appreciable but it should not happen at the expense of justice. Care
must be taken to afford the proper opportunity and should not give any
impression of undue haste or rush up such disposal will be at the expense of
the fair name of justice. Reference
in this behalf may be made on the judgment of Hon’ble Supreme Court of Pakistan
reported as 1994 SCMR 2232
wherein it has been laid down as under:
“It is a well-settled principle of natural justice that no court should adjudicate upon a right of the party who was not before it or to whom no notice was given and thus an ex parte order will be no order in eyes of law. Maxim of “audi alteram partem” i.e. no one should be condemned unheard is a universally established principle of natural justice which is applicable to both judicial and non-judicial proceedings.” (emphasis is provided)
In another case reported as 2009 PTD 1507, the Hon’ble Lahore High Court while deciding the similar controversy, held that:
“An adverse order made without affording an opportunity of personal hearing is to be treated as a void order. It is because of this reason that the Hon’able Supreme Court of Pakistan has always laid its utmost stress on strict observance of norms of natural justice in general and the principles of audi alteram partem in particular. These principles are to be read into every statute.” (emphasis is provided)
In the context of ‘opportunity of being heard’ reliance may
also be placed on a reported judgment 1999
PTD 1358 by the Karachi High Court, wherein it has been held that:
“The phrase ”Opportunity of being heard” would, therefore, means that the party concerned should be allowed to present his point of view, explanation, clarification, and arguments by spoken words which should be heard by the learned ACIR passing the order. An explanation given in writing which is perceived by the sense seated in the eye generally has not been considered sufficient. Experience has shown that many doubts, complaints, and misunderstandings between parties are cleared, resolved, and removed when they meet face to face and communicate by word of mouth. Appearance in person and explanation by word of mouth, therefore, is placed on a higher footing both in daily life and in judicial and administrative proceedings where the rights of parties are involved. Therefore, it is not the written explanation or the answer submitted to the show-cause notice but the expression of spoken words of the person concerned which have been emphasized by the Legislature in the relevant provisions relating to Appeals in the Sales Tax Act. Consequently, an Officer before passing an order which would adversely affect the rights of parties should hear that person's explanation, clarification, and arguments in his defense submitted by him personally or through his counsel or his duly authorized agent. If such a hearing is not given to the person concerned, the order would be in violation of not only the principles of natural justice but also of the statutory requirements and consequently would be invalid.” (emphasis is provided)
6. Further we have observed that three opportunities of 15 days each have not been provided as required in Circular C. No. 7(36) DT-14/92 dated 01.02.1994 issued by the Central (now Federal) Board of Revenue [‘FBR’] under the repealed Income Tax Ordinance, 1979, saved in terms of section 239(10) of the current Income Tax Ordinance, 2001 and is binding on all FBR officials under section 206 of the Ordinance. Through the aforesaid circular, directions were issued for initiating proceedings and allowing proper time for compliance before concluding assessments as reproduced below:
(i) It has been decided that the following procedures should be followed in an assessment proceedings:-
a) The
first notice of hearing should specify the details and information and the
account books that are required to be produced by the assessee. A clear period
of 15 days may be given for compliance. The notice may conspicuously indicate
that this is FIRST CALL;
b) Only those details documents, books of account, and information should be requisitioned which are necessary for making an assessment, unnecessary details which are generally not examined or utilized in assessment may not be requisitioned.
c) Fifteen clear days period be allowed for compliance.
(ii)
if the requisitioned
details/documents books are not complete, the order sheet entries should
indicate the details produced and the time given for production of remaining
details documents or books, etc. It may be emphasized that the order sheet is
intended to be a complete record of the proceedings, including discussions and
conclusions if any drawn so far.
(iii)
if the taxpayer does not
appear on the given date or the detail furnished are lacking in any respect, a
second notice may be issued specifying the remaining details/documents still required.
The notice should conspicuously indicate that it is a SECOND NOTICE.
(iv)
if the second notice is not
complied with, a third notice may be issued with the approval of IAC/CIT and
should be clearly marked ‘FINAL CALL’;
(v) Once the details have been furnished the assessee may not be called upon to appear more than twice and the case may be finalized accordingly……..” (emphasis is provided)
In view of the above clear directions (three opportunities of clear 15 days before
making assessment) issued by the FBR which has not been followed in letter
and spirit by the learned Assessing Officer in the impugned order, the
treatment adopted in the impugned order is a clear violation of the FBR
directions and therefore, not tenable under the law. Reliance may also be
placed on a reported judgment of the Honourable Lahore High Court in PTCL 2013 CL 124=2012 PTD 964. The
extract of the judgment, being relevant, is reproduced below:
“At the outset, it is pertinent to notice that the C.B.R. Circular No.7(2) dated 1-2-1994 manifests that three opportunities of clear 15 days should be offered to the assessee before making estimation/assessment. In the instant case, the Assessing Officer issued the first notice to the respondent on 14-4-2010 allegedly served on 17-4-2010 with a date of compliance i.e.22-4-2010 whereas the second notice was issued on 24-5-2010 allegedly served on 26-5-2010 with a date of compliance i.e. 31-5-2010. It is crystal clear that in both the notices only five day’s time (each) was provided to the respondent-assessee to make the explanation/reply violative to the CBR Circular cited above. Therefore amended assessment order passed on 31-5-2010 was obviously made without providing a reasonable opportunity of explaining the position and thus the same was not tenable in law.” (emphasis is provided)
7. Keeping in view of the above-settled law, affording sufficient opportunity of being heard is the legitimate right of the taxpayer, which cannot be denied at all. Even if, we presume that all the notices issued by the Assessing Officer were properly served on the taxpayer then too, such like attitude on behalf of the revenue authorities cannot be endorsed by us. We are of the opinion that against issued of any notice, there should be sufficient time available with the taxpayer for compliance of the same. In view of the foregoing discussion, since, the taxpayer of the instant case has been denied the adequate opportunity of being heard, therefore, we set aside the orders passed by both authorities and remand the case to the Assessing Officer for de-novo proceedings with the direction to finalize orders in accordance with law after affording sufficient opportunity of being heard to the taxpayer. The taxpayer is also directed to avail this further opportunity by way of making sure his presence during assessment proceedings along with complete documentary evidence possessed by him. We order accordingly.
8. Appeal is disposed of in the above terms. This order
consists of (05) pages and each page bears my signature.
Sd/-
(M. M. AKRAM)
JUDICIAL MEMBER
Sd/-
(NADIR
MUMTAZ WARRAICH)
ACCOUNTANT MEMBER
CERTIFICATE
U/S 5 OF THE LAW REPORT ACT
This case
is fit for reporting as it settles the principles highlighted above.
Sd/-
(M. M. AKRAM)
JUDICIAL MEMBER
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