KARACHI: The legal hitches, the delay in judicial system and inability of tax officials to charge the alleged tax evaders was exposed in an appeal decided by the Supreme Court of Pakistan here recently.
According to the facts ICI, respondent company filed its tax returns for the year 2001-02 and the assessment was finalized under Section 62 of the Income Tax Ordinance, 1979 (the Ordinance, 1979) by an order dated 29.05.2002. Two years later on 30.12.2004, the appellant department issued a notice under Section 122(5A) of the Income Tax Ordinance, 2001 (the Ordinance, 2001) to the respondent seeking to amend the assessment order dated 29.5.2002. The respondent replied to this subsequent notice on 8.3.2005. However the Department took no further action upon the notice dated 30.12.2004 which was subsequently withdrawn. Finally, on 07.05.2007, a notice under Section 122(5A) of the Ordinance, 2001 was issued by the Department stating therein that the date of demerger was not properly appreciated by the assessing officer , thus the assessment order passed on 29.05.2002 is erroneous and prejudicial to the interest of the Revenue. This notice was challenged by the respondents through Writ Petition No.1094/2007 and during the pendency thereof, an assessment order was passed pursuant to the notice dated 07.05.2007. This writ petition was allowed by the Division Bench of the learned High Court of Sindh on 30.05.2007 setting aside the notice dated 07.05.2007 and the assessment order passed pursuant thereto. Civil Appeal No.1598/2007 initiated by the Department was dismissed by this Court vide order dated 29.10.2009 by relying upon the judgment reported as Commissioner of Income Tax Vs. Eli Lilly Pakistan (Pvt) Ltd. (2009 SCMR 1279). There was a lull for a considerable period when on 20.06.2011 the Department issued another notice to the respondents under Section 66 read with Section 66-A of the Ordinance, 1979 intending to amend the notice dated 29.5.2002. Aggrieved of this notice, the respondent filed Constitutional Petition No.2302/2011 before the learned High Court of Sindh. The SHC bench came to the conclusion that the period of limitation provided under Sections 66 and 66-A of the Ordinance, 1979 is four years and that the notice issued by the petitioners on 20.06.2011 is beyond such period.
The Commissioner Inland Revenue, FBR challenged the said order of SHC before Supreme Court which recently deciding the 17 year old controversy ruled in favour of ICI upholding the order passed by the SHC being in accordance with law.