Notice u/s 122(5A) must substantiated twin conditions "Erroneous" and "prejudicial"

Описание: In this video, we delve into the detailed judgment of the Appellate Tribunal Inland Revenue regarding the case of DS Pharma, Islamabad vs. CIR, LTO, Islamabad for the tax year 2014. The decision was delivered on 24th August 2023, addressing several critical points under Section 122(5A) of the Income Tax Ordinance2.

Issuance of Notice: The Additional Commissioner issued a notice under Section 122(5A) due to the non-provision of records by the taxpayer2.

Tax Imposition: Due to the absence of records, the Additional Commissioner imposed tax, which was contested by the taxpayer2.

Appeal to Commissioner: The taxpayer appealed to the Commissioner, who remanded the case back, a decision that was further appealed to the Appellate Tribunal3.

Tribunal's Decision: The Tribunal, comprising Mr. Mian Abdul Basit and Mr. Imran Latif Minhas, ruled that the Commissioner (Appeals) does not have the authority to remand the case back, as it leads to multiplicity of litigation, which is against the principles of natural justice3.

Scope of Section 122(5A): The Tribunal clarified that Section 122(5A) does not empower the Additional Commissioner to demand records, and any legal questions must be decided before addressing the merits of the case4.

Conditions for Notice: The notice must satisfy both conditions: "Erroneous insofar" and "prejudicial to the interest of revenue," which must be substantiated with solid evidence in the show-cause notice5.

Definition of Prejudicial Interest: The court held that "prejudicial to the interest of revenue" is not defined in the Income Tax law and should be interpreted according to its ordinary dictionary meaning6.

Correction of Mistakes: Section 122(5A) cannot be used to correct mistakes unless there is a proven loss of revenue7.

Prohibition of Fishing Inquiries: The Tribunal emphasized that fishing and roving inquiries are not permissible under Section 122(5A). If records are essential, the case should be opened under audit u/s 177 or with definite information u/s 122(1)8.

Redundancy of Sections: Accepting the demand for records under Section 122(5A) would render Sections 122(1) and 177 redundant, which is not permissible9.

Link to download the soft copy of judgment:
http://imranghazi.com/mtba/ShowArticl...

Keywords: DS Pharma, Appellate Tribunal, Section 122(5A), Tax Law, Islamabad, CIR, LTO, Tax Year 2014, Legal Decision, Fishing Inquiry

Tags: #DSPharma #TaxLaw #AppellateTribunal #Islamabad #Section1225A #TaxYear2014 #LegalDecision #TaxInquiry