| Case ID |
17771f44-9576-4170-8f53-d334a32e5fbc |
| Body |
View case body. Login to View |
| Case Number |
I.T.A. No.653/LB of 2007 |
| Decision Date |
Apr 04, 2008 |
| Hearing Date |
|
| Decision |
The Income Tax Appellate Tribunal cancels the amended order impugned for the tax year 2004 and restores the original order. The tribunal found that the Assessing Officer did not provide solid reasons for deviating from past practices in prorating expenses, and that the actions of the Revenue were illegal under section 122(5A) of the Income Tax Ordinance, 2001. The tribunal upheld the arguments presented by the appellant, emphasizing the need for expenses to be prorated on a reasonable basis considering the relative nature and size of activities. Additionally, the tribunal determined that the show-cause notices issued were merely requesting evidence and not within the jurisdiction of the amending authority, rendering them ab initio illegal. |
| Summary |
In the 2008 Income Tax Appellate Tribunal case, I.T.A. No.653/LB of 2007, the Tribunal addressed key issues relating to the prorating of expenses under the Income Tax Ordinance, 2001 and the 1979 Ordinance. The appellant, a manufacturer and exporter of textiles, challenged the Assessing Officer's decision to deviate from previous expense proration methods without providing solid justification. The Tribunal found that the Assessing Officer lacked proper reasoning for altering the established expense allocation pattern, which was reasonably based on the relative nature and size of the business activities. Furthermore, the Tribunal ruled that the show-cause notices issued by the Revenue represented mere evidence requests rather than legitimate inquiries under section 122(5A), thereby exceeding the authority granted to the amending body. Citing case law such as the 1999 PTD (Trib.) 285 decision, the Tribunal concluded that the Revenue's actions were illegal from the outset. Consequently, the Tribunal canceled the amended order for the 2004 tax year, restoring the original assessment. This decision underscores the necessity for tax authorities to maintain consistency in expense allocation and adhere strictly to their jurisdictional powers when issuing notices, ensuring fair and lawful tax assessments. |
| Court |
Income Tax Appellate Tribunal
|
| Entities Involved |
Not available
|
| Judges |
NASEER AHMAD,
EHSAN UR REHMAN
|
| Lawyers |
Farooq Ejaz,
Sardar Masood Raza Qazlibash
|
| Petitioners |
Not available
|
| Respondents |
Not available
|
| Citations |
2008 SLD 199,
2008 PTD 1491
|
| Other Citations |
1999 PTD (Trib.) 285
|
| Laws Involved |
Income Tax Ordinance, 2001,
Income Tax Ordinance, 1979
|
| Sections |
122,
122(5A),
66A
|