| Case ID |
7355ad5b-43f4-4ed3-883a-8230d1f9d8b6 |
| Body |
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| Case Number |
ITA No. 756/LB/2009 (Tax year-2003), ITA No. 757/L |
| Decision Date |
Apr 30, 2010 |
| Hearing Date |
Mar 24, 2010 |
| Decision |
The Appellate Tribunal held that the term 'discovery' in the context of the Income Tax Ordinance, specifically section 111(2), refers to the moment when the taxpayer is confronted with information and fails to provide a satisfactory explanation. The Tribunal analyzed the definition of 'discovery' based on various judicial interpretations and dictionary meanings. It concluded that until the Taxation Officer has sought an explanation from the taxpayer regarding the unexplained income or assets, no valid 'discovery' can be said to have occurred. In this case, the Tribunal found that the discovery took place on 27-09-2008, when the taxpayer provided an explanation in response to a notice. Therefore, the Tribunal ruled that any additions to income should have been made in the tax year 2008, not 2007, as the latter does not align with the legal requirements of the Ordinance. |
| Summary |
This case revolves around the interpretation of the term 'discovery' as used in the Income Tax Ordinance, specifically section 111(2). The Appellate Tribunal Inland Revenue in Lahore addressed the conflicting judgments regarding the timing and meaning of 'discovery' in the context of tax assessments. The case involved Pak Kuwait Textile Ltd. and the Taxation Officer Audit-04, LTU. The Tribunal emphasized that 'discovery' occurs when the taxpayer is formally confronted with evidence and fails to satisfactorily explain it. The Tribunal's decision highlighted the importance of due process in tax assessments, ensuring that taxpayers are given a fair chance to respond to inquiries about their income and assets. The final decision clarified that the additions to the taxpayer's income must reflect the tax year immediately preceding the financial year in which the discovery was made, thereby ruling against the Taxation Officer's earlier decision that included the additions in the wrong tax year. |
| Court |
Appellate Tribunal Inland Revenue, Lahore
|
| Entities Involved |
|
| Judges |
Syed Nadeem Saqlain,
Shahid Jamil Khan (Judicial Member),
Abdul Rauf (Accountant Member)
|
| Lawyers |
Mr. Javed Iqbal Khan FCA,
Raja Sikandar Khan (L.A.)
|
| Petitioners |
Pak Kuwait Textile Ltd., Lahore
|
| Respondents |
The Taxation Officer Audit-04, LTU., Lahore
|
| Citations |
2010 SLD 150
|
| Other Citations |
2006 PTD (Trib) 2662,
2009 100 TAX 155 (H.C. Lah.),
2009 100 TAX 199 (H.C. Kar.)
|
| Laws Involved |
Income Tax Ordinance, 2001,
Income Tax Ordinance, 1979
|
| Sections |
2,
111(1),
111(1)(a),
111(1)(b),
111(1)(c),
111(2),
111(3),
111(4),
122,
122(2),
237,
13(1)
|