' This appeal has been filed by the Tehsil Municipal Administration Bhakkar against the impugned Order No,3815 dated 10-8-2010 for the tax year, 2009 passed by the CIR(A), Faisalabad.
2. The appellant being a withholding agent was obligated to deduct Income Tax under section 153(1)(c) of Income Tax Ordinance, 2001 from payments released to Citizen Community Boards
(CCBs) for development projects but failed to discharge its statutory responsibility. Show-cause notice was issued vide No,1093 dated 10-2-2010 but no compliance was made. Even no reply in response to reminder notice issued vide No,1183 dated 8-3-2010 was submitted. The appellant was treated as taxpayer in default for not discharging legal obligation to deduct and deposit tax into Government Treasury. An assessm ent order was passed by the concerned Tax Officer requiring the appellant to deposit Rs,65,71,361. The appellant filed an appeal before the CIR(A) Islamabad. During proceedings of the first appellate forum, Mr. Khurshid Ali Rana Advocate, A.R. Of the appellant pleaded that the 31CCBs in respect of which demand has been created under section 161 did not relate to TMA Bhakkar and payment to these CCBs was made by the Distt. Govt. (Zila Council, Bhakkar). TMA Bhakkar was, therefore, not liable to withhold tax and was wrongly treated as an assessee in default. The appellant's counsel also requested for condonation of the time bar sought vide letter No,495 dated 31-5-2010.
3. Mr. Ahmed Nadeem Shahid IRO represented the case on behalf of the Revenue and contended that the taxpayer did not furnish any reply/explanation during the proceedings under section 161 and the demand was rightly created. Besides, the appeal was time barred as demand notice along with order was served through Courier (UMS) on 3-4-2010 but appeal was filed on 2-6-2010.
Thus the appeal was not filed within 30 days from the date of receipt of demand notice/order.
4. The learned CIR(A) ordered as follows:-- "The explanation submitted, for condonation of delay in filing of appeal is not satisfactory, hence, not tenable. Therefore, the appeal is dismissed in limine being hit by time limitation."
5. Aggrieved by the Order-in-Appeal the appellant filed this appeal on the following grounds:-- "(a) That Tehsil Municipal Administration, Bhakkar is the major withholding Tax Agent of the income tax and previously the said Tehsil Municipal Administration has always discharged its obligations under the relevant law on the subject.
(b) That the officer Inland Revenue, Enforcement 21, Regional Tax Office Faisalabad has raised an illegal and unjustifiable demand against the Tehsil Municipal Administration Bhakkar vide Order dated 27-3-2010 attached herewith as Annexure A).
(c) An appeal was preferred against the said Order of the officer Inland Revenue, Enforcement 21, Regional Tax Office Faisalabad, however the Commissioner Inland Revenue dismissed the same on account of limitation. The Order dated 10-8-2010 passed by the Commissioner Inland Revenue speaks volumes of hollowness as same has not been decided on merits of the case. (Copy of Grounds of Appeal and Copy of order dated 10-8-2010 passed by the Commissioner Income Tax Appeal are appended herewith as Annexure B & B/1).
(d) That the officer Inland Revenue, Enforcement 21, Regional Tax Office ' Faisalabad has raised a demand amounting to RKR.6,571,361, on account of withholding tax to be recovered from 31 Citizen Community Boards registered with District Government Bhakkar, against Tehsil Municipal Administration Bhakkar.
(e) It is necessary to state here that the District Government Bhakkar and Tehsil Municipal Administration Bhakkar are two different entities constituted under two different provisions of the Punjab Local Government Ordinance, 2001 i,e, section 13 and section 49 respectively. Further it is also stated that both said entities are maintaining their accounts separately under the provisions of section 114 of the Ordinance of 2001.
(f) That basis upon which the demand has been raised is the letter dated 6-1-2010, bearing reference No,E.D.O/BKR/764/2010, written by the Executive District Officer, District Government, Bhakkar (Letter dated 6-1-2010, bearing reference No,E.D.O/BKR/764/2010 attached herewith as Annexure-C), wherein the said official provided information to the officer Inland Revenue, Enforcement 21, Regional Tax Office Faisalabad, regarding 31 Citizen Community Boards to whom funds have been allocated by the District Government but the said Government failed to deduct/recover withholding tax. That officer Inland Revenue, Enforcement 21, Regional Tax Office Faisalabad instead of seeking an explanation from the concerned EDO in this regard, raised an irrational demand of Rs,6,571,361 against TMA BHAKAR for non-deduction of withholding tax on account of 31 CCBs to whom funds have been released by the District Government. It is pertinent to mention here that the list mentioned in the Order dated 27-3-2010 as passed by the officer Inland Revenue, Enforcement 21, Regional Tax Office Faisalabad pertains to District Government and not to TMA Bhakkar. It is also necessary to point out that there are numerous CCBs mentioned in the said Order which falls outside the territorial jurisdiction of the Tehsil Municipal Administration Bhakkar.
The such ignorance at the end of officer Inland Revenue, Enforcement 21, Regional Tax Office Faisalabad, renders the order dated 27-3-2010, illegal and against the provisions of law on the subject, therefore liable to be set aside.
(g) That the appellant prays for permission to make other such submission, add any grounds of Appeal and adduce evidence at the bar as may be necessary".
6. Hearing of the case was held on 3-12-2010. Mr. Khurshid Ali Rana, on behalf of the appellant and Mr. Zia Ullah for the respondent argued their respective positions. The only issue involved in this case is whether certain payments were made by the TMA, Bhakkar to CCBs without deduction of withholding tax. It is inconvertible that the withholding tax on payments made to CCBs was not deducted by the appellant and thus it is well established that the appellant violated the provisions of section 153(1) of the Income Tax Ordinance, 2001. The appellant's second argument was that the demand should have been enforced against the E.D.O, District Government Bhakkar rather than the T.M.A. Bhakkar. We have considered this reasoning of the appellant and our view is that in the aftermath of dissolution of the elected Tehsil Administration, the Tehsils in Punjab are no longer separate administrative and financial entities. A T.M.A. Headed by an Administrator appointed by the provincial government is pretty much part of the district administration and functions under the administrative control of the DCO. Any tax liability is, therefore, an internal affair of the district administration of which TMA is a component. In the present day the district as well as the TMA receive their respective financial allocations or funding directly from the provincial government, hence de novo initiation of the process of recovery of withholding tax from the E.D.O. Will be meaningless. In any case, the counsel for the appellant could not produce any evidence that the CCBs in question were registered with the district government. At one stage the counsel for the appellant even said that the recovery of the withholding tax has already been effected from the T.M.A Bhakkar So, we find that this appeal is in sequential even on merit. Even otherwise learned CIR(A) has rightly dismissed the appeal being beyond the clock because no plausible reason for condonation of delay was furnished by the taxpayer. Therefore, we do not consider it necessary to interfere with the Order-in-appeal decided on the question of law involving limitation of time. In light of the foregoing, we affirm the order of the CIR(A).