' Through the titled appeal pertaining to Tax Year 2009, the department has assailed the impugned order dated 15-8-2012 passed by the learned Commissioner Inland Revenue (Appeals), Gujranwala.
2. Precisely the relevant facts leading for disposal of the instant appeal are that the respondent is an AOP, deriving income from running a Steel Furnace whose annual turnover for the year under consideration exceeds 50(M). Through Finance Amendment Act, 2008 AOPs having turnover of Fifty Million rupees or above in tax year 2007 and onward falls in the definition of "Prescribed Person". The taxpayer being a withholding agent was obliged to deduct Income tax and deposit into government exchequer as required under section 153(1)(a) of the Income Tax Ordinance, 2001 which it failed to do so. The assessing authority issued different letters requiring the taxpayer to provide party-wise details and evidence of tax deduction on raw material purchased locally during the period relevant to tax year 2009. In reply the taxpayer contended that business for the year under consideration was conducted in Individual capacity as such provisions of section 153(7) do not attract to the said taxpayer. In support of his contention the taxpayer submitted certain documents. The explanation of the taxpayer was found unsatisfactory. Finally the taxpayer was treated as taxpayer in default for non-deduction of tax under section 153 of the Income Tax Ordinance, 2001 and total tax under sections 161/205 of Income Tax Ordinance, 2001, was charged at Rs,20,985,404. Being aggrieved, the taxpayer went in appeal before the CIR (Appeals), who vide order dated 15-8-2012, annulled the order under sections 161/205 of the Income Tax Ordinance, 2001 passed by IRO.
3. The learned DR has submitted her arguments as per grounds of appeal. She contended that the order of the Commissioner Inland Revenue (Appeals), Gujranwala is bad in law and contrary to the facts of the case and he is not justified in holding that status of the taxpayer was an individual on the basis of return filed by member of AOP after the completion/finalization of the tax proceedings under sections 161/205 of the Income Tax Ordinance, 2001, ignoring the return already filed by the AOP itself on e-portal of FBR with NTN 3192789-7. She further argued that CIR (Appeals) is not justified to accept the status of individual on NTN 3177997-2 whereas tax was levied to the AOP having NTN 3192789-7. She stated that CIR(Appeals) is not justified to annul the order passed under sections 161/205 in the case of AOP bearing NTN.3192789-7 ignoring the fact that the returns of Sales Tax are still being filed by the taxpayer in the status of AOP.
4. On the other hand, the learned counsel appearing for respondent/taxpayer has vehemently contended that the Commissioner Inland Revenue (Appeals) Gujranwala has rightly passed the order by applying his judicious mind with conscious appraisal of facts and material/evidence furnished by the taxpayer for establishing his status as an individual. He further submitted that the order of the CIR (Appeals) is based upon the judgments rendered by this court in number of cases of similar nature relating to Tax years 2009 and 2010. In this regard he furnished the reported judgment bearing citation 2012 PTD (Trib.) 1732 and copies of other judgments of this court settling the controversy between the department and taxpayer.
5. We have heard the arguments put forth by the learned representatives of both sides and have carefully gone through the available record. After due consideration, we find that the learned Commissioner Inland Revenue (Appeals), Gujranwala, while adjudging the case has not only taken into account the material facts and evidence produced by the taxpayer but also fortified by the judgments of this court in similar cases which is reflected from the following extract:- "As regards the contention of the AR, that taxpayer was an individual and therefore not liable to deduct tax has been found correct because the AR has established his contention with material evidence. In support of his contention the AR of the taxpayer has produced copy of judgment of learned ATIR vide No,768/LB/2012 dated 23-7-2012 wherein the matter has been clearly decided that taxpayer was on individual and was not obliged to deduct tax under section 153(7) (h) or (i) of the Income Tax Ordinance, 2001, for tax year under consideration. The relevant Para-No,8 of the judgment is reproduced hereunder; "In our considered view, the contention raised by the AR of the taxpayer carry much weight to establish his status being of an individual. The lower authorities below have not applied their judicious mind rather they proceeded to pass an ex parte order under sections 161/205 of the Income Tax Ordinance, 2001, in arbitrary, whimsical and technical manner and completely brushed aside the material/evidence provided by the taxpayer for determining his status. In such scenario we are in line with arguments of the AR of the taxpayer and have no ambiguity in our mind to declare the taxpayer as an individual who is not obliged to deduct tax under section 153(7)(11) or (i) of the Income Tax Ordinance, 2001 for the year under consideration. Resultantly the order of CIR (Appeals) is vacated."
Since the AR of the taxpayer has filed dissolution deed of AOP and since return for tax year 2009 was filed in the status of individual therefore return filed in the status of AOP for the year 2009, was revised to a return of an individual. Moreover the learned ATIR in its above judgment has accepted the contention of the taxpayer in this regard for tax year 2010. Therefore following the ratio settled in the judgment referred above in the same case for tax year 2010 by the superior court the taxpayer being an individual was not obliged to deduct tax as required under section 153(7)(h) or
(i) of the Income Tax Ordinance, 2001, therefore, the impugned order is not sustainable in the eyes of law. Besides, since clause (i) of section 153(7) was inserted through Finance Act, 2010, it would be applicable in tax year 2011.
' In view of the foregoing facts I am of the considered opinion that assessment completed in this case suffers from infirmities and legal defects. The upshot of the above discussion is that Officer Inland Revenue has arbitrarily and contrary to the provisions of law ignored the facts and completed assessment in the instant case. Thus the order suffers from infirmities and defects as discussed above.
' The impugned assessment order is therefore not maintainable in the eyes of law, hence annulled.
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6. In such scenario, we are of the view, that the observations made by the learned CIR (Appeals), Gujranwala are justified in annulling the assessment order under sections 161/205 of the Income Tax Ordinance, 2001 and there is no illegality or perversity in the impugned order to call for any interference. Therefore the order of the CIR (Appeals), Gujranwala, is upheld and the appeal filed by the Revenue is dismissed being devoid of any merits.