CH. ANWAAR UL HAQ, (JUDICIAL MEMBER).---The titled appeals pertaining to tax years 2009 and 2010, have been preferred at the instance of taxpayer calling in question the impugned consolidated order dated 13-8-2012 passed by the learned CIR (A), Lahore.
2. The relevant facts in brief are that the taxpayer, a private limited company, is a prescribed withholding agent for deduction/collection of tax. In order to check the taxpayer's compliance with the statutory withholding tax provisions, the assessing officer issued statutory notices and confronted the taxpayer on the certain transactions on point of deduction of tax. Allegedly, the taxpayer had failed to file the requisite information/documentation. Accordingly, the Assessing Officer proceeded ex parte and had observed that under heads; Local raw material, Salaries and wages , store/spare, repair and maintenance, others, Travelling/ Conveyance, Communication, repair and A maintenance, professional charges and selling expenses, the taxpayer had failed to deduct the required tax, therefore, the company was treated as taxpayer-in-default' under section 161 of the Ordinance. Consequently, tax demand under section 161 amounting to Rs,28,640,637 and Rs,2,398,807 along with default surcharge under section 205 at Rs,13,813,418 and Rs,725,162 was created for the tax years 2009 and 2010 respectively. Being aggrieved, the taxpayer went in appeal before the learned CIR (A) and contended that the alleged notices issued were never served upon the taxpayer and submitted the requisite information/documentation. However, the learned CIR (A) has upheld the ex parte action of the assessing officer and refuse to entertain the documentary evidences produced by the taxpayer in terms of section 128(5) of the Income Tax Ordinance, 2001.
Consequently, both the appeals of the taxpayer are rejected by the learned CIR (A).
3. The learned AR of the appellant submitted before us that the CIR(A) was not justified to confirm the illegal orders passed by the assessing officer. It is submitted by the AR before us that the taxpayer-company where-ever required had deducted the tax and deposited the same into government treasury and the learned CIR(A) was not justified to cancel the illegal order of the assessing officer in respect of tax levied under sections 161/205, whereas most of the payments made by the company were below the threshold limit for withholding tax. It 'is explained by the learned AR that the assessing officer while determining default under different heads of expenditure had acted merely on guesswork which is not permissible under the law. It is further submitted by the learned AR that proper opportunity as envisaged under the law was not provided to explain his case. On the contrary, the learned DR on behalf of Revenue vehemently argued before us 'that the assessing officer had rightly charged tax under sections 161/205, as the taxpayer had failed to comply with the provisions of withholding tax and failed to deduct tax on payments made by him.
4. We have heard the arguments put forth by the learned representatives of both the sides and have carefully gone through the available record. After due consideration, we find that the assessing officer has issued notices under section 161 on the, basis of amounts appearing in the accounts of the company and somehow failed to engage the taxpayer in the proceedings to present their case. From the perusal of the available record, it reveals that proper opportunity, as envisaged under the law, is not accorded to the taxpayer to substantiate their stance that the payments made under the different heads of expenditure are mostly below the threshold limit of withholding tax and that tax wherever required was duly deducted/deposited and necessary documentary evidences are available with the taxpayer. These documentary evidences available with the taxpayer needs scrutiny/i verification/thorough examination and the assessing authority is best placed for the purpose. Under such circumstances, we deem it necessary to remand the matter back to the assessing authority for de novo decision. It is strictly directed that every effort should be made to engage the taxpayer in the proceedings and matter be decided in accordance with law. It is also directed to the taxpayer to cooperate with the department in 4he re-assessment proceedings in his own interest. Order accordingly.
5. Both the appeals of the taxpayer are disposed of in the above manner.