TARIQ SALEEM SHEIKH, J. --- Through this reference application under Section 133(1) of the Income Tax Ordinance: 2001 (the "Ordinance"), the Department has urged that the following question of law arises out of order dated 31.08.2012 passed by the learned Appellate Tribunal Inland Revenue (the "Tribunal") which 'requires determination by this Court:-- Whether on the facts and in the circumstances of the cases, the ATIR was justified to delete the tax charged under Sections 161/205 with the observation that the assessing officer had to identify the particular transaction/party wherein the taxpayer was required to deduct tax whereas the ATIR has ignored altogether the judgment of Honourable Supreme Court of Pakistan in the case of M/s. Blitz (Pvt.) Ltd. cited as [2002 PTD 1] which clearly stipulates that onus to prove that deduction was made, falls clearly on the taxpayer?
Briefly, the facts of the case are that the Respondent is a private company engaged in the business of construction, design and supply of HV/EHV transmission lines, grid stations and other electrical, mechanical and civil works. The Respondent e-filed its income tax return for the Tax Year 2011 which was treated as an assessm ent framed under Section 120 of the Income Tax Ordinance, 2001 (the ."Ordinance"). While examining the Respondent's tax return, its audited accounts and statement under Sections 153/165, the Assessing Officer noticed certain discrepancies whereupon he issued it a Show-Cause Notice under Sections 161/205 of the Ordinance and confronted it for having failed to deduct withholding tax on the payments that it made under the following heads during the year: -- Account Head Tax not deducted Salary 16,64,551 Legal and professional charges 10,401 Rent, Rates and Taxes 6,92,625 Creditors of expenses paid off 19,030 Creditors of other paid off 1,21,639 Plant & Machinery 30,748 Advances to Suppliers 2,80,814 Other direct expenses 37,41,504 Total 65,61,314
3. The Respondent submitted its complete reconciliation alongwith supporting documents to the Assessing Officer and also addressed the queries that he raised. Dissatisfied with the said explanation, the Assessing Officer treated the Respondent as "taxpayer-in-defaulf under Sections 161/205 and created a tax demand alongwith default surcharge. The Respondent preferred an appeal before the CIR (Appeals) who upheld the order of the Assessing Officer in all respects except on the issue regarding short deduction of tax on salaries. To that extent the case was remanded to the Assessing Officer for de novo consideration. The Respondent filed second appeal before the Tribunal which was accepted vide Order dated 31.08.2012 and the orders passed by the authorities below were vacated. The Department has come up in reference before this. Court.
4. The contention of the Department in the instant case is that the Tribunal's order dated 31.08.2012 is contrary to the law laid down by the Hon'ble Supreme Court of Pakistan in the case reported as "Messrs Blitz (Pvt.) Limited v. Deputy Commissioner of Income Tax, Multan and another" (2002 PTD 1).
In the said case it was held that once the income tax authorities determine that the taxpayer has made any payments on which it was obliged to deduct withholding tax, the onus shifts to the taxpayer to show that there was no default on its part. The Hon'ble Supreme Court observed:--- "A perusal of the show-cause notice, dated October 31, 1998 issued in respect of non-deduction of the tax for the year 1995-96 indicates that Petitioner made ten payments. The amount of the payments has also been mentioned in the notice but the column of withheld tax indicates that it was not deducted and no reason in this behalf has been offered by the Petitioner. Inasmuch as despite availing sufficient opportunities before the Deputy Commissioner Income-tax no details were furnished for not deducting the tax. Therefore, we are of the opinion that the Petitioner having notice/knowledge that tax has to be deducted from the categories of the parties mentioned in the above-noted provision of law itself has failed to fulfil its obligation, therefore, under these circumstances the Petitioner shall be considered to be assessee-in-default for not deducting the tax from the parties to whom the supplies were made by it. In our opinion, there was no necessity for the Assessing Officer to identify the names of the parties to whom the supplies were made because the record is maintained by the supplier i.e. Petitioner and Hit is the duty of the Petitioner to maintain the record and show that as to why deductions were not made from different parties at the time of making supplies to them."
5. The judgment in the Blitz case was based on Section 50(4)(a) of the repealed Income Tax Ordinance, 1979, but it is fully applicable to the cases under the Income Tax Ordinance, 2001,= inasmuch as the said provision with slight changes is similar to Section 161 of the Ordinance of 2001.
This has also been held by this Court in "Commissioner of Inland Revenue v. Messrs- Islam Steel Mills" (2015 PTD 2335).
6. Perusal of the record shows that the Respondent contested its liability before the CIR (Appeals) as well as the Tribunal only to the extent of three heads of account, viz., "salaries", "rent, rates and taxes" and "other direct expenses". The Tribunal has given a finding of fact that the Respondent had placed documentary evidence on record to establish that it had not defaulted in its obligation to deduct withholding tax and had thus discharged its onus. It has also noted that the Assessing Officer had created the charge through wrong calculations. He had failed to analyze every transaction separately and had taken the entire amount of expenditure incurred under each head and -treated these amounts as liable to tax deduction. Various payments which were exempt from withholding tax or were below the threshold limit were also taken into consideration to hold that the Respondent was a taxpayer-in-default which action was illegal. The Petitioner has not been able to show us as to how in the presence of these findings of fact the law laid down in the Biltz case is violated.
7. For the above reasons, we hold that the question of law framed for reference to this Court does not arise in the circumstances of the instant case. The application in hand is, therefore, dism isse d.
8. Office shall send a copy of this judgment to the Appellate Tribunal Inland Revenue under the Seal of this Court in terms of Section 133(5) of Ordinance XLIX of 2001.