AYESHA A. MALIK, J.---Through this petition, the Petitioner has impugned notice dated 03.04.2019 issued by Respondent No.3, Deputy Commissioner Inland Revenue, Lahore.
2. The basic contention of the Petitioner is that in terms of the Voluntary Declaration of Domestic Assets Act, 2018 ("Act"), the Petitioner is entitled to avail the benefit of the said Act under Section 5 read with Section 8 of the Act as amended through Ordinance XI of 2018 notified in the gazette dated 30.06.2018. Learned counsel argued that in terms of Section 8(2) of the Act an explanation was added which clarified that where proceedings under the Income Tax Ordinance, 2001 ("Ordinance ") in respect of undisclosed income or assets have attained finality , declaration cannot be filed under Section 5 of the Act. However , if they have not attained finality then a declaration can be filed.
Learned counsel argued that finality with respect to the proceedings under the Ordinance is attained once the complete hierarchy is accessed meaning that the right of appeal is availed against the assessment order . In this regard, learned counsel has placed reliance on "Central Board of Revenue and others v. Chanda Motors"
(1992 PTD 1681 ). Learned counsel argued that the order passed in original proceedings is not final unless it crosses all rights of appeal available under the law and it becomes a final order once the right of appeal has been fully availed by the taxpayer . Learned counsel states that in this case even though the proceedings were pending through an assessment order yet the Petitioner sought to avail the benefit of Section 5 of the Act and filed his declaration under the stated section. However , this was rejected on the ground that the recovery notices have been issued against the Petitioner after passing of assessment order on the basis of which the Petitioner is liable to pay the amount.
3. Report and parawise comments have been filed by the Respondents. Learne d counsel for the Respondents argued that Tax Amnesty Scheme 2018 is not applicable on the proceedings which have been finalized under Section 122 of the Ordinance. Learned counsel further argued that recovery notices have been issued to the Petitioner and he is liable to pay the assessed amount and cannot offer a voluntarily declaration under Section 5 of the Act.
4. The basic issue before the Court is with reference to the interpretation of Section 8(2) of the Act. The purpose of the Act is to give effect to the proposal of the Federal Government to offer Voluntarily Declaration of Domestic Assets in order to encourage the payment of tax as well as to increase the number of taxpayers. In terms of Section 5 of the Act any person can make a declaration of undisclosed income and domestic assets before 10.04.2018 subject to the provisions of the Act. The meaning of the declaration is provided in Section 5 of the Act.
Once the declaration is made, the domestic assets so declared are chargeable to tax rate specified under Section 7 of the Act. In terms of Section 8 of the Act the due tax must be paid when the declaration is made. Section 8 was amended through Ordinance XI of 2018 notified in the gazette dated 30.06.2018 to include an explanation such that now Section 8 reads as follows:--
8. Payment of tax. (1) The due date for payment of the tax chargeable under section 7 shall be the date on which declaration is made under section 6.
(2) No tax shall be payable by the declarant under any law for the time being in force including the Income Tax Ordinance, 2001 (XLIX of 2001) declared where tax has been paid under subsection (1) in respect of the undisclosed income and domestic assets under section 5.
"Explanation. ---For the removal of doubt it is clarified that where proceedings under Income Tax Ordinance, 2001 (XLIX), in respect of undisclosed income or assets have attained finality , no declaration shall be filed under section 5 in respect of such income or asset and the tax payable under the said Ordinance shall continue to be payable."
In terms of the explanation it has been clarified that a declaration can be made even in respect of undisclosed income or assets which are pending in proceedings under the Ordinance until they have attained finality . The basic purpose of the explanation is to clarify that even where proceedings are pending under the Ordinance, related to assessment or otherwise the taxpayer can make a declaration of undisclosed income or assets uptil the point when those proceedings attained finality . There is no cavil to the contention that proceedings under the Ordinance attain finality when the right of appeal has been exhausted by the taxpayer and an order has been passed by the appellate forum. The taxpayer case does not attain finality until it has, exhausted all remedies of appeal available under the Ordinance. For the purposes of challenging the assessment order , the case relied upon by the Petitioner clarified that an order of assessment is not a final order for the reasons that it can be challenged in an appeal or revision as the case may be as it only becomes final when it goes through all the forums and remedies available under the law. Hence a taxpayer is entitled to pursue the remedy of appeal or second appeal as such remedies reopen the assessment, meaning that it is not final unless it crosses all forums under that law in which it can be challenged and the order of the last forum is final. Therefore, under the circumstances, the contention of the petitioner is in' accordance with law and the rejection made by the respondents is without any legal basis. In this case assessment order was passed by respondent No.3, Deputy Commissioner Inland Revenue, which has not attained finality as it is subject to an appeal irrespective of the recovery proceedings. Since the order has not attained finality , the petitioner can file a declaration under section 5 of the Act.
5. Under the circumstances, this petitio n is accepted and the impugned notice dated 03.04.2019 passed by Respondent No.3 is set aside. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.