Muhammad Junaid Ghaf far, J. Through this Suit the Plaintif fs have impugned separate notices issued by Defendant No.4 in identical terms under Section 176 of the Income Tax Ordinance, 2001 asking for certain information, followed up by notices under s.182 ibid for its non-compliance and imposition of penalty . It is the case of the Plaintif fs that both these notices have been issued by an of ficer who lacks jurisdiction in the matter .
2. Learned Counsel for the Plaintif fs submits that Defendant No.4 i.e. Assistant Director , Directorate of Intelligence and Investigation, Inland Revenue, Islamabad has no jurisdiction in terms of S.R.O.350(I)/2014 dated 7.5.2014
(SRO) read with Section 230 of the Ordinance , 2001, inasmuch as the Plaintif fs are registered with Large Tax Payer Unit, Karachi, whereas, the said Defendant is an Assistant Director of the Directorate of Intelligence, Inland Revenue at Islamabad. He has read out Serial Nos.10 & 22 of the said Notification and submits that at the most, the said Defendant can approach the concerned Commissioner having jurisdiction in the matter , seeking the information so desired. As an alternative, he has argued that even otherwise, Section 176 ibid cannot be invoked independently for seeking such information as it is in aid of, and ancillary to, Section 177 ibid as admittedly , there is no pending audit or inquiry against the Plaintif fs. He has further argued that the notice is also otherwise, silent and without any disclosure as well as its purpose; hence, the same is liable to be set aside. In support he has relied upon Wateen Telecom Ltd. Through Authorized Attorney V. Sindh through The Secretary of Ministry of Finance Government of Sindh, Karachi and 2 others (2009 PTD 1030), Assis tant Director , Intelligence and Investigation, Karachi V. M/s B.R. Herman and others (PLD 1992 SC 485), M.D. Tahir, Advocate V. Director , State Bank of Pakistan, Lahore and 3 others (2004 CLD 1680 ) and Messrs Tri-Star Industries (Pvt.) Ltd.
Through Director and 8 others V. The Commissioner of Income Tax Companies-I, Karachi and 5others (1998 PTD 3923 ).
3. On the other hand, learned Counsel for the Department has contended that the Defendant No.4 has jurisdiction in the matter in view of Section 2(41) of the Ordinance, 2001 as the Plaintif fs are a permanent establishment operating offices in Islamabad; therefore, the objection is misconceived. He further submits that initially the notice was addressed at the Islamabad office which was not replied, and then a reminder was issued with a follow up notice under Section 182 at the Karachi address of the Plaintif fs, therefore, there is no illegality in the action initiated by the Defendants. According to him, under the said SRO the Defendant No.4 has all the jurisdiction to issue such notice as it is only seeking information about the customers of the Plaintif f's which ought to have been replied. Per learned Counsel, even otherwise, Section 176 falls within the Chapter 8 of the Ordinance, 2001, pertaining to the machinery provisions which are to be construed liberally; hence, the Suit is liable to be dismissed.
In support he has relied upon Kohinoor Sugar Mills V. Federation of Pakistan and others (2018 PTD 821) and Commissioner of Inland Revenue, Sialkot and others V. Messrs Allah Din Steel and Rolling Mills and others (2018 SCMR 1328 ).
4. I have heard both the learned Counsel and perused the record. Since written statement has been filed, whereas, both the learned Counsel had conceded for final decision of the entire matter as only legal issues are involved, by consent the entire Suit has been heard and is being decided accordingly . Following legal issues are settled for adjudication in terms of Order 14 Rule 2 CPC: - "1) Whether Defendant No. 4 has any jurisdiction in the case of Plaintif fs to issue notice under Section 176 of the Ordinance, 2001?
2) Whether non-compliance of the above notice could entail imposition of penalty under Section 182 of the Ordinance, 2001?
3) What should the Decree be?"
5. Since a legal controversy is involved and all issues are inter related, they are being dealt with together . The first and foremost point which is to be adjudi cated is that whether Defendant No.4 has any jurisdiction in the matter inasmuch as admittedly , the Plaintif fs are registered under the Ordinance, 2001 as well as the Sales Tax Act, 1990 with Large Tax Payer Unit at Karachi. The jurisdiction on the officers of Directorate of Intelligence and Investigation has been conferred through the SRO in question issued under Section 230 of the Ordinance, 2001 and the relevant portion reads as under: - "S.R.O.351(I)/2014 Islamabad, the 07th May , 2014 Subject:- Jurisdiction of Directorate General (Intelligence and Investigation) Inland Revenue.
In exercise of the powers conferred by section 230 of the Income Tax Ordinance, 2001 (XLIX of 201), read with section 208 and sub-section (1) of section 209 thereof, and in supersession of its Notification No. S.R.O.51(I)/2013, dated the 29th January , 2013, the Federal Board of Revenue is pleased to confer upon the officers of the Directorate General (Intelligence and Investigation), Inland Revenue specified in column (2) of the Table below , the powers of the authorities specified in column (3) of the said Table, to exercise powers and perform functions under the provisions of the said Ordinance as specified in column (4) thereof, and having jurisdiction specified in column
(5) of that Table:- Table S No.Designation of OfficerDesignation of Officer of Inland RevenuePowers and Functions conferredJurisdiction
(1) (2) (3) (4) (5)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. Additional Director-I I&I Inland Revenue, IslamabadCommissioner Sections 1 14, 1 16, 120, 121, 122, 122C, 123, 124, 124A, 125, 126, 161, 177, (other than powers to initiate audit), 178, 179, 180, 181, 182, Chapter VIII, Part III, Part IV and Part XI of Chapter X, Sections 205 and 221.I. All persons or classes of persons falling within the jurisdiction of the Large Taxpayer 's Unit, Islamabad and Regional T ax Officer , Islamabad.
II. All persons or classes of persons not otherwise specified, if the person resides within the jurisdiction of the of fices mentioned at
(1) above.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22. I. Deputy Assistant Director-I, I&I Inland Revenue, Islamabad.
II. Deputy / Assistant Director-II, I&I Inland Revenue, Islamabad.Commissioner Sections 1 14, 1 16,120, 121,122, (except 1222 5(A), 122C, 123, 124, 124A, 125, 126, 161, 162, 174, 175, 176, 177 (other than powers to initiate audit), 178, 179, 180,181, 182, Chapter VIII, Part III, Part IV and Part XI of Chapter X, Sections 205 and 221.Assigned functions in respect of the persons and classes of persons as specified at S., No. 10 above.
6. Perusal of the aforesaid Notification reveals that the Assistant Director / Defendant No.4 has been notified at Serial No. 22 and has been assigned functions in respect of the persons and classes of persons as mentioned in column 5 against Serial No.10 of the said Notification, which confers powers on the Additional Director , Intelligence and Investigation, Inland Revenue, Islamabad in respect of all persons or classes of persons falling within the jurisdiction of the Large Tax Payer Unit Islamabad and Regional Tax Office Islamabad. This clearly reflects that insofar as Defendant No.4 is concerned, he can only exercise such jurisdiction (under the 2001 Ordinance) which has been conferred on the Additional Director , but only in respect of persons registered with LTU or RTO Islamabad. Admittedly , the Plaintif fs are not registered in Islamabad but with Large Tax Payer Unit at Karachi.
Therefore, apparently , in view of the aforesaid Notification Defendant No.4, or for that matter any other officer at Islamabad in the Directorate of Intelligenc e and Investigation, Inland Revenue, is not conferred with any jurisdiction in respect of a taxpayer who is not registered either with L TU Islamabad or R TO Islamabad.
7. Insofar as reliance on Section 2(41) ibid is concerned, the same appears to be misconceived inasmuch as it is only a definition clause in respect of a permanent establishment; but at the same time it does not figure out in the above SRO issued in terms of Section 230 of the Ordinance, 2001. Therefore, by taking shelter under s.2(41) ibid, Defendant No.4 cannot extend or enlarge his jurisdiction against a person who is registered at Karachi. If that had been the intention, then a specific reference would have been made in the SRO.
8. In view of hereinabove facts and circumstances of this case, it appears that an attempt has been made by Defendant No.4 to seek information from the Plaintif fs for which he lacks jurisdiction and therefore, both the impugned Notices as well as subsequent attempts to impose penalty for purportedly violating the same are declared to be without jurisdiction and lawful authority . Issues No.1 & 2 are answered in negative, whereas, Issue No. 3 is answered by Decreeing the Suit as prayed. Of fice to prepare decree accordingly .