Briefly facts are that the Appellant being a Private Limited Company was issued notices dated 25.06.2021 and 05.07.2021 by Respondent No.3 selecting it for income tax audit for the years 2016, 2018, 2019 and 2020, under Section 177(1) of the Income Tax Ordinance, 2001. Being aggrieved of the said notices, the Appellant filed Writ Petition No.49024/2021, seeking setting aside of those notices being contrary to law, issued under unlawful authority . This writ petition was clubbed with some connected matters involving similar question of law and was dismissed, vide the impugned order . Hence this Appeal.
2. It is contended by learned counsel for the Appellant that the Appellant being a regular filer under Section 114 of the Income Tax Ordinance, 2001 (the "Ordinance") operating under the jurisdictio n of the Respondents, received illegal notices dated 25.06.2021 and 05.07.2021, issued by the Respondent No.3 asking it to produce record/documents/books of Accounts before the Deputy Commissioner Inland Revenue, who would conduct audit of its income tax affairs, as per procedure given in Section 177 of the Ordinance. Adds that challenging the vires of aforementioned notices, the Appellant filed Writ Petition No. 49024 of 2021, which was clubbed with some other matters, taken to be an identical one, as those of the said ones (which actually were different one from those) the learned Single Judge in Chamber , dismissed the same, vide impugned order dated 22.09.2021, which is reproduced as under:- "This Court has already dismissed writ petition, Writ Petition No.37251 of 2021 titled Raza Motor Industries The Federation of Pakistan, etc. vide judgment dated 22.09.2021 in which the issue involved was the same as has been agitated in this petition. For the reasons stated in the aforementioned judgment passed in W.P.No.37251 of 2021, this writ petition is also dismissed".
3. It is contended by the learned counsel that while passing the aforesaid order, the learned Single Judge in Chamber , inadvertently clubbed Appellant' s case with other judicial matters where in notices under Section 177(1) of the Income Ordinance, 2001 (the "Ordinance ") had been challenged ignoring the fact that Appellant' s case was different from that of those, as he had assailed selection for audit for multiple years in view of Section 177(6) of the Ordinance. Adds that a similar matter , as is being agitated through this Appeal, has already been decided by a learned Division Bench of this Court. Reliance has been placed on Pakistan Telecommunication Company Ltd. versus Federation of Pakistan (2016 PTD 1484 ) and Indus Motor Company Limited through Authorized Officer and others versus Federation of Pakistan through Secretary Finance and others (2020 PTD 297). It is further contended that the Appellant was selected for audit under Section 214C of the Ordinance, therefore, the Respondent was required to give reasons for selection for audit; that while passing the impugned order , the learned Single Judge to the extent of the Appellant entirely ignored that a taxpayer once selected for audit for a particular tax year could not be selected again witho ut giving reasonable cause and strong reasons for the same and thus to conduct collective audit for four financial years is against the norms of direction issued by this Court in Defence Housing Authority versus Commissioner Inland Revenue and others (2015 PTD 2538 ); that it was also not taken into account while passing the final order for selecting the Appellant for audit, that the Appellant was not given an opportunity of hearing: that the Respondent/Commissioner was duty bound to give reasons for selection for audit on the basis of his findings in tax year 2017; that the audit selection in terms of Section 177 of the four years i.e. 2016, 2018, 2019 and 2020 is arbitrary , illegal and unlawful based on guess work as no reasoning is available therein for selection of audit of the Appellant; that the powers qua audit in terms of Section 177 have not been exercised fairly; that it has not been taken into account by the learned Single Judge that the Appellant has not been provided opportunity of hearing which is violation of Articles 10-A and 8 of the Constitution despite the fact that it has been settled by the august Apex Courts that the Commissioner is not only required to disclose reasons to the taxpayer in writing for calling for his record etc. but also grant him an opportunity to defend himself by affording him a hearing; that the Respondent/Commissioner was duty bound to issue a preliminary notice to decide as to whether there was any basis for an exercise of power under Section 177; that a learned Division Bench of this Court in The Federal Board of Revenue and others versus Messrs Chenone Stores Ltd. (2018 PTD 208) has held that the Commissioner shall give criteria/reasons in the notice for selection for audit. Lastly , prays for suspension of impugned notices, audit and setting aside of the impugned order being passed without appreciating the grounds taken in respect of simultaneous audit selection under section 177(7) of the Ordinance.
4. Heard and record perused.
5. On one hand, learned counsel for the Appellant mentioned at Page-3 of the Appeal "that the Petitioner case for the tax year 2016, 2018, 2019 and 2020 was not selected for audit in terms of section 214C, therefore, he was selected for audit u/s 177" while taking ground No.2, at the same page, it is stated "that the case of the appellant was selected for audit u/s 214C of the Ordinance culminating in the amendment of assessment". May it be a clerical mistake, however , this ambiguity and stance taken by the Appellant shall be cleared/rectified by reading over first two lines of the impugned notices, which read as under:- "This is to inform you that in exercise of the powers under section 177 and 177(1) of the Income Tax Ordinance, 2001, the undersigned has selected your case for audit for the above tax years [2016, 2018, 2019 and 2020] for reasons mentioned hereunder".
From the above and further perusal of the "impugned notices" makes it crystal clear that the Appellant was selected under Sections 177 and 177(1) of the Ordinance and reasons for its selection for audit were duly and briefly mentioned therein.
6. As for the powers of Commissioner under Section 177 have been questioned through this Reference Application, let a glance over Section 177 be made at; and reproduced below:- "177. Audit---(1) The Commissioner may call for any record or documents including books of accounts maintained under this Ordinance or any other law for the time being in force for conducting audit of the income tax affairs of the person and where such record or documents have been kept on electronic data, the person shall allow access to the Commissioner or the officer authorized by the Commissioner for use of machine and software on which such data is kept and the Commissioner or the officer may have access to the required information and data and duly attested hard copies of such information or data for the purpose or investigation and proceedings under the Ordinance in respect of such person or any other person: Provided that:-
(a) The Commissioner may, after recording reasons in writing call for record or documents including books of accounts of the taxpayer; and
(b) The reasons shall be communicated to the taxpayer while calling record or documents including books of accounts of the taxpayer; Provided further that the Commissioner shall not call for record or documents of the taxpayer after expiry of six years from the end of the tax year to which they relate."
7. Perusal of above provisions reveals that powers of the Commissioner qua issuance of impugned notices are not ambiguous in any manner rather are in the letter of the law, therefore, there is left no doubt that in the case in hand, issuance of notices and mentioning of reasons therein are entirely in accordance with Section 177(1) of the Ordinance.
8. While attacking the judgment passed by the learned Single Judge-in-Chamber , stance of the Appellant is that its writ petition should have not been clubbed and decided with other matters, as its case was different from those of the referred/clubbed cases, as it had assailed selection for audit for multiple years in view of Section 177(6) of the Ordinance.
Section 177(6) is reproduced below:- 6) After completion of the audit under sub section (5) or sub-section (8), the Commissioner may, if considered necessary , after obtaining taxpayer 's explanation on all the issues raised in the audit, amend the assessment under sub-section (1) or sub-section (4) of section 122, as the case may be.
9. Though this ground has not been taken during filing of Writ Petition by the present Appellant, yet to meet the ends of justice, it has been observed that there is nothing in this Section that could bar the Commissioner to issue impugned notices and conduct audit for one or more periods which come within the period of six years.
10. The upshot of above discussion is that, we don't see any illegality or infirmity in the impugned judgment. This Appeal, therefore, being devoid of merits is hereby dismissed.