JAWAD HASSAN, J. Through this writ Petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (the "Constitution"), the Petitioner has impugned the actions/order of the Respondents regarding attachment of his accounts and recovery of tax amount by directly issuing notice under Section 140 of the Income Tax Ordinance, 2001 (the "Ordinance"). He also prayed that the Respondents be directed to refund the amount already recovered.
2. Brief facts of the case are that the Respondent No. 1/Assistant / Deputy Commissioner Inland Revenue, RTO, Rawalpindi Issued order dated 27.03.2019 under Section 122(1) of the Ordinance and created demand of Rs.1,956,342/-. Then issued demand notice under Section 137(2) of the Ordinance for the said amount. The Petitioner feeling aggrieved thereof filed an Appeal before the Respondent No.4/Commissioner Inland Revenue (Appeals-III), Rawalpindi, which was rejected. The Petitioner filed second Appeal along with application for interim relief before the Respondent No.5/Appellate Tribunal Inland Revenue, Islamabad Bench, Islamabad (the "Appellate Tribunal") but during the pendency of Appeal, the Respondent No.6/Inland Revenue Officer, Audit and Enforcement, Rawalpindi issued the notice under Section 140 directing the Respondent No.7/Allied Bank Limited, Saidpur Road, Rawalpindi to hand over the aforesaid amount lying in the account of the Petitioners. Consequently, the Respondent/Bank withdrew an amount of Rs.6,00,000/- from the account of the Petitioner and handed over the same to the Respondent-Department, which is illegal and unlawful. Hence this Petition.
3. Learned counsel for the Petitioner submits, that the Appeal filed by the Petitioner was pending before the Appellate Tribunal, therefore, during the pendency of Appeal the Respondents has miserably failed to adopt the proper procedure and without giving notice under Section 138 of the Ordinance, Respondents have recovered the aforesaid amount. Learned counsel for the Petitioner vehemently argued that before invoking Section 140 and attaching the accounts of the Petitioner, a notice under Section 138 was mandatory; requiring the Petitioner, to pay the tax due within a reasonable time, under Section 138(2), in case of failure by the taxpayer to make the payment within the prescribed time, the Commissioner can proceed to attach and sell any moveable and immovable property of the taxpayer. Adds that the actions taken under Section 140 of the Ordinance infringed fundamental rights of the Petitioner protected under Articles 4 and 10-A of the Constitution. Lastly submits, that it is well settled law that an act required to be done in a particular way has to be done in that manner. Learned counsel relied on the judgments of this Court reported as "Mst. Fouzia Razzak v. Federal Board of Revenue and others" (2021 SLD 199 = 2021 PTD 162) and "Messrs HUAWEI Technologies Pakistan (Pvt.) Ltd. v. Commissioner Inland Revenue and others"
(2016 PTD 1799).
4. Learned counsel for the Respondents vehemently opposed the arguments advanced by learned counsel for the Petitioner and submitted that Section 138 is independent and notice is required to be served only where attachment and sale is to be effected. In the impugned notice the Commissioner Inland Revenue granted permission under Section 140 of the Ordinance to attach bank accounts of the Petitioners for recovery of tax liability. Lastly adds that in order to exercise power under Section 140 of the Ordinance, there is no need to issue a notice prior thereto.
5. Arguments heard. Record perused.
6. This Court has already decided the issue in hand vide judgment of Mst. Fouzia Razzak (2021 SW 199 = 2021 PTD 162) by relying on the judgment of Messrs HUAWEI Technologies (2016 PTD 1799), which although was not binding but the principle laid down therein, was sound and in accordance with law.
7. The Respondent-Department before invoking Section 140 of the Ordinance is required to issue a notice under Section 138 of the Ordinance intimating the taxpayer regarding the invocation of Section 140 ibid and requiring him to make payment of tax liability within a reasonable time. For ready reference the Section 138 is reproduced as under:
138. Recovery of tax out of property and through arrest of taxpayer.-
(1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may serve upon the taxpayer a notice in the prescribed form requiring him to pay the said amount within such time as may be specified in the notice.
(2) If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer the said amount by one or more of the following modes, namely:-
(a) attachment and sale of any movable or immovable property of the taxpayer;
(b) appointment of a receiver for the management of the movable or immovable property of the taxpayer; and
(c) arrest of the taxpayer and his detention in prison for a period not exceeding six months.
Under Article 4 of the Constitution, it is an inalienable right of the citizen to be treated in accordance with law. Also the fair trial and due process are the fundamental rights of the every citizen of Pakistan under Article 10-A of the Constitution but in the instant case no notice under Section 138 was served before invocation of Section 140. Hence, the impugned actions regarding attachment and recovery of tax amount from the bank accounts of the Petitioner are illegal and without lawful authority.
8. In view of above, this Petition is allowed and the impugned notice regarding attachment of accounts and recovery of amount is declared to be without lawful authority and of no legal effect.
Since the Appeal filed by the Petitioner is pending before the Appellate Tribunal, who is hereby directed to decide the same within a period of sixty days from the receipt of certified copy of this order. Meanwhile no coercive measure shall be adopted by the Respondent-Department regarding the disputed tax amount.