RAHEEL KAMRAN, J.: Through this petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 (hereinafter to be referred as the 'Constitution') the petitioner has challenged notice dated 30.01.2024 issued by the Commissioner Inland Revenue, Zone-Okara (respondent No.4) as well as subsequent notice dated 26.03.2024 issued by the Officer Inland Revenue, Zone-Okara-Unit-I(COYS), Okara (respondent No.5). Direction has also been sought to respondent No.4 to allow the petitioner to file its revised income tax return under section 114(6) of the Income Tax Ordinance, 2001 for the tax year 2023 in FBR online IRIS Portal.
2. Short facts of the case as stated in the petition are that the petitioner is a Private Limited Company registered with Inland Revenue Zone-Okara for its tax affairs. Last date for filing of tax return for the year 2023 was 31.12.2023 and as audited accounts of petitioner's firm were not finalized, the petitioner filed income tax return as nil, with intention to revise the same within 60 days, the time granted under section 114(6) of the Income Tax Ordinance, 2001 (the Ordinance). In the meanwhile, notice dated 30.01.2024 (impugned notice) was issued to the petitioner under section 177(1) of the Ordinance, whereby he was informed that his case had been selected for audit under section 177 of the Ordinance. The petitioner responded the impugned notice by filing reply on 29.03.2024, whereby he objected that issuance of impugned notice prior to lapse of 60 days after filing of tax return was barred under section 114(6) of the Ordinance, wherein time of 60 days has been granted for revising tax return. The reply was not considered by the respondents and they issued another notice to the petitioner on 26.03.2024, requiring it to appear before respondent No.5 on 10.04.2024 along with the documents detailed in the notice. Thereafter, penalty notice under section 182(2) of the Ordinance was issued to the petitioner on 20.09.2024, which was followed by order under section 182(2) dated 22.10.2024. Petitioner communicated a reminder on 30.11.2024, but neither its reply nor reminder was taken into consideration, hence this petition.
3. It is contended by learned counsel for the petitioner that the petitioner had filed nil return on 30.12.2023, which could lawfully be revised under section 114(6) of the Ordinance within the period of 60 days, however, the impugned notice has been issued before the lapse of the aforementioned period of 60 days, thereby prejudicing the right of the petitioner conferred by section 114(6) of the Ordinance. He maintains that the issuance of the impugned notice has rendered the provision of section 114(6) redundant and it manifests unreasonable exercise of authority on the part of respondent No.4. In order to substantiate his contention, learned counsel has placed reliance on the judgment of this Court in the case of Commissioner Inland Revenue, Faisalabad v. Messrs Zahid Jee Fabrics Limited (2021 PTD 1705).
4. Conversely, learned counsel for the respondents-department contends that the right conferred under section 114(6) of the Ordinance was never exercised by the petitioner by submitting revised return even after issuance of the impugned notice till today. While elaborating his plea, learned counsel has drawn attention of this Court to pages 36-43 of the petition to suggest that the return, allegedly proposed here, filed on behalf of the petitioner is indeed a tampered document which to some extent is manually filled. He next refers to the reply filed by the petitioner pursuant to the impugned notice under section 177(1) of the Ordinance received in the office of respondent No.4 on 02.04.2024. He adds that no application for extension of time for submission of revised tax return for the tax year 2023 was ever moved by the petitioner. Learned counsel maintains that similar exercise was carried out by the petitioner in relation to the tax year 2022, which is evident from the request for extension of time made by the petitioner on 31.12.2022, available on page No.35 of the reply submitted on behalf of the respondent No.4. It is finally contended by learned counsel for the respondents that section 114(6) of the Ordinance is subservient to subsection (6A), which plays a vital role to bridge between section 114(6) and section 177 of the Ordinance.
5. Heard.
6. By order dated 20.01.2025, following question for adjudication was framed by this Court: - "Whether by invoking provision under Section 177 of the Ordinance as to selection for audit within the permissible period of 60-days for revision of the return resulting in disability of a taxpayer to revise the return within the stipulated period envisaged, under Section 114(6) of the Ordinance, does not render the latter provision redundant, which is a substantive provision of law?".
To facilitate a comprehensive understanding, the applicable provisions of the Ordinance are excerpted as follows: -
114. Return of Income.- -
(6) Subject to sub-section (6A), any person who, having furnished a return, discovers any omission or wrong statement therein, may file revised return subject to the following conditions, namely: --
(a) it is accompanied by the revised accounts or revised audited accounts, as the case may be.
(b) the reasons for revision of return, in writing, duly signed by the taxpayers are filed with the return.
(ba) it is accompanied by approval of the Commissioner in writing for revision of return; and
(c) - - - - Provided that - - - - Provided further that the condition specified in clause (ba) shall not apply if revised return is filed within sixty days of filing of return. (6A). If a taxpayer files a revised return voluntarily alongwith deposit of the amount of tax short paid or amount of tax sought to be evaded alongwith the default surcharge, whenever it comes to his notice, before receipt of notice under sections 177 or sub-section (9) of 122, no penalty shall be recovered from him: Provided that in case the taxpayer deposits the amount of tax as pointed out by the Commissioner during the audit or before the issuance of notice under sub-section (9) of section 122, he shall deposit the amount of tax sought to be evaded, the default surcharge and twenty- five per cent of the penalties leviable under the Ordinance alongwith the revised return: Provided further that in case the taxpayer revises the return after the issuance of a show cause notice under sub-section (9) of section 122, he shall deposit the amount of tax sought to be evaded, default surcharge and fifty per cent of the leviable penalties under the Ordinance alongwith the revised return and thereafter, the show cause notice shall stand abated."
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 of investigation and proceedings under this 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. Section 114(6) of the Ordinance explicitly grants a taxpayer the right to revise a return within 60 days of its filing if any omission or wrong statement is discovered. This provision confers a substantive right upon taxpayers to correct errors or omissions in their returns without penalty provided the revised return is filed within the stipulated time. The proviso to Section 114(6) further clarifies that no approval from the Commissioner is required if the revised return is filed within the 60-days period. This underscores the legislative intent to provide taxpayers with a clear opportunity to rectify mistakes within the specified timeframe.
8. Self-assessm ent of tax is the salient and most distinguishable feature of the Ordinance. Section 114(6) is a substantive provision intended to facilitate voluntary compliance and correction of errors, whereas Section 177 provides enforcement mechanism. No overriding effect has been given under Section 177(1) above the provisions of Section 114 including sub-section (2) thereof, as such the same is to be construed harmoniously with other provisions of the Ordinance including Section 114(6) which confers right upon taxpayers to revise return with 60-days. In the case of Collector Of Sales Tax And Central Excise (Enforcement) and another v Messrs Mega Tech (Pvt.) Ltd. (2005 PTD 1933) the Supreme Court of Pakistan held as under: - "- - - It would, however, appear that every word used by the Legislature must be given its true meaning and the provisions construed together in a harmonious manner. It would not be legal and proper to apply one provision of law in isolation from the other provision as no surplusages or redundancy can be attributed to the legislative organ of the State."
9. The issuance of notice under Section 177(1) of the Ordinance initiating audit before the expiry of 60-days period under Section 114(6) cannot be countenanced for that would undermine the right of a taxpayer to revise the return and benefit from self-assessment besides rendering Section 114(6) of the Ordinance practically redundant and superfluous. There is presumption under law against attributing redundancy to legislative expression much less a provision of law that confers substantive right in favour of a taxpayer. Reliance in this regard is placed on the cases of Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others (2017 PTD 1372), Collector Of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. (2005 PTD 1933) and Messrs Master Foam (Pvt.) Ltd. and 7 others v. Government of Pakistan through Secretary, Ministry of Finance and others (2005 PTD 1537). In the case of Commissioner Inland Revenue, Faisalabad v. Messrs Zahid Jee Fabrics Limited (2021 PTD 1705) it was held by this Court that taxpayer had a right to revise his return and no provision of law restricted his right to file the revised return. Thus, 60-days period is a statutory safeguard for taxpayers and any action that undermines this right is unlawful.
10. The argument of learned counsel for the respondents department that the petitioner failed to exercise its right under Section 114(6) is untenable. The petitioner filed a nil return on 30.12.2023. The issuance of the impugned notice on 30.01.2024 i.e. before the expiry of the 60-days period, which precluded the petitioner from exercising its right under Section 114(6) of the Ordinance. The respondents' reliance on Section 114(6A) is misplaced for that provision applies to revised returns filed after the issuance of a notice under Section 177 or Section 122(9).
11. In the instant case, the respondents' actions in issuing the impugned notices before the lapse of the 60-days period depicts misuse of authority under Section 177(1) of the Ordinance. The statutory framework of the Ordinance envisions a harmonious balance between the taxpayer's right to revise a return and the tax authorities' power to conduct audits. By prematurely initiating audit proceedings, the respondents disrupted this balance and rendered the petitioner's right under Section 114(6) ineffective. This is also clear violation of the principles of fairness and due process.
12. For the foregoing reasons, this petition is partly allowed. The impugned notices dated 30.01.2024 and 26.03.2024 are declared to have been issued without lawful authority for being in disregard and in violation of the petitioner's statutory right under Section 114(6) of the Ordinance, hence set aside. Rest of the prayer qua direction for submission of the revised return, cannot be acceded to by this Court in the first instance since admittedly such prayer has been made in the month of December, 2024 after the lapse of 60 days prescribed under sub-Section (6) of Section 114 of the Ordinance and without seeking prior permission of the Commissioner concerned. The petitioner may, if so advised, apply for seeking permission of the competent authority in accordance with law.