After hearing the learned counsel for the parties I will agree that the order, dated 1-4-1995 made by the Income Tax Officer, Circle-22 Mandi Bahauddin under section 86 of the Income Tax Ordinance, 1979 requiring the respondent-Committee Muridkey to pay a sum of Rs.33,741 is without jurisdiction.
2. From the record it is established that the Assessing Officer after payment of an instalment of advance tax under section 50(7-A) by the Contractor himself issued clearance certificate on 13-10- 1992. In that certificate neither the date of payment was mentioned nor it was stated that the payment had been made with any delay.
3. It will further be noted that on payment of every instalment the concerned Assessing Officer issued a certificate. For example on 14-3-1992 a certificate was issued that the assessee/contractor had made payment of Rs. 1,10,457 as instalment of advance tax under section 50(7-A) of the Income Tax Ordinance, 1979 in the National Bank of Pakistan, Branch Mandi Bahauddin. Obviously the challan for that instalment was issued by the concerned Circle Officer. In that manner impliedly the payment was allowed to be made in instalments. Thereafter, irrespective of the legal position if such payment could be made in instalments, the Assessing Officer could not be allowed to turn about to claim that the payment by instalment was unjustified and that it attracted liability to additional tax. Not at least against the respondent-Municipal Committee the contract awarding agency after holding it to be an assessee in default.
4. That being so this petition succeeds and the aforesaid demand against the petitioner is declared to be illegal.