Production of Tax Records beyond the Limit Prescribed by Law

Production of Tax Records beyond the Limit Prescribed by Law Case Laws Commercial Constitutional Law Income Tax Industrials Knowledge - Constitutional Law Lahore High Court Litigation & Arbitration Solutions - Constitutional Law Tax Mr. Justice Shahid Karim in his judgment has decided the issue of production of tax records beyond the limit prescribed by law in Writ Petition No. 18703 of 2008.

1. This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, lays a challenge to the notice dated 06.12.2008 issued by the Deputy Commissioner, Enforcement and Collection Division-02, Large Taxpayer Unit, Lahore. By the impugned notice, a request has been made to furnish the annual statement of withholding taxes as prescribed under section 165 of the Income Tax Ordinance, 2001 (Ordinance, 2001) in respect of tax year 2003 along with reconciliation statement as per rule 44(4) of the Income Tax Rules, 2002 (Rules, 2002).

2. According to the contents of the impugned notice, it has been mentioned that the record of the tax department shows that annual statement of withholding taxes for the tax year 2003 has not been filed. It was further intimated through the impugned notice that the results declared in the return of income/audited accounts statements furnished along with return of income for the tax year 2003 show that certain amount of tax had not been deducted by the petitioner during the tax period 2003. Thus, by the impugned notice the petitioner was required to furnish the statement of withholding taxes for the tax year 2003 along with reconciliation statement as per the provisions of rule 44(4) of the Rules, 2002. Further that the evidence of payment of the claimed deduction should also be made over to the officer issuing the impugned notice. It is clear from the impugned notice, therefore, that the department is seeking a reconciliation of the amounts claimed as tax deductions by eliciting evidence of the payment of the tax deductions claimed by the petitioner.

3. This judgment shall also decide W.P No.13957 of 2010 which also seeks to restrain the respondents from requiring the petitioner to produce the record which was not required to be maintained beyond a period of five years under section 174(3) of the Ordinance, 2001. In this petition too, the return of total income in respect of tax year 2004 was filed under section 114 of the Ordinance, 2002. Subsequently, the petitioner was selected for audit by the Commissioner in exercise of the powers under section 177(4) of the Ordinance, 2002. This was followed by two notices for initiation of audit proceedings issued by the respondent No.2, both dated 15.5.2009. The selection for audit was challenged before this Court vide W.P No.12475 of 2009 which was disposed of on 22.10.2009. During the course of the audit proceedings, the petitioners raised objections to the demand by the respondent-department for the petitioners to produce certain record vide letter dated 20.05.2010 on the plea that the period for maintaining the record and accounts for the tax year 2004 had lapsed on 30.06.2009 in terms of section 174 (3) of the Ordinance, 2001. This plea of the petitioners was rejected vide letter dated 27.5.2010. The respondent No.3 in the instant petition did not consider the objections raised by the petitioner as sustainable and issued a notice dated 4.6.2010 by which it was threatened that ex-parte assessment shall be completed under section 120 of the Ordinance, 2001. The notice dated 4.6.2010 has been impugned in this petition (impugned notice-2).

Further information for production of tax records beyond the limit prescribed by law can be solicited from AUJ LAWYERS. Feel free to contact us in case you need any clarification and/or require legal assistance regarding production of tax records beyond the limit prescribed by law.