Messrs HONDA FORT PVT. LTD. through Director vs COMMISSIONER OF INCOME TAX and another
This judgment of the Lahore High Court disposes of two writ petitions (W.Ps. No.4114 and 4115 of 2008) filed by Messrs Honda Fort Pvt. Ltd. challenging notices issued under section 177 of the Income Tax Ordinance, 2001, regarding tax audits for the tax years 2003, 2004, and 2005. The core legal question was whether constitutional writ jurisdiction should be invoked at the stage of issuance of a show-cause or audit notice under section 177 of the Income Tax Ordinance, 2001. Relying on the precedent set in Intra Court Appeal (I.C.A.) No.125 of 2007 ('Kunjah Textile Mills' decided on 10-9-2008), the Court held that a writ petition against a notice under section 177 is premature and that the High Court ought not to interfere in such proceedings at the notice stage, leaving the matter to be examined through the statutory referable jurisdiction. Consequently, the Court declined to interfere and dismissed the petitions as premature without expressing any view on the merits.
- Can constitutional writ jurisdiction be invoked against the issuance of a notice under section 177 of the Income Tax Ordinance, 2001?
- Are writ petitions challenging income tax audit notices premature when an Intra Court Appeal precedent dictates non-interference at the notice stage?
- Section 177, Income Tax Ordinance 2001
- Section 122(5), Income Tax Ordinance 2001
- Section 120, Income Tax Ordinance 2001
- Section 120(1)(A), Income Tax Ordinance 2001
- Section 177(7), Income Tax Ordinance 2001
ORDER
' KHAWAJA FAROOQ SAEED.---This order will dispose of W.Ps. No.4114 and 4115 of 2008 as common questions of law and fact are involved in these petitions.
2. Through this writ petition indulgence of this Court is sought for declaring the notices under section 177 of the Income Tax Ordinance, 2001 to be as unlawful and against the powers of the income tax authorities.
3. Learned counsel for the petitioner detailed the facts of the case by, inter alia, mentioning that notices under section 122(5) were issued earlier in respect of the one year. However, subsequently, through another notice, tax years, 2005, 2004 and 2003 were also included showing the intention that the department wants to audit the assessment finalized under section 120 of the said Act.
4. For the years, 2003 and 2004 since the provision in terms of A section 120(1)(A) was inserted later in 2005, it cannot be considered as retrospective. Further the provision of section 177(7) deprives the department from issuance of notices in respect of the earlier years after B having proceedings in respect of the subsequent year.
4-A. This Court would not like to prejudice the working of the subordinate authorities while giving comments on the argument advanced by the learned counsel for the petitioner. Since this Court in many others similar writ petitions have considered, the initiation of the proceedings against notices under section 177 to be as not enough for invocation of a writ jurisdiction at the stage of the said proceedings and have declined to interfere, obviously no remarks on merits are required. In fact, the issue "as to whether a writ jurisdiction should be exercised on issuance of notice under section 177 of the Income Tax Ordinance, 2001", has ultimately been decided by this Court through I.C.A.
No.125 of 2007 on 10-9-2008, in the case of "Kunjah Textile Mills". In view whereof, the present writ petition is premature. This Court after holding that being the repository this Court may examine the issue in its referable jurisdiction, it should not interfere in the proceedings initiated on the basis of section 177.
5. The result is obvious. The present writ petitions are considered as premature and, therefore, interference is declined.
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