2013 PTD 1288

ORDER

NAZIR AHMAD (JUDICIAL MEMBER).-- -The above titled appeal pertaining to tax year, 2009 has been filed at the instance of the department against the appellate order dated 14-4-2011 recorded by CIR(Appeals-I), Lahore.

2. Mr. Jalal Ahsan, FCA is present on behalf of the taxpayer whereas none has tendered appearance on behalf of the department/ appellant. Therefore, ex parte proceedings are conducted by resorting to Rule 20(2) of ATIR Rules, 2010 and the titled appeal is disposed of on merits.

3. Brief facts leading to the instant appeal are that it was observed by the DCIR that the taxpayer had failed to deduct tax on payments made under various heads and the same were not deposited into Government Treasury due to non-availability of any proof of payment record. He also found certain gaps in payments on which tax was deducted and the total payments made. Therefore, notice dated 27-12-2010 under section 161 of the Income Tax Ordinance, 2001 (hereinafter called 'the Ordinance') followed by subsequent notice under sections 161/205 dated 12-1-2011 were issued requiring the taxpayer to produce documents/details for reconciliation but all in vain as the taxpayer on the due dates always applied for adjournment, which was turned down lastly on 31-1-2011. Feeling aggrieved, the taxpayer preferred appeal before CIR(A), who remanded the matter back to DCIR by way of setting aside the order passed under sections 161/205 of the Ordinance as per finding given below:--

"The procedure requires that in case of any gap in actual payments and the payments from which the tax has been deducted, the appellant may be required to reconcile it as provided in rule 44(4) of the Income Tax Rules, 2002.

(4) A person required to furnish the statements under sub-rule (1) or (2) shall, wherever required by the Commissioner, furnish a reconciliation of the amounts mentioned in the aforesaid annual and [monthly] statements with the amounts mentioned in the return of income, statements, related annexes and other documents submitted from time to time.

It is only after the examination of reconciliation as provided in Rule 44(4) the Commissioner or the authority empowered by him, finds that the withholding agent has failed to deduct tax or if deducted, failed to pay the tax so deducted to the Commissioner concerned. Needless to say, this he can do after obtaining the reconciliation under Rule 44(4) in respect of the payments as mentioned in the impugned order. As this is not the case here, therefore, the order cannot be sustained. The matter is remanded back to the concerned Officer with the direction to proceed in this in the manner as indicated above."

----Aggrieved by the treatment meted out by first appellate authority, the department has come up in appeal before this Tribunal.

4. The learned counsel appearing on behalf of the taxpayer has fully supported the impugned order simply by reiterating the basis evolved therein.

5. Arguments advanced by learned counsel have been heard and relevant record perused. Sole objection of the department raised as per grounds of appeal is as under:--

"That the learned CIR(A) was not justified in setting aside the order of the DCIR dated 31-1-2011 as the powers of the CIR(Appeals) have already been withdrawn through Finance Act, 2005"

--- The stance taken by the department is forceful in the light of Full Bench decision of this Tribunal dated 16-3-2012 recorded in I.T.As. Nos.1078 and 1079/LB of 2010, wherein it has been held that Commissioner (Appeals) has no power to remand the case under existing provisions relating to its jurisdiction. Therefore, the impugned order on the point of jurisdiction is vacated. However, due to gap in actual payments and the payments from which the tax has been deducted, the matter requires reconciliation in the light of provisions of Rule 44(4) of the Income Tax Rules, 2002 for which an adequate opportunity has been denied to the taxpayer. Therefore, we deem it appropriate to remand the matter back to taxation officer to reinitiate proceedings in accordance with law after providing adequate opportunity to the taxpayer.

HBT/72/Tax(Trib.) Case remanded.