BROTHERS TEXTILE MILLS LTD vs FEDERATION OF PAKISTAN through Secretary
This constitutional petition addresses the grievance of a taxpayer, a listed textile company, against the refusal of the Commissioner of Income Tax (Appeals) to entertain its appeal without the mandatory payment of 15% of the disputed tax demand. The core legal question was whether an assessee is entitled to interim relief against a tax demand pending the adjudication of an appeal by the first appellate forum. The Lahore High Court held that forcing a taxpayer to pay a percentage of a disputed demand as a condition for hearing an appeal effectively denies the right of appeal. The Court ruled that an assessee is entitled to interim relief until the matter is decided by at least one appellate forum. The ratio established is that refusing interim relief against an original assessment order by a Revenue Officer constitutes a travesty of justice and may encourage the raising of arbitrary or excessive tax demands. Consequently, the Court allowed the petition, directing the appellate authority to entertain the appeal without insisting on the 15% payment.
- Is an assessee entitled to interim relief against a tax demand pending the decision of the first appellate forum?
- Can an appellate authority refuse to entertain an appeal solely on the ground of non-payment of a percentage of the disputed tax demand?
- Does the requirement to pay a portion of a tax demand as a condition for filing an appeal constitute a denial of the right of appeal?
ORDER
' The only grievance of the petitioner appears to be the non-entertainment of appeal by the first appellate forum/CIT(Appeals), Lahore without payment of 15% of the demand raised.
2. The petitioner is a listed company and is engaged in yarn spinning. As against disclosed income of Rs,4,751,556 an assessm ent was framed at taxable income of Rs,73938314. In the process additions were made in production accounts, sale of waste, interest disposal of fixed assets and administrative expenses,.
3. Learned counsel for the petitioner states that being before the first appellate forum the assessee is entitled to an interim relief and that forcing him to pay 15% of illegal demand will amount to denial of right of appeal.
4. After hearing the learned counsel for the petitioner as well as the Revenue, I am inclined to agree.
5. The petitioner being before the first appellate forum appears entitled to an interim relief on account of huge additions made in its hand. In a number of recent judgments this Court has observed that an assessee/tax payer is entitled to interim relief till the matter stands decided at least by one appellate forum. Refusing interim relief against an original order of a Revenue Officer would b.e travesty of justice and is likely to encourage raising of fabulous demands for extraneous reasons.
6. That being so this petition is allowed. The respondent/CIT (Appeals) will entertain the appeal of the petitioner without insisting upon the payment of 15% of the demand created by the impugned assessm ent order.
Cited by 4 cases
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- Oracle Systems Pakistan (Private) Limited. vs Pakistan Through The Secretary Revenue & Exofficio Chairman Federal Board Of Revenue, Islamabad, Etc 2024 IHC 78, 2024 PTD 105
- Messrs Pakistan LNG Limited through Authorized Representative vs Federation of Pakistan, through Secretary Revenue Division, Ministry of Finance, Islamabad 2022 PTD 1763
- M/s. Pakistan LNG Limited through Duly Authorized Representative vs 2023 PLJ Islamabad 40