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  • Apr 16th, 2017
  • Comments Off on Re-assessment Proceedings: ATIR enjoys inherent powers to grant stay: LHC
In a landmark judgement, the Lahore High Court (LHC) has held that the Appellate Tribunal Inland Revenue (ATIR) has inherent powers to grant stay of re-assessment proceedings where appeal against the remand order by the Commissioner (Appeals) is pending before ATIR. It is learnt that the petitioner has challenged order dated 28.02.2017 passed by Appellate Tribunal Inland Revenue ("Appellate Tribunal") whereby application for grant of stay was refused.

Brief facts are that an appeal was filed by petitioner before Appellate Tribunal challenging competence of Commissioner (Appeals) to remand the case to Taxation Officer for re-adjudication. An application, for restraining the Taxation Officer from re-assessment, meanwhile, was also moved. The application was dismissed, through impugned order, with the observation that Appellate Tribunal is not vested with the power to stay re-adjudication proceedings.

The counsel for the petitioner placed reliance on a judgement by Supreme Court in CP No 53 of 2007 and 83 of 2012 wherein earlier judgement in Imran Raza Zaidi vs Government of Punjab (1996 SCMR 645) was followed. He argued that order to decline interim relief is against the law laid down.

The deputy attorney general (DAG) opposed the arguments, submitting that jurisdiction of Appellate Tribunal under Section 131(5) of the Income Tax Ordinance, 2001 ("Ordinance") is limited. He further submitted that this petition against order of Appellate Tribunal is not maintainable, because the impugned order could only be challenged through Reference Application under Section 133 of the Ordinance. Sources said that the Commissioner (Appeals) remanded the case back to the assessing officer with certain direction for re-assessment. The taxpayer filed appeal before the Tribunal on the ground that as per facts and legal position the Commissioner (Appeals) should have decided the appeal in its favour instead of remanding the same to the assessing officer. When during the pendency of appeal before the Tribunal, the assessing officer issued notice for reassessment the taxpayer filed application before the Tribunal for granting stay against the re-assessment proceedings. The application was rejected by the Tribunal on the basis that there is no express power for granting stay of re-assessment proceedings and the only power available for interim relief is stay of recovery. On that the taxpayer filed writ petition before the Lahore High Court through Shahid Jami Advocate. Lahore High Court in its judgement held that the Tribunal has inherent power to grant interim relief of stay of proceedings in order to avoid the multiplicity of litigation. It is the first judgement on the issue and has been appreciated by the taxpayer and tax lawyers across the country.

The text of the operating part of the judgement revealed that, "Appellate Tribunal, in exercise of appellate jurisdiction under the Section 132, can affirm, modify or annul an assessment or an order appealed against, in addition to remanding the case to Appellate Commissioner. To exercise this jurisdiction effectively, power to suspend the impugned order or to restrain Taxation Officer from passing assessment order, pursuant to the order impugned before it, falls within incidental and ancillary jurisdiction. Particularly when no restriction or limitation, on exercise of such ancillary or incidental power, is available in the subsection (5) of Section 131. Needless to observe that allowing the Taxation Officer to complete re-assessment would not only lead to multiplicity of litigation but would frustrate the right of appeal before Appellate Tribunal if subsequent order is passed.

"Under the circumstances, the impugned order is set aside. Application for grant of stay shall be deemed pending before the Appellate Tribunal, which shall be decided on merits. Till decision, as directed, proceedings before the Taxation Officer shall remain suspended," the LHC judgement added.



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