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SC sets aside LHC order ‘favouring’ Tareen
Says issuance of show cause notice does not mean it would lead to adverse order
Hasnaat Malik
November 09, 2021
Jahangir Tareen. PHOTO: APP/ FILE
ISLAMABAD: The Supreme Court on Monday set aside the Lahore High Court (LHC) judgment which quashed the Federal Board of Revenue’s (FBR) show-cause notice issued to senior Pakistan Tehreek-e-Insaf (PTI) leader Jahangir Khan Tareen seeking details of Rs425 million income tax payment for the year 2010.
"We reached to the finale that respondent No1 (Jahangir Khan Tareen) should raise all grounds of challenge to the show cause notice including the alleged jurisdictional error in the reply before the additional commissioner who shall after providing ample opportunity of hearing first establish the conditions laid down in Section 210 of the Income Tax Ordinance, 2001 with regard to the delegation of authority before he can proceed on the merits of the case," a 12-page judgment authored by Justice Muhammad Ali Mazhar said.
The bench was hearing an FBR petition against five-year-old LHC ruling which was issued in “favour” of Tareen. A division bench of the apex court led by Justice Umar Ata Bandial had on September 15 passed a short order on this matter.
The court has remanded the matter to the additional commissioner to first establish the conditions laid down in Section 210 of the Income Tax Ordinance, 2001 regarding delegation of authority to him before he can proceed on the merits of the case.
The controversy set in motion when a show cause notice issued to Tareen by additional commissioner IR, Large Taxpayer Unit, Lahore under Section 122 (5) read with Section 122 (5a)/122 (4) of the Income Tax Ordinance for tax year 2010 whereby the assessment was found erroneous and prejudicial to the interest of revenue for the reason that income of Rs.425,000,000/- was unexplained.
The court in its ruling noted that Tareen was issued a show cause notice to submit the reply “which does not mean or pre-empt that the issuance of show cause will entail or lead to an adverse order or action against him.”
The judgment further said that “it is most commonly noticed that whenever a show cause notice is issued by the hierarchy provided under the tax laws calling upon the taxpayer to submit the reply, they immediately challenge the show cause notice in writ jurisdiction with the presumption or presupposition that the show cause notice means an adverse order against them, so in our considerate appraisal, abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities must be the normal rule”.
The court also noted that the challenge to show cause notices in writ jurisdiction at premature stages and tendency to bypass the remedy provided under the relevant statute is by and large deprecated and disapproved in many dictums laid down in local and foreign judgments in which courts have considered the interference as an act of denouncing and fettering the rights conferred on the statutory functionaries specially constituted for the purpose to initially decide the matter.
Justice Mazhar noted that a show cause notice is delivered to a person by an authority in order to get the reply back with a reasonable cause as to why a particular action should not be taken against him with regard to the defaulting act.
"By and large, it is a well-defined and well- structured process to provide the alleged defaulter with a fair chance to respond the allegation and explain his position within reasonable timeframe," the judgment said.
"Even in case of an adverse order, the remedies are provided under the tax laws with different hierarchy or chain of command. The court may take up writs to challenge the show cause notice if it is found to be barred by law or abuse of process of the court," it added.
"The abuse of process is the use of legal process for an improper purpose incompatible with the lawful function of the process by one with an ulterior motive. In its broadest sense, abuse of process may be defined as misuse or perversion of regularly issued legal process for a purpose not justified by the nature of the process."
"Whereas coram non judice is a Latin word meant for "not before a judge," is a legal term typically used to indicate a legal proceeding that is outside the presence of a judge or with improper venue or without jurisdiction."
The referred case of Indus Trading and Contracting company vs Collector of Customs (Preventive) Karachi and others (2016 SCMR 842) wherein it was held that where a special law provides legal remedy for the resolution of a dispute, the intention of the legislature in creating such remedy is that the disputes falling within the ambit of such forum be taken only before it for resolution.
The court observed that such bypass of the proper forum is contrary to the intention of the provisions of Article 199 (1) of the Constitution which confers jurisdiction on the high court only and only when there is no adequate remedy is available under any law.
“Where adequate forum is fully functional, the high court must deprecate such tendency at the very initial stage and relegate the parties to seek remedy before the special forum created under the special law to which the controversy relates.”
The court also said that section 209 of Income Tax Ordinance 2001 depicts the jurisdiction of income tax authorities which inter alia provides that the board or the chief commissioner as the case may be transfer jurisdiction in respect of cases or person from one commissioner to another.
The impugned judgment of the learned high court only concentrates and accentuates the question of jurisdiction that additional commissioner IR could not have issued the show cause notice without delegation of power under section 210 of the Income Tax Ordinance.
"Neither any discussion was made on the above notification in the impugned judgment nor was it set aside. In our foresight also we do not find any illegality or impropriety with regard to transfer of jurisdiction pursuant to notification dated 13th July, 2016".
Regarding the objection that notification was not published in the official gazette, the court referred to Article 19-A of the constitution, which envisages and encapsulates that every person shall have the right to have access to information in all matters of public importance subject to regulation and reasonable restriction imposed by law.
Says issuance of show cause notice does not mean it would lead to adverse order
Hasnaat Malik
November 09, 2021
Jahangir Tareen. PHOTO: APP/ FILE
ISLAMABAD: The Supreme Court on Monday set aside the Lahore High Court (LHC) judgment which quashed the Federal Board of Revenue’s (FBR) show-cause notice issued to senior Pakistan Tehreek-e-Insaf (PTI) leader Jahangir Khan Tareen seeking details of Rs425 million income tax payment for the year 2010.
"We reached to the finale that respondent No1 (Jahangir Khan Tareen) should raise all grounds of challenge to the show cause notice including the alleged jurisdictional error in the reply before the additional commissioner who shall after providing ample opportunity of hearing first establish the conditions laid down in Section 210 of the Income Tax Ordinance, 2001 with regard to the delegation of authority before he can proceed on the merits of the case," a 12-page judgment authored by Justice Muhammad Ali Mazhar said.
The bench was hearing an FBR petition against five-year-old LHC ruling which was issued in “favour” of Tareen. A division bench of the apex court led by Justice Umar Ata Bandial had on September 15 passed a short order on this matter.
The court has remanded the matter to the additional commissioner to first establish the conditions laid down in Section 210 of the Income Tax Ordinance, 2001 regarding delegation of authority to him before he can proceed on the merits of the case.
The controversy set in motion when a show cause notice issued to Tareen by additional commissioner IR, Large Taxpayer Unit, Lahore under Section 122 (5) read with Section 122 (5a)/122 (4) of the Income Tax Ordinance for tax year 2010 whereby the assessment was found erroneous and prejudicial to the interest of revenue for the reason that income of Rs.425,000,000/- was unexplained.
The court in its ruling noted that Tareen was issued a show cause notice to submit the reply “which does not mean or pre-empt that the issuance of show cause will entail or lead to an adverse order or action against him.”
The judgment further said that “it is most commonly noticed that whenever a show cause notice is issued by the hierarchy provided under the tax laws calling upon the taxpayer to submit the reply, they immediately challenge the show cause notice in writ jurisdiction with the presumption or presupposition that the show cause notice means an adverse order against them, so in our considerate appraisal, abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities must be the normal rule”.
The court also noted that the challenge to show cause notices in writ jurisdiction at premature stages and tendency to bypass the remedy provided under the relevant statute is by and large deprecated and disapproved in many dictums laid down in local and foreign judgments in which courts have considered the interference as an act of denouncing and fettering the rights conferred on the statutory functionaries specially constituted for the purpose to initially decide the matter.
Justice Mazhar noted that a show cause notice is delivered to a person by an authority in order to get the reply back with a reasonable cause as to why a particular action should not be taken against him with regard to the defaulting act.
"By and large, it is a well-defined and well- structured process to provide the alleged defaulter with a fair chance to respond the allegation and explain his position within reasonable timeframe," the judgment said.
"Even in case of an adverse order, the remedies are provided under the tax laws with different hierarchy or chain of command. The court may take up writs to challenge the show cause notice if it is found to be barred by law or abuse of process of the court," it added.
"The abuse of process is the use of legal process for an improper purpose incompatible with the lawful function of the process by one with an ulterior motive. In its broadest sense, abuse of process may be defined as misuse or perversion of regularly issued legal process for a purpose not justified by the nature of the process."
"Whereas coram non judice is a Latin word meant for "not before a judge," is a legal term typically used to indicate a legal proceeding that is outside the presence of a judge or with improper venue or without jurisdiction."
The referred case of Indus Trading and Contracting company vs Collector of Customs (Preventive) Karachi and others (2016 SCMR 842) wherein it was held that where a special law provides legal remedy for the resolution of a dispute, the intention of the legislature in creating such remedy is that the disputes falling within the ambit of such forum be taken only before it for resolution.
The court observed that such bypass of the proper forum is contrary to the intention of the provisions of Article 199 (1) of the Constitution which confers jurisdiction on the high court only and only when there is no adequate remedy is available under any law.
“Where adequate forum is fully functional, the high court must deprecate such tendency at the very initial stage and relegate the parties to seek remedy before the special forum created under the special law to which the controversy relates.”
The court also said that section 209 of Income Tax Ordinance 2001 depicts the jurisdiction of income tax authorities which inter alia provides that the board or the chief commissioner as the case may be transfer jurisdiction in respect of cases or person from one commissioner to another.
The impugned judgment of the learned high court only concentrates and accentuates the question of jurisdiction that additional commissioner IR could not have issued the show cause notice without delegation of power under section 210 of the Income Tax Ordinance.
"Neither any discussion was made on the above notification in the impugned judgment nor was it set aside. In our foresight also we do not find any illegality or impropriety with regard to transfer of jurisdiction pursuant to notification dated 13th July, 2016".
Regarding the objection that notification was not published in the official gazette, the court referred to Article 19-A of the constitution, which envisages and encapsulates that every person shall have the right to have access to information in all matters of public importance subject to regulation and reasonable restriction imposed by law.
