‘Papers not filed to answer notice’: Higher tribunal upholds stance of tax dept

LAHORE: A show-cause notice by the tax department has survived the test on the ground that a tribunal cannot base its judgment on documents which were not part of the reply filed in response to the show-cause notice.

As per details, a taxpayer had filed return but didn’t disclose in it that he had a bank account in the UK, as well.

Upon receipt of information regarding such bank account, a show-cause notice was issued to him that he had concealed it and also deposits therein. In reply to the said show-cause notice, the taxpayer submitted that the amount in the UK bank account represents the loan taken in London which was subsequently paid.

However, he failed to produce any documentary evidence of such loan transaction and his reply was found unsatisfactory; therefore, assessing officer issued another notice requiring him to submit relevant record. However, he failed to submit the same. Consequently, he was charged to tax under the relevant section of the Income Tax Ordinance.

His appeal before the Commissioner Appeal was dismissed for not producing the documentary evidence before him. The taxpayer preferred an appeal before the tribunal, where he for the very first time produced the documents. The tribunal allowed his appeal and the department filed a reference against this order.

The department was of the view that the tribunal has based its judgment on documents which were not part of the reply filed in response to the show-cause notice. The higher appellate forum held that the tribunal went wrong in allowing the appeal. It was challenged by the taxpayer at the highest appellate forum, which was dismissed on the ground that no question of law arises for determination, which is based on a factual dispute. It followed by a review before the same forum.

However, the review petition met with a similar fate because the taxpayer failed to establish that he has discovered any new and important matter which after the exercise of due diligence was not within his knowledge or could not be brought to the notice of the court at the time of passing of the order or judgment.

Copyright Business Recorder, 2025