KARACHI: The Sindh High Court (SHC) on Monday dismissed a suit against Section 177(1) of the Income Tax Ordinance 2001 being ultra vires Article 25 of the Constitution.
According to an order authored by Justice Adnan Iqbal Chaudhry of the SHC, the plaintiff has challenged notice dated 10-11-2016 issued under Section 177(1) of the Income Tax Ordinance, 2001, by the commissioner of Inland Revenue (impugned notice), calling upon the plaintiff to provide record for audit of his income tax affairs for the tax year 2013.
The order stated that the plaintiff did not file a reply to the notice but instead filed the instant suit on 14-11-2016 for a declaration that “section 177 of the Income Tax Ordinance, 2001 and the audit notice u/s 177 dated 10.11.2016 to be malafide, completely without jurisdiction, unconstitutional, unlawful, void ab initio and of no legal effect, while annulling the same”.
The counsel for the plaintiff submitted that Section 177(1) of the ordinance gave unchecked and arbitrary powers to the commissioner of Inland Revenue to pick and choose any person for initiating audit; hence ultra vires Article 25 of the Constitution of Pakistan.
On the other hand, the counsel for the tax department submitted that after the enunciation in commissioner of Inland Revenue, Sialkot v. Allah Din Steel and Rolling Mills (2018 SCMR 1328), the challenge to the vires of Section 177(1) of the Ordinance was futile.
The bench stated that the plaintiff had also to demonstrate that the powers exercised by the commissioner of Inland Revenue under the said provision had actually led to an infringement of the plaintiff‘s fundamental right under Article 25 of the Constitution.
The court ruled that challenge to the vires of Section 177(1) of the Income Tax Ordinance on the grounds that it generally offends Article 25 of the Constitution couldn’t succeed.
The counsel for the plaintiff submitted that the audit notice is discriminatory of the plaintiff and offends his fundamental right of Article 25 of the Constitution.
“That submission would have been worthwhile had the notice not assigned any reasons. The notice clearly gives plausible reasons for asking for documents under section 177(1) of the Income Tax Ordinance,” the court declared. The court stated that notice was never replied by the plaintiff and didn’t attack the grounds taken in the notice, nor were such grounds addressed during the course of submissions. Therefore, the plaintiff had never set up a case for discrimination, the court decreed.
Copyright Business Recorder, 2021