LAHORE: An appellate forum has set aside an additional demand raised by the tax department based on the rectification of mistake not part of the original proceedings, said sources.
According to details, the taxpayer company had filed income tax return for the year 2011 by declaring sales at Rs 232,823,500 net income at Rs 90,610 and tax paid at Rs 23,645, which was taken as deemed assessment as per the law.
Subsequently, the department charged minimum tax by rectification of mistakes in the return. Being aggrieved from the order, the taxpayer challenged the correction by pointing out the essential condition for exercise of such power which requires that the mistake should be apparent on the face of the record and should be seen floating on the surface of the record, not requiring investigation or further evidence.
It further contended that the mistake should be so obvious on mere reading the order. Where an officer exercising such power enters into the controversy, investigates into the matter, reassesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of the law and forms opinion different from the order, then it will not amount to rectification of the order.
According to the taxpayer, a careful reading of sections 120, 122 and 221 of the Ordinance makes it clear that the powers under these provisions are not overlapping rather independently clearly intended to operate within their respective compass.
The appellate forum sided with the taxpayer, stating that the powers under section 221 are quite limited to the extent of mistakes apparent from record since there are other provisions of law which deal with the authority of the department officials with regard to reopening of assessment and revision.
In cases where the department is if the view that certain income has escaped from the chargeability of tax, but for exercising powers under section 221, there must be a mistake apparently floating on the surface which is so obvious to strike one’s mind without entering into long drawn process of reasoning and detailed deliberation etc.
Copyright Business Recorder, 2025
Comments