Tax department prevails over tribunal judgement

LAHORE: Tax department has won over a tribunal judgment based on documents not part of reply filed by a taxpayer filed against a show cause notice.

According to details, the taxpayer filed his return for a particular tax year but did not disclose that he had a bank account in a foreign country. Therefore, the department, upon receipt of information regarding such bank account, issued a show cause notice. In reply to the said show cause notice, the taxpayer submitted that the amount in the foreign bank account represents the loan taken abroad which was subsequently paid. However, he failed to produce any documentary evidence of such loan transaction.

The assessing officer found the reply unsatisfactory and issued another notice requiring the taxpayer to submit relevant record, which he failed to submit the same. Consequently, he was charged to tax. An appeal filed by the taxpayer was dismissed, as the said documentary evidence of the loan was not even produced before the Commissioner Appeals.

The taxpayer approached to the tribunal, which allowed his appeal because the taxpayer for the very first time produced the documents before it.

Upon this development, the department approached to the higher fora , which accepted the reference on the ground that the tribunal had based its judgment on documents which were not part of the reply filed by the taxpayer in response to the show cause notice. Such a course was impermissible to the tribunal which should not have accepted the documents produced before it and to proceed to upset the findings of the forum below.

This would tantamount to set up a new case before the tribunal and if these documents were available to the taxpayer, they would ought to have been produced in response to the show cause notice. Therefore, the tribunal went wrong in allowing the appeal filed by the taxpayer.

The taxpayer pursued the case up to the level of the highest appellate forum but to no avail, as he could not establish a question of law for determination in his favour, which was based on a factual dispute.

Copyright Business Recorder, 2025