A landmark judgment by the Appellate Tribunal Inland Revenue (ATIR) in Islamabad has brought much-needed clarity to the seemingly contradictory provisions within Section 122 of the Income Tax Ordinance (ITO) 2001. This section deals with amending income tax assessments for taxpayers in Pakistan.
Key Points of the Judgment:
- Conflicting Provisions: The judgment addresses the apparent conflict between Section 122(2) which specifies a five-year limitation period for making amended assessments, and Section 122(9) which sets a 180-day limit.
Key Questions and Answers:
Question A: Does the 180-day limit (Section 122(9)) override the five-year limit (Section 122(2))?
- Answer: No. Both provisions are mandatory, but they serve different purposes. Section 122(2) sets the overall timeframe for completing the amendment process, while Section 122(9) governs the timeframe within which this process must be completed once initiated.
Question B: Can an amended assessment order be issued after 180 days, even if within the five years?
- Answer: No. Even if the five-year limit hasn’t expired, if the Commissioner fails to complete the amendment process within the 180-day limit (plus any extensions), the order becomes time-barred.
Question C: Does the provision allowing multiple amendments (Section 122(4)) become redundant?
- Answer: No. This provision remains relevant. It allows for multiple amendments within the statutory timeframes, ensuring flexibility while maintaining accountability.
Question D: How can further amendments be made after a missed deadline?
- Answer: If an amendment is not completed within the 180-day limit, that specific amendment process is time-barred. However, further amendments can still be initiated under Section 122(4), as long as they comply with the overall five-year limit and other requirements.
Question E: Can a show cause notice issued just five days before the five-year expiry be considered timely under Section 122(9)?
- Answer: No. The 180 days provided in Section 122(9) doesn’t extend the five-year limit. The Commissioner would only have those five days to complete the amended assessment order.
Conclusion:
This ATIR judgment offers significant clarification for taxpayers and tax authorities regarding time limits for amending income tax assessments. It emphasizes adhering to both the five-year and 180-day limitations, while also allowing flexibility for multiple amendments within the allowed timeframe. The legal implications of adhering to “fair trial and due process” principles in situations involving very short amendment timelines are left for future cases.
Taxpayers facing amended income tax assessments are advised to consult with a tax professional to ensure their rights are protected and all deadlines are met.
