The Supreme Court has overruled Lahore High Court’s (LHC) judgment which suppressed the Federal Board of Revenue’s (FBR) show-cause notice that the body issued to senior Pakistan Tehreek-e-Insaf (PTI) leader Jahangir Khan Tareen looking for an explanation of Rs425 million income tax payment for the year 2010.

According to a 12-page judgment by Justice Muhammad Ali Mazhar, “We reached to the finale that respondent No1 (Jahangir Khan Tareen) should raise all grounds of challenge to the show cause notice including the alleged jurisdictional error in the reply before the additional commissioner who shall after providing ample opportunity of hearing first establish the conditions laid down in Section 210 of the Income Tax Ordinance, 2001 with regard to the delegation of authority before he can proceed on the merits of the case”.

The bench heard an FBR petition against a five-year-old LHC ruling which was considered in “favor” of Tareen. Earlier on September 15 Justice Umar Ata Bandial led a division bench of the apex court and passed a short order regarding this matter while the detailed order was issued on Monday.

The court has remanded the issue to the additional commissioner for the purpose of establishing the conditions laid down in Section 210 of the Income Tax Ordinance, 2001 pertaining to the delegation of authority to him before he can proceed on the merits of the case.

The controversy remains unexplained and was fueled by the issuance of a show-cause notice to Tareen by additional commissioner IR, Large Taxpayer Unit, Lahore under Section 122 (5) read with Section 122 (5a)/122 (4) of the Income Tax Ordinance for the tax year 2010 whereby the assessment was found erroneous and prejudicial to the interest of revenue for the reason that income of Rs.425,000,000/- was unexplained.

The court noted in its ruling that Tareen was issued a show-cause notice to submit the reply “which does not mean or pre-empt that the issuance of show cause will entail or lead to an adverse order or action against him.”

The judgment added that “it is most commonly noticed that whenever a show cause notice is issued by the hierarchy provided under the tax laws calling upon the taxpayer to submit the reply, they immediately challenge the show cause notice in writ jurisdiction with the presumption or presupposition that the show cause notice means an adverse order against them, so in our considerate appraisal, abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities must be the normal rule”.

The court further noted that the challenge to show cause notices in writ jurisdiction at premature stages and tend to bypass the remedy provided under the relevant statute is by and large deprecated and disapproved in many dictums laid down in local and foreign judgments in which courts have considered the interference as an act of denouncing and fettering the rights conferred on the statutory functionaries specially constituted for the purpose to initially decide the matter.

Justice Mazhar said that a show-cause notice is delivered to an individual by an authority for the purpose of getting the reply back with a reasonable cause pertaining to why a particular action should not be taken against him with regard to the defaulting act.

The judgment states, “By and large, it is a well-defined and well-structured process to provide the alleged defaulter with a fair chance to respond the allegation and explain his position within a reasonable timeframe”.

It further added, “Even in case of an adverse order, the remedies are provided under the tax laws with different hierarchy or chain of command. The court may take up writs to challenge the show cause notice if it is found to be barred by law or abuse of process of the court”.

“The abuse of process is the use of legal process for an improper purpose incompatible with the lawful function of the process by one with an ulterior motive. In its broadest sense, abuse of process may be defined as misuse or perversion of the regularly issued legal process for a purpose not justified by the nature of the process.”

“Whereas Coram non-judice is a Latin word meant for “not before a judge,” is a legal term typically used to indicate a legal proceeding that is outside the presence of a judge or with improper venue or without jurisdiction.”


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