The key decision in the case affirmed the Commissioner Inland Revenue (BTB), Rawalpindi's authority based on a Chief Commissioner's order, highlighting the importance of timely objections to jurisdiction in tax disputes.

here's a brief explanation:

The case involved disputes over income tax assessments against Masood-ul-Hassan of M/s Prism Estate and Builders for Tax Years 2010, 2011, and 2012. The Commissioner Inland Revenue initially imposed assessments which were later canceled by the Appellate Tribunal due to jurisdictional issues. The Lahore High Court, Rawalpindi Bench, reviewed the case and ruled in favor of the Commissioner Inland Revenue, reinstating the assessments. The court emphasized that the Tribunal had not properly considered the Commissioner's jurisdiction as authorized by a Chief Commissioner's order. This decision reaffirmed the Commissioner's authority under the Income Tax Ordinance, highlighting the importance of jurisdictional clarity in tax assessments.

Stereo HCJ DA 38

 JUDGMENT SHEET

IN THE LAHORE HIGH COURT, 

 RAWALPINDI BENCH, RAWALPINDI

 JUDICIAL DEPARTMENT

Income Tax Reference No.01 of 2019

Commissioner Inland Revenue

V/S Masood-ul-Hassan Prop: M/s 

Prism Estate and Builders 

etc.

J U D G M E N T

Date of hearing

20.05.2024

Applicant (s) by 

Ch. Manzoor Hussain, Advocate.

Respondent(s) by

M/s Sh. Istadamet Ali and Junaid Hassan 

Sheikh, Advocates.

JAWAD HASSAN, J. These Reference Applications 

No.01 of 2019, 02 of 2019 and 04 of 2019 under Section 133 of 

the Income Tax Ordinance, 2001 (the “Ordinance”) have been 

filed by the Applicant, being dissatisfied with the order passed by 

the Appellate Tribunal Inland Revenue, Islamabad Bench, 

Islamabad (the “Appellate Tribunal”) in ITA No.912/LB/2016 

(Tax Year 2010), ITA No.913/LB/2016 (Tax Year 2011), ITA 

No.914/LB/2016 (Tax Year 2012), ITA No.722/LB/2015 (Tax 

Year 2010), ITA No.723/LB/2015 (Tax Year 2011) and ITA 

No.724/LB/2015 (Tax Year 2012) filed by the Respondent No.1 

and cross appeals filed by the Applicant Department bearing 

Nos.ITA No.678/LB/2015 (Tax Year 2010), ITA No.679/LB/2015

(Tax Year 2011), ITA No.680/LB/2015 (Tax Year 2012), ITA 

No.386/LB/2016 (Tax Year 2010), ITA No.387/LB/2016 (Tax 

Year 2011) and ITA No.388/LB/2016 (Tax Year 2012), which are 

being dealt with and decided together as common question of law 

arises for an opinion of this Court. 

I.T.R.No.01 of 2019

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I.T.R.No.04 of 2019

2.

Brief facts of the case are that proceedings under Section 

122 of the “Ordinance” (Tax Years 2010, 2011 and 2012) were 

initiated against the Respondent No.1, on failure to submit 

satisfactory explanation by him which resulted into deemed 

assessments under Section 122(1) of the “Ordinance” vide 

order dated 31.12.2014. Further, undeclared balances were 

added under Section 111(1)(b) of the “Ordinance” (Tax Years 

2010, 2011 and 2012) vide order dated 20.01.2015. The 

Respondent No.1 filed appeal against both orders before the 

Commissioner Inland Revenue (BTB), Rawalpindi which 

confirmed the additions vide order dated 30.03.2015 that was 

further challenged by the parties through cross appeals before 

the “Appellate Tribunal”, which cancelled the assessments 

made under Section 122(1) of the “Ordinance” by the 

Commissioner Inland Revenue (BTB), Rawalpindi vide 

impugned order dated 17.11.2018 on ground of jurisdiction,

hence these applications. The operative part of the impugned 

order reads as:

“The impugned orders of amendment of 

assessment u/s 122(1) for all the years under 

appeal are illegal for having been passed by 

Commissioner BTB who did not have 

jurisdiction in the cases of existing 

taxpayers”. 

3.

Learned counsel for the applicant-department submits that 

the “Appellate Tribunal” has passed the impugned order ignoring 

the jurisdiction of Commissioner Inland Revenue (BTB) 

Rawalpindi vested on him specifically by the Chief Commissioner 

in terms of Section 209(1) of the “Ordinance” vide order dated 

20.08.2014. 

4.

On the other side, learned counsel for the Respondent 

submits that the impugned order has been passed strictly in 

accordance with law and does not require any interference by this 

Cour

I.T.R.No.01 of 2019

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I.T.R.No.04 of 2019

5.

Heard. Record perused. 

6.

Needless to say that the “Appellate Tribunal” is the last 

fact finding forum in hierarchy of Taxation Laws, therefore, it is 

bound to discharge its functions diligently. Any opinion, on law, 

by the “Appellate Tribunal” would lose credence for 

consideration by High Court in advisory jurisdiction, if findings of 

fact arrived at by it are not trustworthy. In these applications, 

exercise of jurisdiction by the Commissioner Inland Revenue 

(BTB), Regional Tax Office, Rawalpindi is questioned. We are 

constrained to observe that “Appellate Tribunal” has failed to 

properly consider jurisdiction vested with the Commissioner 

Inland Revenue (BTB), Rawalpindi in the Respondent’s case vide 

order dated 20.08.2014. Section 209 of the “Ordinance” deals 

with the jurisdiction of income tax authorities which reads as

209. Jurisdiction of income tax authorities.---[(1) Subject to 

this Ordinance, the [Chief Commissioners], the 

Commissioners and the Commissioners (Appeals) shall 

perform all or such functions and exercise all or such 

powers under this Ordinance as may be assigned to them in 

respect of such persons or classes of persons or such areas 

as the [Board] may direct.

Provided that the Board or the Chief Commissioner, 

as the case may be, may transfer jurisdiction in respect of 

cases or persons from one Commissioner to another.]

7.

Above provision of law is quite clear while dealing 

jurisdiction of income tax authorities as defined under Section 207 

and their appointments in terms of Section 208 of the 

“Ordinance”. Section 209(1) of the “Ordinance” empowers the 

Chief Commissioners, the Commissioners and the Commissioners 

(Appeals) to perform and exercise powers as assigned to them in 

respect of persons or classes or areas on the directions of the 

Board. While proviso to Section 209 of the “Ordinance”

empowers both the FBR and the Chief Commissioner to transfer 

jurisdiction in respect of cases or persons from one Commissioner 

to another. Above said section has already been elaborated in 

“CHENAB FLOUR & GENERAL MILLS versus FEDERATION 

I.T.R.No.01 of 2019

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I.T.R.No.02 of 2019

I.T.R.No.04 of 2019

OF PAKISTAN and others” (PLD 2021 Lahore 343) wherein it 

has held as under:

“22. From plain reading of aforesaid section, it 

quite clear that this Section specifically deals with 

the jurisdiction of the income tax authorities. The 

income tax authorities are defined under Section 

207 of the Ordinance while their appointments are 

made in terms of Section 208 of the Ordinance by 

the Board. According to Section 209(1), the Chief 

Commissioners, the Commissioners and the 

Commissioners (Appeals) perform and exercise 

powers as assigned to them in respect of persons or 

classes or areas on the directions of the Board 

(FBR). While Proviso to Section 209 of the 

Ordinance empowers both to the FBR and the Chief 

Commissioner to transfer jurisdiction in respect of 

cases or persons from one Commissioner to 

another. The definition of the term ‘Commissioner’ 

as provided under Section 2 (13) of the Ordinance, 

postulates that Commissioner” means a person 

appointed as Commissioner Inland Revenue under 

section 208 and includes any other authority 

vested with all or any of the powers and functions 

of the Commissioner. This leads to the 

unambiguous conclusion that Commissioner also 

includes any authority, which is vested with all or 

any of the power and functions of the 

Commissioner. Perusal of Impugned Notification 

clearly unveils that the same was competently 

issued under enabling provisions of the law and 

validly conferred jurisdiction of the Commissioner 

under the Ordinance pertaining to particular class 

of taxpayers as envisages under Section 209, subsection (8A) of which also provides that ‘the power 

to confer jurisdiction under this section shall 

include the power to transfer jurisdiction from one 

income tax authority to another’. Section 211 (3) of 

the Ordinance further laid down the same that ‘The 

Board or, with the approval of the Board, an 

authority appointed under this Ordinance, shall be 

competent to exercise all powers conferred upon 

any authority subordinate to it.’

8.

In the case in hand, the Chief Commissioner, vide order 

dated 20.08.2014 transferred jurisdiction in respect of Respondent 

No.1’ case from Additional Commissioner Inland Revenue, Audit 

I.T.R.No.01 of 2019

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& Enforcement-II, Zone-III, Regional Tax Office, Rawalpindi to 

Commissioner Inland Revenue (BTB), Regional Tax Office, 

Rawalpindi. Above said order reads as under:

9.

Record also indicative of the fact that the Respondent 

No.1 had not taken the objection with regard to jurisdiction of 

Commissioner Inland Revenue (BTB), Regional Tax Office, 

Rawalpindi at the time of filing reply to show cause notice or a

I.T.R.No.01 of 2019

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I.T.R.No.02 of 2019

I.T.R.No.04 of 2019

time of filing appeal before the Commissioner of Inland 

Revenue (Appeals-III), Rawalpindi. It has been held in case of 

“CHIEF ENGINEER, HYDEL (NORTH) AND PROJECT 

DIRECTOR, WAPDA, WARSAK versus ZAFRULLAH SHAH

and another” (2003 SCMR 686) that “no objection to the 

jurisdiction of a Court or Tribunal is taken in the forum of first 

instance it cannot be raised either in appeal or in revision.”

Even otherwise, no prejudice is caused to Respondent No.1 in 

connection with question of jurisdiction in light of 

aforementioned order dated 20.08.2014, which speaks loud and 

clear on aspect of jurisdiction absolutely against stance 

assumed by the Respondent No.1, which order dated 

20.08.2014 has either not been gone through by “Appellate 

Tribunal” or the same has been skipped by him. As such, 

impugned order dated 17.11.2018, being outcome of nonreading and misreading of record, is not sustainable in the 

eye of law.

10. In view of above, these Reference Applications are 

decided in favour of the Applicant.

11.

Office shall send a copy of this order under seal of the 

Court to the “Appellate Tribunal” as per Section 133(5) of the 

“Ordinance”.

(MIRZA VIQAS RAUF)

 JUDGE

 (JAWAD HASSAN)

 JUDGE

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