Tax Tribunals Must Decide Cases On Basis Of Available Records: SC.

ISLAMABAD -- Supreme Court of Pakistan on Monday ruled that the tax tribunals must proceed ex-parte to decide the cases on the basis of available records rather than dismissing them on the basis of non-prosecution.

It was declared in a seven-paged judgment authored by Justice Syed Mansoor Ali Shah while hearing an appeal in a tax matter and the court also noted that Section 132(2) does not encourage adjournments by the parties. The ruling said that the tribunal can proceed ex-parte if any of the parties is found to be 'in default' on the date of hearing.

In this regard, the apex court struck down Appellate Tribunal Inland Revenue Rules, 2010 as being ultra vires section 132(2) of the Income Tax Ordinance 2001. The top court explained that 'in default' meant the absence of a party without a sufficient cause on any date fixed for hearing.

A division bench of the apex court led by Chief Justice of Pakistan Justice Umar Ata Bandial conducted hearing in the matter.

The judgment mentioned that Section 132(2) of the ordinance said that the tribunal may proceed ex-parte to decide the appeal on the basis of the available record. On the other hand, Rule 22(1) stipulates that the tribunal may if it deems fit, dismiss the appeal or application in default.

Justice Shah noted that section 132(2) of the ordinance is far more detailed, explicit, direct and clear compared to Section 33(4) of the Income Tax Act, 1922.

Therefore, the order said, it is underlined that the logic and rationale behind Section 132(2) of the ordinance and the consistent jurisprudence evolved over the years around Section 33(4) of the erstwhile tax law is to promote and support an efficient tax administration and encourages smart tax governance in the country.

The court also noted that the order of dismissal of the appeal on the ground of default gives rise to a new set of litigation on a technical issue totally unrelated to the tax controversy at hand.

It further explained that any further proceedings against the order of dismissal are a futile exercise for a tax collector, as well as, the taxpayer...