ABS & Co successfully represented KTC before the Appellate Tribunal Inland Revenue (ATIR), Peshawar Bench, in multiple connected appeals challenging substantial tax assessments imposed under Section 122 of the Income Tax Ordinance, 2001. The firm’s tax litigation team demonstrated that the assessment proceedings suffered from procedural and legal infirmities, including the absence of recorded reasons, lack of opportunity of hearing, and non-speaking orders. Upon considering the submissions and documentary evidence, the Tribunal set aside the impugned assessment orders, vacating tax liabilities exceeding PKR 3 billion.
ITA No. 535/PB/2024 & ITA No. 536/PB/2024 were filed on behalf of KTC before the ATIR, challenging Assessment Orders dated 30.07.2024 and 02.08.2024, passed by the Deputy Commissioner Inland Revenue under Section 122(1) of the Income Tax Ordinance, 2001 (“ITO, 2001”). Through these orders, heavy tax liabilities of Rs. 314,214,887/- and Rs. 1,559,157,687/- were imposed upon the Appellant.
It was argued that the assessment proceedings were fundamentally flawed as the audit notices under Section 177(1) lacked recorded reasons and no proper opportunity of hearing was provided, and non-speaking Orders were passed without application of mind. On merits, it was contended that trade discounts are not taxable under Section 156, gross receipts cannot be treated as net taxable income under Section 111, payments to local growers are exempt under SRO 787(I)/2011, and advances from distributors do not constitute taxable income. It was also argued that expenses and purchases were wrongly subjected to withholding contrary to Section 153(1)(a), while denial of investment tax credit and depreciation claims was unjustified.
Upon consideration of the submissions, reconciliations, and documentary evidence produced, the Tribunal held in favour of our client, KTC. Accordingly, both Assessment Orders were set aside, and the entire liabilities of Rs. 314,214,887/- and Rs. 1,559,157,687/- stood vacated vide Tribunal’s Orders dated 01.07.2025.
Similarly, in ITA No. 537/PB/2024, the Additional Commission Inland Revenue’s Assessment Order dated 02.08.2024 under section Section 122(5A) was challenged, wherein a liability of Rs. 1,175,280,748/- was imposed upon KTC.
It was argued that the jurisdiction assumed under Section 122(5A) of the ITO, 2001, requiring twin conditions, error in the assessment and prejudice to revenue, were not established. It was contended that the ACIR failed to conduct any independent inquiry and instead relied on a roving and fishing exercise, which the law does not permit. The order is also liable to be vitiated for want of due process, as no reasonable opportunity of hearing was granted. Emphasizing the principle of “no taxation without representation”.
On these grounds, the Tribunal accepted the appeal. The Impugned Order was set aside, and the matter was remanded back to the tax authorities with directions to conduct a fresh adjudication after providing due opportunity of hearing to the Appellant. The order was passed vide Order dated 01.07.2025.
This case reflects ABS & Co’s expertise in tax litigation and its commitment to achieving favourable outcomes for clients. The ABS & Co team working on this matter included Maaz ul Mulk Khattak and Usman Jillani.
