The CIR Vs Ms Gulf Packaging

Form No: HCJD/C-121

ORDER SHEET

IN THE LAHORE HIGH COURT LAHORE

JUDICIAL DEPARTMENT

Case No. ITR No. 248815/2018

Commissioner Inland Revenue Versus Gulf Packaging (Pvt.) Ltd., etc.

S.No. of order/ Date of order/ Order with signature of Judge and that of Proceeding Proceeding parties or counsel, where necessary 15.09.2026 Mr. Zafar Zulqarnain Sahi, Advocate for the applicant.

C.M. No.1/2026 & MAIN CASE

Through this single order, we propose to decide the applications under Section 5 of the Limitation Act, 1908 (“the Act”) seeking condonation of delay in filing the instant Income Tax Reference as well as connected Income Tax References No.248831/2018 and 248825/2018.

2.Learned counsel for the applicant-department submits that the References were initially presented on 13.01.2018, within the prescribed period of limitation, whereafter certain office objections were raised. According to learned counsel, the objections were subsequently removed and the References were re-filed on 12.11.2018. It is contended that once the References had initially been presented within limitation, the subsequent re-filing, after removal of office objections, could not render them time-barred. Learned counsel further submits that the applicant had removed the objections promptly, but the office failed to endorse the same within time. It is also argued that since no objection regarding limitation was raised by the office at the time of re-filing, the References ought to be treated as having been filed within time. Learned counsel lastly contends that the question regarding the effect of delayed re-filing after

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removal of office objections was authoritatively settled by the Hon’ble Supreme Court of Pakistan through judgment dated 31.07.2026 passed in CPLA No.41-L/2026 titled as Commissioner Inland Revenue v. M/s Al-Hamad Cotton Ginning Pressing Factory, Jhang (2026 SCP 238) and connected matters, and that the said judgment ought not to be applied retrospectively to the prejudice of the applicant.

3.We have heard learned counsel for the applicant and examined the record as well as the documents appended with the applications. The record reveals that the instant Income Tax Reference was initially presented on 13.01.2018. The office, however, raised an objection that the case could not be entertained as it was “totally incomplete”, and the applicant was allowed three days to remove the objection. The concluding part of the Objection Sheet makes this position explicit. It is an admitted position that the applicant neither removed the office objection within the stipulated period nor re-filed the Reference within the time allowed by the office. The Reference was eventually re-filed on 12.11.2018.

4.The Hon’ble Supreme Court of Pakistan, while considering the precise legal question as to the effect of re- filing proceedings after expiry of the period prescribed for removal of office objections, has recently reiterated the settled position in Commissioner Inland Revenue (2026 SCP 238) (supra) and connected matters, observing, inter alia, as follows:

“5. The controversy involved in the present bunch of petitions is no longer res integra. The legal position governing the consequences of delayed compliance with office objections and re-filing after the expiry of the prescribed period of limitation has recently been reaffirmed by this Court in MCB Bank Limited. In that case, an

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appeal presented without the requisite court fee was returned by the office with the direction to remove the objection within the prescribed period, subject to limitation. The appellants neither complied with the office objection within the time stipulated nor sought extension of time or condonation of delay before re-filing the appeal after the expiry of the limitation period. In these circumstances, this Court in the aforesaid case held that such conduct was contumacious, observing that where office objections remain uncomplied with within the period allowed, the prescribed period of limitation expires in the meantime, and the defaulting party fails to furnish any satisfactory explanation for such conduct, the proceedings, upon re-filing, are liable to be treated as barred by limitation/stale claim. The judgment thus reaffirms that compliance with office objections is not a matter of procedural formality but a procedural obligation, the deliberate or unexplained disregard of which attracts substantive legal consequences under the law of limitation. The Court did not lay down any new principle of law but merely reaffirmed the settled legal position governing delayed re-filing after the expiry of the prescribed period of limitation following the raising of office objections.”

5.In view of the above authoritative pronouncement, the mere fact that the Reference was initially presented on 13.01.2018 cannot, by itself, preserve limitation when the defects which rendered the filing incomplete were not removed within the period stipulated by the office and the matter was re-filed only on 12.11.2018.

6.The further contention that the judgment dated 31.07.2026 cannot be applied to the present matter on the ground that it was rendered subsequently also does not persuade us. The judgment of the Hon’ble Supreme Court has not introduced a new rule governing limitation; rather, it has reaffirmed and explained the legal position already prevailing with regard to delayed removal of office

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objections and re-filing of proceedings. An authoritative pronouncement declaring the law does not, merely because it is rendered subsequently, become inapplicable to proceedings which were pending adjudication, unless the judgment itself expressly limits its operation. The question before us is, therefore, to be examined in accordance with the law as authoritatively declared by the Hon’ble Supreme Court.

7.Moreover, Section 133 of the Income Tax Ordinance, 2001 (“the Ordinance”) requires an Income Tax Reference to be properly instituted in accordance with law. A mere physical presentation of an incomplete proceeding does not, in every circumstance, confer an indefeasible right to have the subsequent defective filing treated as a valid institution irrespective of the statutory period of limitation.

8.The legal position is well settled that an office objection is not an empty procedural formality. Where a proceeding is returned with specific directions to remove defects within a stipulated period, the litigant is required to comply within the time so prescribed. If the defects remain unremoved and, in the meanwhile, the prescribed period of limitation expires, the subsequent re-filing cannot automatically relate back to the date of the original defective presentation. The period consumed in removing the objections is not liable to be excluded as a matter of course or practice. Unless the delay is judicially condoned upon the applicant establishing sufficient cause, the proceeding remains vulnerable to the bar of limitation.

9.The above principle finds clear expression in Asad Ali and 9 others v. The Bank of Punjab and others (PLD 2020 SC 736), wherein the Hon’ble Supreme Court held:

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“17. In cases in which certain objections are raised by the office which rendered the institution of the case in itself invalid or incompetent should be held to be time-barred unless the objections or deficiencies pointed out by the office are met within the time specified by the office in this regard which in turn should be within the limitation period prescribed by the law. It is trite law that what cannot be done directly can also not be allowed to be done indirectly. If what is filed within the limitation period cannot be said to be a valid appeal, in the presence of deficiencies/objections pointed out by the office, it should be held to be hit by limitation if the objections/deficiencies are remedied beyond the period of limitation.”

The aforesaid principle has subsequently been followed, inter alia, in Saleem Khan v. Mst. Zeenat and others (2023 CLC 1217) and Province of Punjab and others v. Muhammad Arif and Company (PLD 2022 Lahore 596). The consistent thread running through these authorities is that where office objections affecting the validity or competence of the proceeding are not removed within the stipulated period and the period of limitation expires meanwhile, subsequent removal of such objections does not, by itself, revive or validate the original defective institution.

10.A Division Bench of this Court in M/s Sui Northern Gas Pipelines Limited v. M/s Bhatti Fabrics, etc. (2024 LHC 3160) has likewise reiterated the necessity of strict compliance with the law of limitation and held that a party seeking condonation is required to furnish a satisfactory explanation for the delay, supported by material demonstrating due diligence and bona fide pursuit of the remedy. Mere assertions of administrative difficulty or procedural delay, without a convincing explanation supported by the record, do not constitute sufficient cause.

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The principle assumes still greater significance where the applicant is a Government department. The Hon’ble Supreme Court has repeatedly held that Government departments and public functionaries are not entitled to any special indulgence merely by reason of their status. In Government of Balochistan through Secretary Board of Revenue, Balochistan, Quetta and others v. Muhammad Ali and 11 others (2007 SCMR 1574) and Muhammad Bashir and another v. Province of Punjab through Collector of District Gujrat and others (2003 SCMR 83), it was emphasized that limitation binds the State with the same force as it binds private litigants. The statutory requirement of limitation cannot be diluted on the basis of administrative convenience.

11.Although limitation does not extinguish or create substantive rights, it bars the legal remedy after the prescribed period has expired and protects rights that may have accrued to the opposite party during the delay. Courts therefore cannot extend or disregard statutory limitation merely on considerations of equity, justice, good conscience, or sympathy. The basic purpose of limitation is to require a person to assert his legal rights promptly; unexplained and prolonged delay, particularly by a person who was aware or ought reasonably to have been aware of his rights and had access to legal assistance, cannot ordinarily be condoned. In short, limitation is mandatory and inflexible, and a litigant must provide a complete and credible explanation covering the entire period of delay; otherwise, the claim or proceedings are liable to be dismissed as time-barred.

12.The limitation is founded on diligence. The Latin maxim Vigilantibus non dormientibus jura subveniunt means

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“the law assists those who are vigilant, not those who sleep over their rights.” In Akhtar Nasir Ahmed v. Province of Punjab (PLD 2024 SC 1268), the Supreme Court held that a person seeking judicial relief must assert his rights promptly and diligently, because limitation is not merely a technical procedural rule; it protects parties from stale claims, preserves evidence, and ensures certainty and finality in legal relations. The Hon’ble Supreme Court of Pakistan further reiterated in Secretary to Govt. of KPK, C&W Department v. M/s Parco Associates Govt. Contractors (PLD 2020 SC 371) that once the prescribed period expires, valuable rights may accrue to the opposite party, which cannot ordinarily be defeated except in accordance with law. Thus, the law rewards diligence rather than indolence, and condonation of delay is an exception and not the rule, which requires a convincing legal justification for the entire period of delay.

13.The same jurisprudential approach is reflected in Khushi Muhammad v. Fazal Bibi (PLD 2016 SC 872), Ghulam Sarwar v. Province of Punjab through District Collector, Lodhran (PLD 2025 SC 60), Muhammad Faisal, Proprietor F.A. Traders, Lahore v. Commissioner Inland Revenue, Zone-II, Lahore (2025 SCMR 930), Commissioner Inland Revenue, Faisalabad v. Messrs Engineers Associated Precast (Pvt.) Ltd. (2023 PTD 393), Muslim Commercial Bank Limited and others v. The Punjab Labour Appellate Tribunal, Lahore and others (2025 SCMR 269), Abdul Majid etc. v. Mst. Zubeda Begum etc. (PLJ 2007 SC 560), and Sindh Irrigation & Drainage Authority v. Province of Sindh (2026 SCMR 190)

14.The underlying rationale of limitation law is not merely procedural. It is intended to bring certainty and

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finality to litigation, prevent stale claims from being resurrected after the expiry of the period prescribed by law, and protect the accrued rights of the opposite party. As recognized in the above authorities, the law of limitation is a statute of repose. Once the prescribed period has expired, a valuable right accrues to the opposite party, and such right cannot be displaced except in accordance with the statutory power of condonation and upon establishment of sufficient cause.

15.Consequently, an application under Section 5 of the Limitation Act cannot be allowed mechanically. The applicant must disclose a sufficient, bona fide and reasonably substantiated explanation for the entire period of delay. Where the record demonstrates failure to comply with an office direction within the stipulated period and no convincing explanation is furnished for the prolonged delay in re-filing, the discretionary jurisdiction of the Court under Section 5 cannot be invoked merely to regularize an otherwise stale proceeding.

16.In the present case, the applicant has failed to furnish any satisfactory explanation for its failure to comply with the office objection within the stipulated three days or for the substantial period thereafter culminating in re-filing on 12.11.2018. The assertion that the objections had been removed promptly, but that the office failed to endorse the same in time, is not supported by sufficient material on record. Equally, the absence of a separate office objection regarding limitation at the stage of re-filing cannot confer jurisdiction upon the Court to ignore the statutory period of limitation. Limitation is a matter of law and cannot be extended merely because the office did not independently flag the defect.

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17.It is also significant that the applicant did not seek timely judicial extension of the period granted for removal of objections, nor did it move an application for condonation contemporaneously with the delayed re-filing. The explanation furnished, therefore, fails to establish the requisite diligence or sufficient cause for the delay.

18.We may also observe that the plea based upon the subsequent pronouncement of the Hon’ble Supreme Court is misconceived. The said judgment does not constitute the creation of a new rule to be applied prospectively; it reaffirms the settled legal position concerning the consequences of failure to remove office objections within the prescribed period. The present matter, being pending adjudication, is consequently governed by the law so declared. The applicant cannot claim a vested right in a proposition of law which has been authoritatively held to be otherwise.

19.Once the original institution, after expiry of the prescribed period and failure to cure the defects within the time allowed by the office, is found to be barred by limitation, the Court is not required to enter into the merits of the Reference. The law of limitation operates independently of the merits of the underlying dispute, and an otherwise arguable case cannot furnish a ground for overlooking a statutory bar.

20.For the foregoing reasons, we find no sufficient cause warranting condonation of the delay. Accordingly, the applications under Section 5 of the Limitation Act, 1908, filed in the instant Income Tax Reference and connected Income Tax References No.248831/2018 and 248825/2018 are dismissed. Consequently, the aforesaid Income Tax References, being barred by limitation, are also dismissed.

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19.Office is directed to transmit a copy of this judgment under the seal of the Court to the learned Appellate Tribunal in terms of Section 133(8) of the Income Tax Ordinance, (Hassan Nawaz Makhdoom) (Muhammad Ajmal Zahid) Judge Judge M.Tahir*