Syed Naveed Amjad vs Assistant Commissioner.

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT LAHORE

JUDICIAL DEPARTMENT

Case No: W.P. No.27851/2015

Syed Naved Amjad Versus Assistant Commissioner Andrabi Inland Revenue, etc.

JUDGMENT

Date of hearing 13.10.2026 Petitioners by M/s Tafazzul H. Rizvi, Syed Naveed Amjad Andrabi and Khurram Saleem, Advocates.

Respondents by: M/s Ibrar Ahmad, Muhammad Yahya Johar and Muhammad Yasin Zahid, Advocates.

Muhammad Ajmal Zahid, J.— Through this single judgment, we propose to decide the instant constitutional petition along with connected W.P. No.32717/2015, as both petitions involve common questions of law and fact.

2.Through these constitutional petitions instituted under Article 199 of the Constitution of the Islamic Republic of Pakistan, (“the Constitution”), the petitioners have challenged the legality of notices dated 09.09.2015 and 16.10.2015, respectively, issued to various commercial banks under Section 176 of the Income Tax Ordinance, 2001 (“the Ordinance”), requiring them to furnish information concerning bank accounts maintained by the petitioners.

3.Briefly stated, the petitioners assert that they have regularly filed their income tax returns up to Tax Year 2015 and have discharged their tax liabilities in accordance with law. They maintain that, although certain other taxpayers were selected by respondent No.3 for audit for Tax Years 2011 to 2014, their cases were not selected for audit. According to the petitioners,

respondent No.1, acting with mala fide intention, issued the impugned notices to various commercial banks, requiring them to retrieve and furnish statements of their bank accounts. They contend that, in the absence of any pending proceedings, inquiry or investigation against them, the impugned requisitions are without lawful authority and liable to be set aside.

4.Learned counsel for the petitioners submits that the relevant bank statements and financial information had already been furnished to the concerned tax authorities. He further contends that the impugned notices, notwithstanding their purported issuance under Section 176 of the Ordinance, do not satisfy the statutory requirements governing the exercise of the power to requisition information. According to him, such power cannot be exercised arbitrarily or for an extraneous purpose, nor can it be employed to circumvent the statutory conditions governing assessment, amendment of assessment and audit proceedings. In support of his submissions, he relies upon Fazli Hakeem and another v. Secretary State and Frontier Regions Division Islamabad and others (2015 SCMR 795) and Government of Sindh through Secretary and Director General, Excise and Taxation and another v. Muhammad Shafi and others (PLD 2015 SC 380).

5.When learned counsel for the respondents was specifically asked whether the impugned exercise was intended to facilitate proceedings under Sections 121, 122 or 124 of the Ordinance, or under any other enabling provision, he failed to controvert the submissions advanced on behalf of the petitioners or to identify any specific proceedings or lawful purpose warranting issuance of the impugned notices.

6.We have heard learned counsel for the parties and examined the available record with their assistance.

7.The controversy essentially concerns the legal effect of the expiry of the statutory period prescribed for initiating assessment

proceedings upon the continued utility of a requisition for information issued under Section 176 of the Ordinance. The question is whether, once the relevant assessment jurisdiction has become barred by limitation, the tax authorities may nevertheless continue to invoke an information-gathering provision for the purpose of facilitating proceedings that they are no longer legally competent to initiate.

8.It is a settled principle of statutory interpretation that a statutory authority must exercise its powers within the limits prescribed by the law conferring them. No statutory power can be enlarged by implication or employed to circumvent a restriction expressly imposed by the legislature. Sections 175, 176 and 177 of the Ordinance provide distinct mechanisms for obtaining access to relevant premises and records, requisitioning information and conducting audits. These provisions facilitate the administration, determination of tax liability and enforcement of the tax law; they do not, however, confer an unrestricted or independent authority to disregard the conditions governing the exercise of substantive assessment jurisdiction.

9.The power to requisition information under Section 176 must be distinguished from the jurisdiction to determine, amend or otherwise give effect to a taxpayer's liability. Although information obtained under that provision may constitute material relevant to assessment proceedings, the power to obtain such information cannot enlarge the jurisdiction conferred by the substantive provisions of the Ordinance, including Sections 120, 121, 122 and 124, wherever applicable. Each statutory power remains subject to its own terms, conditions and limitations, and the exercise of an ancillary or facilitative power cannot dispense with the jurisdictional requirements governing the substantive proceeding for which it is invoked.

10.Limitation is not a mere procedural formality; it defines the temporal boundaries within which a statutory authority may lawfully exercise its jurisdiction. Where the legislature has prescribed a period for initiating or completing a particular proceeding, the competent authority must act within that period, subject to any exclusion, extension or exception authorised by law. Neither administrative convenience nor the pendency of an audit, inquiry, investigation or requisition for information can, in the absence of statutory sanction, suspend the running of limitation or enlarge the period available for exercising the relevant jurisdiction.

11.The legal consequence is that the issuance of a notice under Section 176 does not, by itself, preserve, suspend or revive assessment jurisdiction that has otherwise become unavailable by reason of limitation. The requisition of information cannot be treated as a substitute for the statutory proceedings through which the taxpayer's liability may lawfully be determined. Nor can it operate as an indirect means of achieving an assessment or amendment of assessment that the competent authority is precluded by limitation from undertaking directly.

12.Where, therefore, the statutory period for initiating the contemplated assessment proceedings has expired, and no exclusion, extension or exception is available under the Ordinance, a notice under Section 176 loses its operational value and legal utility insofar as it is intended to facilitate those time-barred proceedings. To permit the continuation of such a requisition for that purpose would effectively allow an ancillary information- gathering power to outlive, and thereby undermine, the statutory limitation governing the substantive jurisdiction. Such a construction would defeat the legislative scheme and render the prescribed limitation ineffective in practice.

13.This conclusion is confined to the purpose for which the impugned notices have been issued. The expiry of limitation

applicable to a particular assessment proceeding does not, by itself, extinguish every independent power otherwise lawfully exercisable under the Ordinance. The decisive consideration is whether the requisition has a subsisting lawful purpose within the scope of Section 176 or is being employed to facilitate proceedings that have become barred by limitation. A statutory power cannot be sustained merely because the information sought might, in the abstract, be relevant to the administration of the tax law; its exercise must remain referable to a lawful purpose and the applicable statutory framework.

14.Applying these principles to the present cases, the petitioners have asserted that the relevant bank statements and financial information had already been furnished to the tax authorities and that no proceedings, inquiry or investigation existed to warrant the impugned requisitions. More significantly, when called upon to identify the statutory basis and purpose of the impugned exercise, the respondents failed to identify any specific proceedings or demonstrate, on the available record, a lawful justification for requiring the banks to furnish the information in question. The respondents have also failed to establish any basis on which the contemplated assessment proceedings could lawfully be pursued notwithstanding the expiry of the applicable limitation period.

15.In these circumstances, the impugned notices cannot be sustained merely on the strength of the general power to requisition information under Section 176. Once the limitation governing the contemplated assessment proceedings has expired, the respondents cannot continue to rely upon the impugned requisitions as a means of keeping alive, or indirectly exercising, jurisdiction that the law no longer permits them to invoke. The notices, having lost their operational value for the purpose for which they were issued,

cannot be allowed to subsist as an instrument for circumventing the statutory bar.

16.For the foregoing reasons, we hold that the impugned notices are unsustainable insofar as they are intended to facilitate assessment proceedings that have become barred by limitation and the respondents have failed to establish any other lawful basis for their issuance under Section 176 of the Ordinance. The exercise of a statutory power for a facilitative purpose cannot be converted into a means of defeating the express temporal restrictions imposed by the legislature.

17.Consequently, both constitutional petitions are allowed to the extent indicated above, and the impugned notices dated 09.09.2015 and 16.10.2015 are set aside. There shall be no order as to costs.

(Hassan Nawaz Makhdoom) (Muhammad Ajmal Zahid) Judge Judge

APPROVED FOR REPORTING

Judge Judge

M. Tahir*