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APPELLATE TRIBUNAL INLAND REVENUE OF PAKISTAN DIVISION

BENCH, MULTAN
ITA No. 514/MB/2023
Tax-Year: 2017

NOOR NABI JHAKKAR, JHAKKAR HOUSE, NEAR WERA STADIUM,

LA YYAH Appellant

Vs.
COMMISSIONER INLAND REVENUE, MULTAN ........... Respondents

Appellant by : M. Imran Ghazi Adv

Respondent by : Mashooq Hussain DR
Date of hearing : 01.12.2023
Date of Order : 02.01.2024

ORDER.

CH. MUHAMMAD AZAM (Judicial Member}. Titled appeal was filed on

22.06.2023 at the instance of appellant against the Impugned order of
,/.'(1i1au . (A) Multan dated 07.03.2023
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/t'~-<'· ' ~~~ a~:s:order impugned herein is framed u/s 122(5A) on the reason
a ;'"'C pellant declared agriculture income at Rs. 26,00000/-/- for Tax
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~~ ·it •, 017. The appellant however, did not provide proof of payment of
_1!. · griculture tax despite providing many opportunities, hence, income was
amended by making addition u/s 111 (1) for Tax Year 2017. It is
however, contended that agriculture tax was paid. On examination tax
was paid at Rs. 20850/- which fell short of the actual tax payable and
avoid any liability u/s 111 (1) of the Ordinance. Appellant filed and
CIRA modified order of assessing officer dated 10.01.2023. Appellant
challenged the impugned order on the following grounds:
Grounds
1. That order of the learned Commissioner Inland Revenue
(Appeals- I), Multan is bad in law and contrary to the facts of
the case.
2. That the learned CIR(Appeals) is erred to dismiss the appeal
and endorsed the tax demand at Rs.429,508/-; without
appreciating the fact that income was earned and declared in
return of income as Agriculture Income and said income
categorically be exempted under section 41 of the Income Tax
Ordinance, 2001.
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3. That the learned CIR(Appeals) is erred to dismiss the appeal

and endorsed the tax imposed by Assessing Officer on
agriculture income which is after 18th Amendment in
Constitution, can only be assessed, imposed and recovered by
authorities of province of Punjab.
4. That the learned CIR(Appeals) is erred to dismiss the appeal
and endorsed the tax imposed by Assessing Officer on
agriculture income; whereas agriculture income is exempted
from levy of income tax and on existence of any factual or
legal controversy, Hon'ble this Court and Higher appellate
forums on various occasions, directed the Respondent
department to refer the case to appropriate Provincial
authority.
5. That the learned CIR(Appeals) is erred to confirm the addition
u/s 11 l(l)(d)(i) read with section 122(5A) of the Income Tax
Ordinance, 2001 made by the assessing officer; whereas
appellant himself declared the agriculture income at
Rs.2,600,000/- in return of income alongwith disclosure of
payment of tax to provincial government, hence none of
element of concealment was unearthed and all exercise
carried out by the AO is futile due to nothing of erroneous
insofar prejudicial to the interest of revenue exist.
/J"'~~ , at the learned CIR(Appeals) is erred in law to dismiss the
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; "~ ~ eal of appellant without appreciating the fact that Addl.

{(~ . · ;, l\-:l considered "any amount chargeable to tax" for

\\1~A · /~li,'.hputation
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of tax liability as given u/ s 111 (1) rather than
'<;t ,i: /),' ~-~:~:':"--:(;f11ow the language of Section 122(5) i.e. "any income
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1973 and specifically discarded by the apex court by reported

judgment 2023 SCMR 534.
7. That the Commissioner Inland Revenue (Appeals- I), Multan
is bad in law and contrary to the facts of the case due to some
other reasons which may be adduced at the time of hearing.
Findings
Provincial Government and not the Federal Government competent to
receive tax. Provincial Government has every right to charge tax whether on
area basis or on income basis. Federal Government has no right to interfere
in the system adopted by the Provincial Government. In this regard reference
was made to an unreported judgment of the Tribunal passed vide ITA
No.630 to 632/LB/2000 dated 26.11.2001, wherein it was held that probe
into agricultural income is beyond the assessing officer's Jurisdiction. In
another judgment issue has been settled vide ITA No.07/LB/2012 dated 30-
01-2012 with the following observations:
"The Federal Government has no authority to tax agricultural
income. It has been averred by the learned counsel that the taxpayer
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was cultivating about two squares of agricultural land. He has filed

claims of agricultural income savings to explain the investment in
acquisition of impugned plot. The taxing authority could have easily
forwarded such claim to the Provincial agricultural income tax in
concurrence with the CIR(A) on the issue and accordingly order
deletion of addition on this income and direct the taxing authority to
forward the claim of agricultural income to the Provincial authorities
for proper taxation".
Reference was also made to a decision of the Hon'able Lahore High Court,
Lahore passed vide writ petitioin No.9708/2013 dated 24.04.2013 wherein there
Lordship held that:
"In this background, we called Member (Taxation), Board of
Revenue. He stated that the Agricultural Tax even though levied under
the Act, has not taken root on an operational level due to lack of proper
infrastructure. On a question posed by the court he submitted that there
has been no assessment of agricultural Tax in Punjab according to his
penalties under the Act. record and the same is the case with the
imposition of The statement made by the Member (Taxation) made it
clear that the Agricultural Tax has not been operationalized in the field
1
· ·'➔r;_i:· . d is presently source than a still-born tax which needs to the properly
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· ···t:~'1!' orced. The Member failed to show any record of recovery

.··. ~-!.., ~\le, ntained under Section 6 of the Act read with Rule 19 of the Rules to
1
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t~ blish that the Agricultural Tax is being collected under the Act.
AN_.-:;\,~ ertainty that the petitioner had committed default in payment of
-~-~..-::~ agricultural income tax"
Learned CIR(A) rejected the appeal of above noted appellant while he has
accepted the appeal vide appeal No.152 dated. 19.08.2013 of Ghulam Rasool Urf
Kashif Iqbal, on reliance of Judgment of ITA No.07/LB/2012, with following
words:
"The taxing authority could have easily forwarded such claim to
the Provincial Agricultural Income Tax Authority for levy of
Agricultural Income Tax I feel no hesitation to annul the impugned
amended Order with the direction to the department, refer the matter
to the Provincial Authority for charging of Agricultural Tax".
Thereafter, the succeeding CIR(A) has also accepted the plea vide Appeal
No.381 dated. 11.12.2013 in the case ofKh. Shahid Raza ofUch Sharif with the
following remarks:-

"Reliance is place on Tribunal Judgment in ITA No.07/LB/2012

wherein deletion of Agricultural Income has been endorsed by the
Tribunal with the direction to get claim of Agriculture Income verified
from provincial authorities for proper taxation".
It is pertinent to mention here that If the decision of the learned CIR(A) is
accepted and the taxpayer pays the tax, even then the liability of Provincial
Government for taxation on agricultural Income Tax remained intact. So it would
tantamount to double taxation which is not permissible under the law. In this view
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of the matter, we have no hesitation to vacate the order of the learned CIR(A) and
cancel amended order passed u/s 122 (5) of the Income tax Ordinance, 2001,
passed by the DCIR for the tax year 2010. Assessing officer should refer this
matter to provincial tax authorities for verification of alleged payment of tax
amount to Rs.20,850/- and demand for short payment of agriculture tax against
income of Rs.26,00,000/-. In our view, recovery of further agriculture tax from the
appellant is under jurisdiction of Punjab province( Tax authorities).
File be consigned to the record room after issuance of copies to the parties
concerned.
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It is certified that order in hand is consisting of four (04) pages and each
:'_ , e has been signed.
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-==-- (CH. MUHAMMAD AZAM)
Judicial Member
(Imran Latif Minhas)
Accountant Member