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M.A. (Stay) No.708/LB and I.T.A. No.913/LB of 2015, decided on 22nd April, 2015.

----Ss. 127, 128 & 131---Recovery of tax before disposal of appeal against order-in-original before the Commissioner (Appeals) under S.127 of the Income Tax Ordinance, 2001---Application for grant of interim injunction against recovery of tax before disposal of appeal before the Commissioner (Appeals)---Appellant Taxpayer/assessee impugned order of Commissioner (Appeals) whereby application of taxpayer assessee for stay of recovery proceedings initiated by the Department, was rejected---Contention of the taxpayer assessee was that the tax demand had yet to pass the test of appeal and recovery of the same till disposal of appeal before Commissioner (Appeals) was unjustified---Validity---Income Tax Appellate Tribunal directed the Department not to pursue recovery, in any manner, till decision of the main appeal by the Commissioner (Appeals) on the ground that recovery should not be made till disposal of appeal by an independent forum---Departmental Authorities were further directed to de-attach bank accounts of the taxpayer assessee till decision by the Commissioner (Appeals) and directed that the said appeal before the Commissioner (Appeals) should be decided within a period of three weeks---Appeal was allowed, accordingly. Messrs Z. N. Exports (Pvt.) Ltd. v. Collector of Sales Tax 89 Tax 177 = 2003 PTD 1746 = 2003 GST 283 and 2011 PTD 1290 rel. Waheed Shahzad Butt for Applicant. Rao Shehzad, D.R. for Respondent. Date of hearing: 22nd April, 2015.

The registered person through the titled appeal has assailed the order dated 17-4-2015 passed by the learned CIR[Appeals-IV], Lahore whereby has refused to grant the stay against recovery of tax demand whereas the miscellaneous application has been preferred for interim relief against recovery proceedings initiated by the Department for recovery of an amount of Rs. 13,24,55,360 in respect of Tax Year 2009. 2. The learned AR submits that a tax demand of Rs.13,24,55,360 was created by the assessing authority, which was challenged in first appeal before the learned CIR[Appeals-IV], Lahore and is still pending for adjudication there. He further stated that during the pendency of appeal the department has initiated the recovery proceedings and has started coercive measure to recover the disputed tax demand, therefore, an application for grant of stay was filed before the CIR[Appeals-IV], Lahore who vide order dated 17-4-2015 rejected the same. The learned Counsel for the applicant vehemently contended that the appellant / taxpayer has a prima facie good arguable case and there is every likelihood of the success of appeal. He further submitted that the tax demand created by the assessing authority has still to pass the test of appeal and recovery of the same till the disposal of appeal is unjustified and immature. Therefore, the learned CIR[A] was not justified in rejecting the request for grant of stay. It is, therefore, prayed that the order of learned CIR[A] rejecting the request for grant of stay may be annulled and stay against recovery of the aforesaid tax demand be granted till the disposal of appeal by the learned first appellate authority. 3. During the proceedings, the learned AR has placed reliance on a reported judgment in re: 89 TAX 177 = 2003 PTD 1746 = 2003 GST 283 in the case of Messrs Z.N. Exports [Pvt.] Ltd., v. Collector of Sales Tax , decided on 3-2-2003 wherein the Honorable Court has held that:-- "In all fairness, equity and justice, an assessee should not be forced to pay a demand created by a Revenue authority unless the order creating such demand has undergone the scrutiny of at least one independent forum". The learned AR has further placed reliance on another reported judgment 2011 PTD 1290 of the Hon"ble Lahore High Court., Lahore and an unreported decision of the Tribunal in MA[Stay] No. 2366/LB/2014 - ITA No. 2180/LB/2014, [Tax Year 2013], Dated: 26-9-2014 wherein as per his claim the stay was allowed. 4. Keeping in view the above, the Department is advised not to pursue the recovery, in any manner, in this case till decision of the main appeal by the Commissioner[Appeals] in view of the directions issued by the superior courts, as referred above, that recovery should not be made till disposal of appeal by an independent forum. The departmental authorities as also directed to de-attach the bank accounts till the decision by the learned CIR[Appeals]. The learned CIR[A] is also directed to decide the appeal of the taxpayer within a period of three weeks. Order accordingly. 5. The appeal as well as the stay application, is disposed of accordingly. HBT/72/Tax(Trib.) Order accordingly.

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