Case Summary & Legal Holding

This judicial decision was delivered by the Supreme Court / High Court of Pakistan. The matter involves proceedings between Petitioner and Respondent, officially reported as 2025 LHC 6431. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.

Full Judgment Text & Judicial Ruling

Form No.HCJD/C-121 ORDER SHEET LAHORE HIGH COURT, LAHORE JUDICIAL DEPARTMENT ITR No.256746 of 2018 Commissioner Inland Revenue, Faisalabad vs. M/s Al-Hamd Cotton Ginning Pressing Factory, Jhang Sr. No. of order/ proceedings Date of order/ proceedings Order with Signature of Judge, and that of parties or counsel, where necessary. 21.10.2025 M/s Muhammad Yahya Johar and Malik Abdullah Raza, Advocates for the applicants-department. Mr. Muhammad Ajmal Khan, Advocate for the respondents- taxpayer. This order shall decide the instant ITR along with connected I.T.R. Nos.256748, titled “Commissioner Inland Revenue, Faisalabad vs. M/s Zahid Cotton Ginning Pressing Factory, Jhang” and 256756 of 2018, titled “Commissioner Inland Revenue, Faisalabad vs. M/s Ghazi Cotton Ginning Pressing Factory, Jhang Sadar” as common question of law and facts is involved in all these reference applications. 2. Through these reference applications under Section 133 of the Income Tax Ordinance, 2001 (hereinafter referred to as the “Ordinance”), following question of law, asserted to have arisen out of impugned order dated 01.08.2018, passed by the Appellate Tribunal Inland Revenue, Lahore (“Tribunal”), have been proposed for our opinion:- “i. Whether the learned Appellate Tribunal IR was justified in holding that “information regarding sales declared by the taxpayer in the Sales Tax Returns cannot be treated as definite information” in terms of Section 122(5) of the Ordinance?” 3. On 02.10.2025, learned counsel for the parties were directed to assist this Court on the question of limitation, in pursuance of which arguments have been addressed today.

ITR No.256746 of 2018 -2- 4. Learned counsel for the applicants-department contends that the question of limitation is not attracted in the present case. Further submit that the lis is to be adjudicated in accordance with the law and as per judicial pronouncements prevailing at the relevant time, i.e., the year 2018, at the time when the reference applications were instituted, and in support thereof, has placed reliance upon the case of Farman Ali vs. Muhammad Ishaq (PLD 2013 SC 392). Learned counsel argues that the subsequent judgment of the Hon’ble Supreme Court titled ASAD ALI and 9 others vs. The BANK OF PUNJAB and others (PLD 2020 Supreme Court 736), which was rendered on the issue of limitation, operates prospectively and not retrospectively. They maintain that the procedural rules regulating office objections were not duly observed by the office of this Court, and therefore, the plea of limitation is misconceived. They add that if the present reference applications are dismissed as time-barred, the High Court Rules governing removal of office objections would become redundant. It is lastly urged that since the reference applications were initially filed within the prescribed limitation period and as such, the subsequent removal of office objections after expiry of the limitation period do not render the same as time-barred. Learned counsel have placed reliance on HABIB BANK LIMITED through Attorney vs. MEHBOOB RABBANI (2023 PLC (C.S.) 891), Rao ABDUL REHMAN (DECEASED) through legal heirs vs. MUHAMMAD AFZAL (DECEASED) through legal heirs and others (2023 SCMR 815) & CHIEF EXECUTIVE PESCO DEPARTMENT, GOVERNMENT OF KHYBER PAKHTUNKHWA PESHAWAR and others vs. AFNAN KHAN and another (2021 SCMR 2100). 5. Conversely, learned counsel for respondents-taxpayer argues that the reference applications are time barred. Further submits that after removal of office objections the reference applications were

ITR No.256746 of 2018 -3- re-filed with the inordinate delay of 41-days, which cannot be condoned. 6. We have heard learned counsel for the applicants- department as well as learned counsel for the respondents- taxpayers and perused the available record. 7. It is evident from the record that impugned order was passed on 01.08.2018, while the certified copies of the same were received by the applicants-department on 06.08.2018 & 08.08.2018, respectively. The prescribed limit for filing of the reference applications was 90-days. The applicants filed the reference applications on 03.11.2018, within time, when the office raised objections that files are “totally incomplete” and directed to resubmit after removal of objections within three days, which had to be filed on 06.11.2018. The applicants after removing the objections re-filed the reference applications on 17.12.2018 i.e. after 41-days beyond the period granted for removal of the office objections. 8. The Hon’ble Supreme Court of Pakistan in MUHAMMAD FAISAL Prop., F.A. Traders, Lahore vs. COMMISSIONER INLAND REVENUE, ZONE-II, RTO-II, LAHORE (2025 SCMR 930), while dealing with the question of limitation has observed as under: - “10. It is also a settled proposition of law that limitation is not a mere technicality as once limitation expires a vested right is created in favour of the other side by operation of the law which cannot be taken away lightly. It appears that the record is completely silent whether the defects in the ITR pointed out by the office were remedied within the time given by the office or not, however it is an admitted position that the matter became time barred, for which an application was filed by the Department before the High Court. Though the High Court has passed the order on the merits of the case but it could not be denied that it has failed to discuss the averments of the CMA with regard to the limitation by specifying whether the same was allowed or rejected; which the High Court ought to have decided as a preliminary

ITR No.256746 of 2018 -4- issue, duly raised by the petitioner in his objections to the said CMA. We also do not agree with the Department, that the CMA was impliedly allowed by the High Court, as it is a trite principle of law that a vested right can only be taken away through express legislation and not by implication. In view of above authoritative pronouncement, it is manifest that the question of limitation is not a mere procedural formality but a matter affecting vested rights, which must be determined through a clear and speaking order, being preliminary issue. In the present case, the applicants-department has failed to establish that the delay in re-filing of reference applications was condoned by any express order of this Court or that sufficient cause existed for the belated re-filing beyond the time granted for removal of office objections. 9. It is a settled procedural requirement, embodied in Rule 9-A of the Lahore High Court Rules and Orders, Volume V, Chapter I, that when the office raises objections, a list of petitions, appeals, and other matters ordered to be returned, shall be notified on the Notice Board. Importantly, the said Rule clarifies that any delay in placing such petitions before the Court or in issuing the list shall not furnish any justification for non-receipt of the returned petition within the prescribed period, nor shall it excuse non-compliance with the office objection within the time specified. For clarity, Rule 9-A is hereby reproduced hereinafter: “9-A. A list of petitions, appeals, etc., ordered to be returned shall be notified on the Notice Board, and petitions, appeals, etc., not received back within seven days of the publication of the list shall be placed before a Judge of the High Court for orders on a date to be notified by including such petition in a motion cause list. It is made clear that any delay in placing such petition before the Court or issuing the list shall not furnish any justification for non-receipt of the returned petition in time and non-compliance of the objection taken within time specified by the Deputy Registrar (Judicial).” 10. Further, the inordinate delay in filing the reference applications is fatal in absence of any application for condonation

ITR No.256746 of 2018 -5- of delay or any explanation demonstrating “sufficient cause” as required under Section 5 of the Limitation Act, 1908. Once the limitation period commences, it runs inexorably and cannot be arrested or extended by administrative lapses or clerical omissions. Neither departmental hardship nor negligence constitutes a valid ground for condoning the delay. The law of limitation must be applied with strict adherence to its terms. Needless to observe that question of limitation cannot be left unattended. Guidance in this respect can be sought from the case of ASAD ALI and 9 others vs. The BANK OF PUNJAB and others (PLD 2020 Supreme Court 736). The relevant extract of said dictum is reproduced below :- “15. The said principle of law has repeatedly been laid down, followed, approved, affirmed and reiterated in a large number of judgments of this Court as well as the High Courts. Starting from the judgment of the Lahore High Court Lahore reported as Ghulam Hussain v. Bahadar (PLD 1954 Lahore 361) till judgment of this Court reported as Lahore Development Authority v. Muhammad Rashid (1997 SCMR 1224), there is consistency in the principle that if objections raised by the office are not removed during the period allowed by the office and meanwhile the limitation period expires, the petition would become barred by time. There are two subsequent judgments of this Court reported as Mst. Sabiran Bi v. Ahmad Khan (2000 SCMR 847) and Farman Ali v. Muhammad Ishaq (PLD 2013 SC 392) which are incorrectly understood to have decided that so long as the initial institution is within the limitation period, removal of objections raised by the office after expiry of the limitation period does not render the petition to be barred by time. The said judgments have been rendered in a different set of facts and circumstances, do not lay down the entire law on the subject and are distinguishable on points of law as well as facts. 16. Be that as it may, since the LDA case (ibid) was decided by three learned Judges, it has to be followed instead of the two subsequent judgments rendered by two learned Judges. In addition to the above, following judgments also hold that if objections raised by the office are not removed within the time specified by the office and in the meanwhile limitation for filing the appeal expires, the appeal would be rendered time-barred: Lahore Development Authority v. Muhammad Rashid (1997 SCMR 1224); Naheed Ahmad v. Asif Riaz (PLD 1996 Lahore 702); Ghulam Hussain v. Bahadar (PLD

ITR No.256746 of 2018 -6- 1954 Lahore 361); Ellahi Bakhsh and 8 others v. Ahmad Bakhsh and 2 others (1999 YLR 777); Ghulam Dastgir Khan Lak v. Hayat (2000 CLC 781); Muhammad Idrees v. Abdul Rehman (2001 YLR 2294); Mazhar Iqbal v. Muhammad (2001 YLR 819); Protein and Fats International (Pvt.) Ltd. v. Capital Assets Leasing Corporation Limited (2005 CLD 857); and Controller Land Acquisition v. Fazal-ur-Rehman (2009 SCMR 767). 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.” 11. It was the argument of learned counsel for the applicants- department that the question of limitation does not arise in the present matter, and that the lis is to be governed by the legal position and judicial pronouncements prevailing at the relevant time (i.e., in the year 2018). In support of this contention, reliance was placed upon Farman Ali vs. Muhammad Ishaq (PLD 2013 SC 392), on the premise that the reference applications were originally instituted within the prescribed limitation period. However, this contention stands refuted in light of the authoritative judgment rendered by the Hon’ble Supreme Court in Asad Ali supra, wherein the Apex Court undertook a detailed review of the law on the subject. The august Court while dealing with the question of limitation examined the line of precedents from the case of Ghulam Hussain vs. Bahadar (PLD 1954 Lahore 361) up to Lahore Development Authority vs. Muhammad Rashid (1997 SCMR 1224), and reiterated the well-established principle that if office objections are not removed within the period allowed and the limitation period expires in the meantime, the petition or reference becomes time-barred. It is important to note that the

ITR No.256746 of 2018 -7- Lahore Development Authority (“LDA”) case was decided by the Hon’ble Supreme Court of Pakistan (a Bench comprising three members), whereas the subsequent decisions cited by the applicants’ counsel i.e. Farman Ali and Mst. Sabiran Bi vs. Ahmad Khan (2000 SCMR 847) were rendered by two members Bench of the august Court. Therefore, as per the settled principle of judicial propriety and precedent, the view taken by the three members Bench of the Supreme Court in LDA case must prevail and be followed. 12. Moreover, the Hon’ble Supreme Court in Asad Ali’s case clearly distinguished Farman Ali and Sabiran Bi cases on both factual and legal grounds. It was observed that these cases were decided in a different factual context and do not lay down a binding or comprehensive rule to the effect that removal of office objections after expiry of limitation has no bearing, provided the initial filing was within time. The assumption that these judgments permit unlimited delay in curing defects post-filing is incorrect and contrary to the consistent judicial position. 13. Further, the argument of learned counsel for the applicants- department that the High Court Rules governing removal of office objections would become redundant if the present reference applications are dismissed as time barred, is also misconceived. These procedural rules are meant to ensure timely perfection of pleadings and cannot be circumvented on equitable grounds. The delay in removing objections is not merely a procedural lapse but goes to the very root of limitation, as clarified in Asad Ali’s case. In these circumstances, the applicants- department contention that the reference applications remained within limitation despite the objections being removed after expiry of the prescribed period is without force.

ITR No.256746 of 2018 -8- 14. It is trite law that what cannot be done directly can also not be allowed to be done indirectly. If a memorandum of appeal or petition, though presented within the limitation period, suffers from defects or deficiencies that render it invalid, and such defects are cured after the expiry of the prescribed limitation period, the filing shall be deemed to be barred by limitation. This principle has also been expounded by the august Court of Pakistan in the case of Muhammad Faisal Prop., F.A. Traders, Lahore supra as under: “9. The primordial question raised in the instant matter is regarding the issue of limitation. It is an admitted fact on behalf of the respondent that the order of the ATIR was received by the Commissioner Inland Revenue on 09.03.2017. The said ITR was filed before the High Court on 29.05.2017, within the limitation period, which was set to expire on 07.06.2017. However, since the said ITR suffered from some shortcomings, it took the department few days in removing the said objections raised by the branch. The said shortcomings/defects were finally removed after 8/9 days of the expiry period. The Department has taken the stance that the decision was given on merits by the High Court and the limitation issue raised by the counsel for the petitioner was a mere technicality which ought to be ignored. It may however be noted that till such time the objections were removed the matter already got time barred, which is evident from the fact that an application under section 5 of the Limitation Act, 1908 was filed by the Department before the High Court, with the prayer that the delay may be condoned. It is a settled proposition of law that if objections raised by the office of the Court were not removed within the time specified by the office and in the meantime limitation for filing the appeal stands expired, the appeal would be rendered as time barred. Reliance in this regard is placed upon the decision of Asad Ali v. The Bank of Punjab.1” 15. No plausible explanation has been rendered by learned counsel for the applicants to justify the removal of office objections beyond the stipulated period. Mere bald assertions, unsupported by any cogent explanation or evidence, cannot mitigate the consequences arising under the law of limitation. It is apparent from the record that no legal or factual disability existed

ITR No.256746 of 2018 -9- which could have prevented the applicants from approaching the Court within the prescribed period. 16. It is settled by a catena of judgments that the Court is duty bound to enforce limitation statutes with judicial rigour and restraint, regardless of whether limitation is raised as a defense. The law aids the vigilant, not the indolent (Leges vigilantibus non dormientibus subserviunt). Ignorance of law, inadvertence, does not constitute valid grounds for condonation. The Courts have consistently held that condonation of delay is not to be granted as a matter of right, but only upon establishing sufficient cause with due diligence. In this regard, authoritative pronouncements reference in this regard can be made to MUSLIM COMMERCIAL BANK LIMITED and others vs. The PUNJAB LABOUR APPELLATE TRIBUNAL, LAHORE and others (2025 SCMR 269). Relevant portion is reproduced as under:- “11. It is reminiscent of jurisprudential time immemorial that the law favors adjudication on merits, but at the same time another philosophy of law resonates, that the law helps the vigilant and not the indolent. The Latin maxim "Leges vigilantibus non dormientibus subserviunt" or "Vigilantibus Non Dormientibus Jura Subveniunt" articulates that the law aids and assists those who are vigilant but not those who are sleeping or slumbering. The doctrine of equality before the law dictates that all litigants should be afforded the same treatment to administer the law even-handedly. In fact, the law of limitation does not bestow a right but ensues incapacitation after the lapse of a certain period admissible for putting into force existing legal rights. Therefore, it is a fundamental duty of the Court to examine the question of limitation vis-à-vis the statutory provisions envisioned under special or general law, requiring compliance of an act within a specific timeline. Repercussions will follow if the limitation period provided by the law set into motion is not observed or fulfilled, notwithstanding whether the objection of limitation is raised by the opponent or not. Beyond a shadow of a doubt, the rationality of the law of limitation reckons the right to sue upon the arising of a cause of action, but in tandem, it also brings forth an impediment and provides a strong line of defense to the opposing party after the lapse of the limitation period set forth for enforcing any legal right or claim.”

ITR No.256746 of 2018 -10- 17. In the present matters, the applicants-department has failed to furnish any explanation, much less a satisfactory or legally sufficient cause, for the delay in re-filing the reference applications. Since these reference applications are barred by limitation, there is no occasion to advert to the merits of the cases. Reliance in this regard can be placed on “Abdul Hafeez Abbasi and others vs. Managing Director, Pakistan International Airlines Corporation, Karachi and others (2002 SCMR 1034) and Collectors of Customs E & S.T. and Sales Tax vs. Pakistan State Oil Company Ltd (2005 SCMR 1636). Accordingly, we hold that the reference applications are not maintainable on the ground of limitation. Hence, the same are dismissed as time-barred. 18. The instant reference application, along with connected reference applications is answered in the negative against the applicants-department in the terms stated above. 19. Office to transmit copy of this order under the seal of the Court to the Appellate Tribunal in terms of Section 133 (8) of the Income Tax Ordinance, 2001. (ABID AZIZ SHEIKH) (MALIK JAVID IQBAL WAINS) JUDGE JUDGE Approved For Reporting JUDGE JUDGE Usman*

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