LAHORE: The Lahore High Court has ruled that agriculture tax for 2012 and 2013 (prior to promulgation of Finance Act 2013) can be recovered, however, taxpayers have the right to challenge the amount sought to be recovered through appeals/objections.

A judgment issued by Justice Ayesha A. Malik on hundreds of petitions further rules that against the recovery notices issued under Section 3B of Punjab Agricultural Income Tax Act 1997, remedy of appeal is available to the petitioners.

“In this regard, the recovery notices can be challenged within 30-day time from the date of release of this judgment under section 7 of the Act before the competent authority, who is directed to decide the appeals filed by the petitioners within 30 days after which the respondents can recover agriculture income tax from the petitioners as per law,” it adds.

The petitioners had received notices of recovery of agriculture income tax for the assessment years 2012, 2013, 2014, 2015, 2016, 2017 and 2018.

They contended that the notices were barred by time as the government could not recover agriculture income tax beyond the two-year limit prescribed, meaning thereby that if notices were issued in 2019, the respondents could only recover agriculture income tax for the assessment years 2016-17 and 2017-18.

They said the respondents issued recovery notices on the basis of which they sought immediate recovery which denied them right to appeal as prescribed under the law.

Some of the petitioners stated that they had not declared agriculture income tax in the returns or they had not filed any income tax return and exemptions granted to them by the government on account of flood and drought had not been considered.

The petitioners also pleaded that the respondents must hear their objections with respect to the amounts sought to be recovered. The petitioners were represented by advocates Muhammad Amjad Khan, Mohsin Virk, Ozair Chughtai and others. Additional Advocate General Akhtar Javed represented the government along with the officials of the Board of Revenue.

Justice Malik in her verdict observes the law itself provides that the respondents/assistant commissioners can recover agriculture income tax on the basis of declared agricultural income in the income tax returns for any assessment year filed under the Act in terms of the rates specified in the second schedule.

“However, the taxpayer has a right to appeal against the amount sought to be recovered even if it is based on a declaration in the income tax return and direct recovery inflicted by the respondents adversely affects the petitioners’ right of appeal under section 7 of the Act,” rules the judge.

Published in Dawn, July 13th, 2019