I.   BACKGROUND (BG)

1.   This refers to the related Important TLQCs in trail, blue, italic and double Line (a) 1197 of 20.10.20 Stay over 180 days when no decision by Tribunal- SHC stayed till next hearing (b) 1142 of 25.7.20 about Stay over 340 days granted by Tribunal

2.   We also refer to several Other TLQC including 1909 of 30.6.22 about Time Limit under ST Section 45B is Mandatory - SCP

II.   UPDATED COMMENTARY

A.   Reference

Further to KQU ----- of -------, being an important matter, we would inform you about --------------------------- (Attachment 3256.1).

The Miscellaneous Application is filed before the ATIR, Lahore Bench, by ---------------------------against the Commissioner of Inland Revenue (CIR), Zone-V, LTO, Lahore and decided vide MA  No  in Attachment 3256.1 (in ITA ---------------).

B.   Background

The applicant sought an extension of a stay order (previously granted for 285 days) pending the adjudication of its main appeal (ITA No. ---------------------). A difference of opinion arose between the two hearing members of the Tribunal:

1. Member -------------- favored granting a further 40-day stay extension, citing judicial precedents that the 90-day stay limit is directory, not mandatory.

2. Member -------------------- dissented, arguing that administrative directives from the Honorable Chief Justice of Pakistan (via letter dated -------------) prohibit extending stay orders beyond the statutory period and are binding on subordinate tribunals.

Due to this disagreement, the matter was referred to a Third member (Referee Member), Mr ---------------, for resolution.

C.   Key Legal Issues Referred to Third / Referee Member

The dissenting member raised several questions regarding the Tribunal's authority to:

1. Ignore directives from the Chief Justice.

2. Interpret or act contrary to such directives.

3. Grant stay extensions while the issue is sub judice before the Lahore High Court.

4. Avoid discriminatory application if similar extensions were previously refused.

D.  Third Referee Member Deliberation

After hearing arguments from both sides and reviewing relevant law and case law, the Referee Member concluded:

1. The third proviso to Section 131(5) of the Income Tax Ordinance, 2001, allows stay orders to continue beyond 90 days if the appeal is not decided within the statutory period.

2.  The administrative directives from the High Court use the phrase “stipulated under the law” – which includes the exception under the third proviso. Therefore, there is no conflict between the law and the directives.

3.  No applicant should be penalized for delays not of their making, especially when the appeal is pending due to tribunal inefficiency or other external factors.

4.  The Tribunal has inherent power to grant interim relief to prevent irreparable harm and ensure effective appellate justice.

E.   Third / Referee Member Decision

The Referee Member upheld the decision to grant stay extensions in all related cases (including M/s. ------------), allowing stays to continue until the disposal of the main appeals, provided the delay is not attributable to the taxpayers.

III.   Kasbati & Co Views

The order reinforces the principle that administrative directives cannot override substantive law and that tribunals must exercise their powers to ensure justice, particularly where taxpayers are not at fault for delays in the appellate process.

F.   Key References:

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- V.   FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.