Re: Legal opinion relating to Notice under section 113 (f) of the Income Tax Ordinance, 1984, A/C. Company 1.
We refer to your letter dated 12.04.2007 received by us on 16.04.2007 and letter dated 24.04.2007 on the above subject.
We have perused your letters and Notice No. …………………. …………. dated 27.02.2007 (the Notice) issued by the Deputy Director General, Central Intelligence Cell, National Board of Revenue (the Deputy Director General, CIC, NBR) under section 113 (f) of the Income Tax Ordinance, 1984. The Deputy Director General, CIC, NBR has requested the Managing Director, Bank 1 (the Bank) to provide information and statements of accounts of the companies under ownership of Company 1in order to determine the taxes of Mr. X, Chairman of Company 1payable to NBR. The Notice has been signed by the Deputy Director General, Central Intelligence Cell, NBR and it is stated in the notice that the appropriate authority has given legal approval in this regard.
The Company 1vide its letter dated 28.03.2007 forwarded a certificate dated 27.03.2007 issued by Company 2 wherein it appears that upon filing application by Company 3 and other companies, a Division Bench of the High Court Division, comprising Mr. A and Mr. Justice B vide order dated 27.03.2007 issued Rule and directed that the operation of the Notice be stayed till hearing of the petition which is fixed on 17.04.2007 and requested the Bank not to disclose accounts details of the companies of Jamuna Group.
Subsequently, Company 1forwarded a photocopy of certified copy of the order dated 17.04.2007 passed by the High Court Division in Writ Petition No. 3033 of 2007 to the Bank wherein it appears that the order of stay granted earlier has been extended till disposal of the Rule. In such situation the matter has been referred to us with a request to advise on the next course of action of the Bank.
Our opinion is as follows:
Section 113(f) of the Income Tax Ordinance, 1984 (the “Ordinance”) provides as under:
“113. Power to call for information-
The Deputy Commissioner of Taxes, the Inspecting Joint Commissioner, The Commissioner, The Director General, Central Intelligence Cell or any other officer authorised in this behalf by the Commissioner or the Board may, for the purposes of this Ordinance, by notice in writing, require-
(f) any person, including a banking company, to furnish information in relation to such points or matters, or to furnish such statements or accounts giving such particulars, as may be specified in the notice.
Provided that no such notice on a banking company shall be issued by the Deputy Commissioner of Taxes or the Inspector, without the approval of the Commissioner, the Director General, Central Intelligence Cell and by any other officer, without the approval of the board.”
In view of the above provision of the law, the Bank is legally obliged to provide information or statements of accounts of the companies of Company 1to the CIC, NBR as per their Notice dated 27.02.2007.
However, please note that the Notice dated 27.02.2007 of CIC, NBR has been stayed by the High Court Division in Writ Petition No. 3033 of 2007. In such situation, unless the said order of stay is vacated by the Court, providing information and statements of accounts to CIC, NBR would be a violation of Court’s order which may amount to contempt of Court and the same is not desirable. The concerned Deputy Director General, CIC, NBR may be informed accordingly.
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For: “The Lawyers & Jurists”