Inaam Ameen Minhas, J.--Through the instant writ petition, the petitioner assails the condonation letter dated 16.01.2025 ("Impugned Condonation") granted by Respondent No. 2(i)/Member IR (Operations) under Section 214-A of the Income Tax Ordinance, 2001 ("Ordinance") whereby the period of limitation prescribed by the second proviso to Section 177(1) of the Ordinance was enlarged. The petitioners also seek declaration that the respondents/Federal Board of Revenue ("FBR") cannot enlarge the period of limitation prescribed by the second proviso to Section 177(1) of the Ordinance and that the audit proceedings under Section 177 pertaining to Tax Year 2019 is time barred. Lastly, the petitioners seek the interpretation of Section 214-A of the Ordinance.

2. The facts of the instant petition, in brief, are that the petitioner having special tax year was selected for audit under Section 177 of the Ordinance, for the period from 01.01.2018 to 31.12.2018 ("Tax Year 2019"), by Commissioner Inland Revenue (Audit-II) ("CIR"), who issued notice dated 24.05.2022 ("Intimation Notice") under Section 177(1) of the Ordinance, wherein the petitioner was informed that its case has been selected for audit. Thereafter, CIR under Section 177(1) of the Ordinance issued another notice dated 22.08.2022 ("Information Notice") seeking Record/Documents/Books of Account in relation to the ongoing audit proceedings and sought for compliance by 05.09.2022. Afterwards, the audit proceedings continued and FBR accordingly issued multiple reminders and notices. Notably, show cause notice dated 19.05.2023 under Section 182(2) of the Ordinance was issued for non-compliance and a penalty was imposed on 22.11.2024 for non-cooperation and non-compliance. Thereafter, the CIR vide its letter dated 12.12.2024 sought condonation of delay for finalizing audit proceedings and Respondent No. 2(iii)/Second Secretary (Inland Revenue Operations) issued the Impugned Condonation upon the approval of the competent authority i.e. Respondent No. 2(i)/Member IR (Operations) exercising powers under Section 214-A of the Ordinance, thereby extending the statutory period of limitation for audit proceedings, which was otherwise set to lapse on 31.12.2024, by an additional six months up to 30.06.2025.

3. The learned counsel for the petitioner contended that the Impugned Condonation was issued after the expiry of the six-year statutory bar contained in the second proviso to Section 177(1) and is thus unlawful and a manifest usurpation of vested rights. He argued that the language of Section 177(1) of the Ordinance is casted in negative terms and employs the mandatory expression "shall not," thereby unequivocally restraining the respondents from calling for record or documents after expiry of the prescribed limitation. He submitted that the placement of the statutory bar within the proviso reflects that the legislature, having first conferred a general power to call for record under Section 177(1), deliberately and consciously curtailed that power by imposing a strict six-year limitation, signaling its intent that such authority cannot survive beyond the period expressly stipulated.

4. Learned counsel for the petitioner further argued that Section 177 prescribes a structured audit regime, wherein the Commissioner's authority is neither unbridled nor capable of revival once the statutory limitation lapses. He contended that the respondents sought to enlarge this limitation by invoking Section 214-A, a provision of general applicability that neither contains a non-obstante clause nor indicates any legislative intention to override a specific, stringent and time-bound restriction. Lastly, the learned counsel submitted that the Impugned Condonation was issued without cogent reasoning, factual justification, or a speaking order, offends the standards of reasonableness, transparency, and good faith mandated under Section 214-A itself, Section 24A of the General Clauses Act, 1897 ("GCA, 1897"), and the jurisprudence laid down by the Superior Courts, which require that discretionary power be exercised sparingly, rationally, and only for advancing legislative purpose and thus, the arbitrary extension granted by Respondent No. 2 constitutes executive overreach, violates the statutory scheme governing audit, disregards a vested right that had matured into a past and closed transaction, and undermines the fairness and certainty essential to the tax regime.

5. Conversely, the learned counsel for respondents raised preliminary objections to the maintainability of the petition. It was contended, first, that the petition is premature as the petitioners do not qualify as "aggrieved parties" within the contemplation of Article 199 of the Constitution. The extension of time granted to the CIR for concluding audit proceedings, it was argued, does not, in itself, inflict any grievance or adverse consequences upon the petitioner and mere conduct of an audit does not give rise to a justiciable cause. Furthermore, that the petition is barred by the availability of adequate alternate remedies under the Ordinance: in the event of an adverse amended assessment, the petitioner may file an appeal before the Commissioner Inland Revenue (Appeals) under Section 127, thereafter can approach the Appellate Tribunal Inland Revenue under Section 131, and, if still aggrieved, can invoke this Court's reference jurisdiction under Section 133. It was submitted that this statutory appellate framework ultimately culminates before the High Court, and any attempt to bypass it undermines the legislative intent and the constitutional separation of powers.

6. The learned counsel for respondents further submitted that the petitioner also has recourse to Section 7 of the Federal Board of Revenue Act, 2007, by way of representation and that High Court should not exercise writ jurisdiction in a manner that circumvents the statutory adjudicatory hierarchy. Lastly, allegations of mala fides were pressed, asserting that the petitioner has approached this Court with unclean hands. It was claimed that the petitioner failed to file its return of income within the prescribed time under sections 114 and 118 of the Ordinance, responded to audit notices in a piecemeal and obstructive manner, and repeatedly withheld complete records, thereby compelling the assessing officer to impose a penalty under Section 182 for non-compliance.

7. I have given anxious consideration to the arguments of the learned counsel for the parties and perused the record with their able assistance.

8. It is reflected from the record that audit proceedings in the instant case pertain to Tax Year 2019, which ended on 31.12.2018. The statutory limitation of six (6) years for calling records/documents therefore ended on 31.12.2024. However, after the expiry of the prescribed limitation period, Respondent No. 2(iii)/ Second Secretary (Inland Revenue Operations) issued the Impugned Condonation under Section 214-A of the Ordinance, extending the statutory period of limitation for audit proceedings by an additional six months i.e. up to 30.06.2025, which was otherwise set to lapse on 31.12.2024. Therefore, the question that arises for determination is whether the Impugned Condonation is without lawful authority, and if not, whether its issuance stands sanctioned in accordance with the law.

A. Whether the FBR can issue Condonation of time under Section 214-A?

9. The relevant portion of sec. 214-A is reproduced hereunder for reference:

"214A. Condonation of time limit.--Where any time or period has been specified under any of the provisions of the Ordinance or rules made there-under within which any application is to be made or any act or thing is to be done, the Board may, [at any time before or after the expiry of such time or period,] in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate."

10. A bare perusal of the above provision reflects that it is a provision of general applicability which bestows a statutory power on the FBR to condone time for certain matters. It is therefore necessary to peruse the law laid down on the matter to see whether the same can be used to extend the time limit for acts which contain a mandatory time limit. The Honorable Supreme Court in the case of Collector of Sales Tax, Gujranwala and others vs. Super Asia Mohammad Din and others, (2017 SCMR 1427, 2017 PTD 1756) while interpreting a pari materia provision i.e. Section 74 of the Sales Tax Act, 1990 ("STA, 1990") expounded on the matter whether the mandatory timelines could be extended in terms of the powers granted under Section 74 of the STA, 1990. For ease the relevant portion is reproduced below:--

"12. As regards the reliance placed on Section 74 of the Act, it provides that where a time frame has been stipulated in the Act within which an act or thing is to be done, the Board, or the Commissioner notified by the Board, are empowered to permit such act or thing to be done within such time period as they may consider appropriate. Passing an order under Section 36(3) of the Act is certainly an act or thing to be done under the Act. Therefore the Board (which expression shall hereinafter include Commissioner notified by the Board) has the power under Section 74 of the Act to permit the passing of an order under the aforesaid section within such time period as it may consider appropriate…. The purpose of Section 74 supra is to give a separate overriding power to the Board to permit any act or thing to be done under the statute within such time period as it may deem appropriate, which undoubtedly is independent of any other provision of the Act which provides a time frame. To restrict the time period that can be granted under Section 74 supra to the maximum period available under the first proviso to Section 36(3) of the Act would render the former absolutely redundant and superfluous, which cannot be countenanced under the settled rules of interpretation which do not allow such redundancy to be attributed to the legislative intent. Therefore, where the Board has permitted the passing of an order under the proviso within a time frame different from that contained therein, this new time frame shall be deemed to be the relevant one….Thus we are of the opinion that while undoubtedly the Board has the power under Section 74 supra to extend the time limit and permit an order under Section 36 supra to be passed within such time or period as it may consider appropriate, such power must be exercised within a reasonable time period of six months from the date when the time period provided in the first proviso to Section 36(3) supra and the extension granted thereunder have lapsed, and such power can only be exercised (by the Board under Section 74 supra) to grant an extension of not more than a reasonable time period of six months."

11. Later, some doubts were expressed as to the correctness of the principles enunciated in Super Asia (ibid). However, a larger bench of Honorable Supreme Court in the case of WAK Limited and others vs. Collector Central Excise and Sales Tax, (2025 PTD 1179) upheld the decision in Super Asia (Supra) and reaffirmed the correctness of the views expressed and principles enunciated therein. The upshot of the larger bench's holding is that extension can be granted, however, the provision does not confer an open-ended power in such regard and the Board/FBR cannot, on the basis of its own wish and whims, grant an extension for reasons it thinks fit but only within a maximum limit of six months, and subject to being objectively and reasonably justified.

12. Therefore, it transpires that Section 214-A empowers the Board, and officers duly authorized, to condone delay in the performance of any act or thing for which a period has been prescribed under the Ordinance and audit essentially is an act or thing to be done. Although the provision is framed in broad terms, the purpose of Section 214-A is to give a separate overriding power to the Board to permit any act or thing to be done under the statute within such time period as it may deem appropriate, which is independent of any other provision of the Ordinance that provides a time frame and an audit is plainly such an act. Thus, the petitioner's argument is devoid of merit and we are of the considered view that FBR apparently has the power under Section 214-A of the Ordinance to grant condonation.

B. Whether the power was exercised in accordance with the law?

13. It is settled law that statutory power cannot be exercised in an unstructured, unguided, or unbridled manner, for such exercise undermines the statutory scheme. It would be more appropriate to examine the matter through the lens of the standard in which the Board, or any officer exercising the power of condonation under Section 214-A on its behalf, must invariably ask itself: what order should I pass if I were to act justly, fairly, and reasonably? If the order ultimately passed is inconsistent with the answer to that question, the Board/Taxation officer exceeds its lawful jurisdiction and commits an abuse of the authority entrusted to them. Therefore, this Court shall now examine whether the said power was exercised in accordance with the law.

I. Whether the power under 214-A was exercised reasonably?

14. Reasonableness in this context requires a demonstrable application of mind, a conscious evaluation of the circumstances warranting extension, and the articulation of reasons that reveal a rational nexus between the material on record and the conclusion reached. If the order is bereft of reasons, proceeds mechanically, or fails to address the statutory preconditions, it cannot meet the threshold of reasonableness. The Honorable Supreme Court in the case of Super Asia (Supra) held:--

"However this does not mean that in exercise of its power under Section 74 of the Act, the Board will have unfettered and unbridled authority to extend time when, and for however long, it feels it expedient to do so. Rather time would only be extended in certain cases, after application of mind and that too for a reasonable amount of time."

15. Similarly in the case of Commissioner of Inland Revenue vs. Messrs Allah Din Steel and Rolling Mills and others, (2018 SCMR 1328) the Honorable Supreme Court expounded on the manner of exercise of discretionary power in the following terms:-

"However, if delays are inevitable, beyond the control of the Department and do not occur on account of any act or omission on the part of the Taxation Officers and happen on account of litigation and grant of stay orders, the Audit Officer may seek extension of time from the Federal Board of Revenue for completion of the audit after recording reasons in writing for seeking such extension explaining reasons for his inability to complete the audit within the stipulated time. The Board may on consideration of such reasons grant reasonable extension in order to enable completion of the audit. It is however emphasized that extension if granted should be supported by due application of mind and appropriate reasoning on the part of the Board. It should not be granted casually, repeatedly and as a matter of routine. Adherence to guidelines and timeframes would enhance confidence of the Taxpayers in the system and at the same time act as a check on lethargy and inefficiency on the part of the departmental functionaries."

16. It follows from the above that extension of time is not automatic, it can only be granted in specific cases after due consideration, and only for a reasonable period. It is evident from the record that Respondent No. 2(iii) issued the Impugned Condonation without identifying any specific facts or circumstances warranting such relief and proceeded to extend the limitation period by six months on the bare and generic assertion of "taking cognizance of the facts of the case". The Impugned Condonation does not demonstrate the existence of any circumstances or facts of the case that could lawfully justify the exercise of its power of extension. Rather, the officer empowered on the Board's behalf appears to have acted on the mistaken premise that such power can be invoked as a matter of course, without undertaking the requisite objective assessment mandated by law. Further reliance is placed on the recent case of Additional Collector of Customs, Faisalabad vs. Messrs Fatima Enterprises, Multan and another, (2025 SCMR 1929). The exercise of discretion in this manner, divorced from evidence and reason would amount to an arbitrary and colorable exercise of authority in derogation of the principles of natural justice.

17. Moreover, Section 24A of the GCA, 1897 stipulates that statutory power must be exercised reasonably, fairly, justly, and for advancement of the purpose of the enactment. The Superior Courts have dilated upon Section 24 of GCA, 1897 and enunciated the principle that the executive authorities while exercising discretion must give reasons for its decision through a speaking order. The requirement to articulate reasons is neither a mere procedural formality nor an empty ritual; rather, it is a substantive safeguard designed to demonstrate that discretion has been exercised judiciously, objectively, and with due application of mind. Reasoned decision-making ensures that affected persons are apprised of the basis of the action taken, facilitates meaningful judicial review, and acts as a restraint against arbitrariness or caprice.

18. Applying the facts of the instant matter to the test laid down by the Superior Courts essentially amounts to a blatant disregard of Section 24 of the GCA, 1897. Hence, we are disinclined to treat any extension as "lawful" due to the failure to record reasons which as stated above is meant to ensure fairness and transparency. Similar view was expressed by the Honorable Supreme Court in the case of Federal Board of Revenue vs. Abdul Ghani, (2021 SCMR 1154) wherein the Court ordered to set aside the condonation granted under Section 74 of the STA, 1990 in the following terms:--

"More importantly, the order passed under Section 74 of the Act by the FBR fails to state any reason for extending the limitation period .... The said requirement is meant to ensure fairness and transparency in the exercise of statutory discretion by the FBR which suffers from opacity and therefore unreasonableness …. we are not inclined to interpret the said provision as authorizing the unchecked reversal of a statutory limitation period and consequential rights created by it."

II. Whether the power was exercised justly?

19. As to the second question, namely whether the power was exercised justly, it must be observed that the statute imposes a fiduciary obligation upon the taxation authority to ensure that any enlargement of time is grounded in a manner that reflects adherence to the statutory safeguards and is consistent with the purpose for which the discretion was conferred.

20. To address the question above it must be noted that Super Asia (Supra) dealt specifically with the issuance of an order-in-original by the adjudicating officer upon breach of mandatory timeline of an order in original, and the principles laid down therein were confined to that context. Similar view was observed by the larger bench of Honorable Supreme Court in the case of WAK Limited (Supra). The relevant portion is reproduced below:

"37. Section 74 statutorily empowers (but does not bind, i.e., confers a discretion on) the FBR to, as here relevant, allow an adjudicating officer (since he is one of the officers specified in Section 30) to do the act or thing required of him (i.e., issue the order-in-original) for which a time period has been specified (i.e., the relevant provisions) to do that act or thing within such time or period as FBR may consider appropriate. The first point to note is that, in terms of well settled principles, like all statutory powers the one conferred by Section 74 has to be exercised objectively. In other words, what is the period of extension appropriate in a given case or class of cases is not to be determined subjectively by FBR, but objectively and in accordance with settled principles of law. Secondly, the power confers a discretion (i.e., it is not a statutory duty) and the law is well settled how a statutory discretion is to be exercised by the authority or officer on which it is conferred. Most fundamentally, it must be exercised reasonably. Thirdly, it must be kept in mind that Super Asia was concerned with, and therefore the principles enunciated in para 12 thereof were in relation to, a specific aspect of Section 74 that act or class of acts or things, namely the issuance of an order-in-original by an adjudicating officer at first instance, when the mandatory periods specified in the relevant provisions had been, were or could be breached. Whether those principles are to have a broader application remains to be decided in a suitable future case where such question actually arises."

21. Hence, it is necessary for this Court to undertake an independent construction of Section 214-A, for the principles expounded in the case of Super Asia (Supra) were confined to its respective factual position. A broader construction is therefore warranted, particularly as the legislature has already conferred upon the FBR a substantial period of six years. While a six-month extension may, in isolation, appear modest, but when acting "justly" its reasonableness must be assessed in the context of the already generous period provided by law. Thus, while a short statutory period (such as the one under consideration in the Super Asia case) may rationalize a modest extension, a six-year period already signifies legislative generosity. Accordingly, when the power of condonation is examined through the lens of acting justly, the guiding principle is that the longer the original statutory period prescribed for performing the act, the stronger the justification needed for any extension.

22. Similarly, in the instant matter the statutory period (a period of six years under the second proviso to Section 177(1)) granted is, by any measure, more than adequate and any additional time in the absence of any "exceptional justification" would amount to a reward for administrative inefficiency, which the law does not permit. Therefore, any condonation of time without recording any exceptional circumstances which might justify further extension constitutes an act of highhandedness and amounts to executive overreach. However, in the present matter the Impugned Condonation was granted on the basis of the generic observation of "taking cognizance of the facts of the case" without specifying any grounds. Thus, the Impugned Condonation does not even satisfy the basic threshold of eligibility for consideration under this test.

23. Moreover, acting justly when exercising the power of condonation would also include an examination of the facts to reflect why the taxation officer has not adhered to the guidelines and statutory timeframes. This would enhance confidence of the taxpayers in the system and at the same time act as a check on lethargy and inefficiency on the part of the departmental functionaries. The Honourable Supreme Court in the case of Commissioner Inland Revenue, Zone-IV, Lahore vs. Messrs Panther Sports and Rubber Industries (Pvt.) Ltd. and others, (2022 SCMR 1135) observed that the Ordinance is largely structured around time-framed provisions such as sections 120 (assessment), 122 (amendment of assessment) and 221 (rectification of mistakes) in order to make the taxing mechanism certain, transparent and the tax administration and tax governance smarter and efficient. In this regard the Court categorically held that the tax department is under an obligation to be vigilant and efficient enough so as to proceed against a taxpayer within the statutory timeframe provided.

24. Furthermore, the Honourable Supreme Court in the case of Commissioner of Inland Revenue vs. Messrs Allah Din Steel and Rolling Mills and others, (2018 SCMR 1328) held that if delays are inevitable, beyond the control of the Department and do not occur on account of any act or omission on the part of the Taxation Officers and happen on account of litigation and grant of stay orders, the Audit officer may seek extension of time from the Federal Board of Revenue for completion of the audit after recording reasons in writing for seeking such extension explaining reasons for his inability to complete the audit within the stipulated time.

25. A perusal of the CIR's request dated 12.12.2024 reveals that the CIR sought condonation on the basis of (i) reorganization of FBR's field formations, (ii) frequent transfers and postings of the concerned assessing officer/unit office and (iii) delay in the provision of complete records by petitioner. However, the record contains no material whatsoever to substantiate the assertion regarding frequent transfers, as not a single document has been produced to demonstrate the same. Likewise, the notification pertaining to the reorganization of the FBR's field formations furnished by the respondents is dated 05.08.2020, whereas the petitioner's case was selected for audit on 24.05.2022, meaning thereby that the reorganization relied upon by the CIR had taken place nearly two years prior to the selection of the petitioner's case for audit, and thus could not reasonably have impeded the initiation or completion of the audit within the statutory period.

26. As for the reasoning of delayed provision of records by the petitioner, it is manifest from the record that the delay in bringing proceedings to an end was fully within the control of the Department and arose directly from acts and omissions on the part of the audit officers. It is apparent that a show cause notice dated 19.05.2023 was issued to the petitioner and penalty was imposed on 22.11.2024 under Section 182 for failure to comply. It is thus evident that there was an unexplained delay of approximately eighteen months in the imposition of penalty under Section 182. Accordingly, it stands evident that no external or unavoidable constraint hindered the proceedings, and the FBR could, with due diligence, have proceeded within the prescribed time.

27. If the power had been exercised in a just manner, the empowered officer of the Board would have examined why the Audit officers were not vigilant and efficient enough to proceed against the petitioner, and why they failed to meaningfully or effectively exercise the wide and comprehensive powers vested in them under the Ordinance, such as the one enshrined in Section 175. The failure to utilize these powers within the statutory timeframe, despite the clear legislative command and judicial guidance, reflects a dereliction of the fiduciary obligations incumbent upon the tax administration. Even otherwise, where the law confers authority for the protection of the public revenue, that authority must be exercised with diligence, discipline, and fidelity to statutory purpose. All these factors must be looked at holistically and taken into consideration when exercising powers under 214-A, which is not evident in the present case.

28. Since condonation for the purposes of audit has been addressed adequately above, there is no need to burden this judgment for determination of the same on the standard of fairness. Rather at this juncture it is appropriate to state that the present matter not only relates to the enlargement of the statutory limitation for conducting an audit but also for amendment of assessment under Section 122 of the Ordinance as evident from the relevant portion of the CIR's request dated 12.12.2024 which is reproduced below:--

"Subject: REQUEST SOLICITING BOARD'S CONDONATION FOR FINALIZING AUDIT PROCEEDINGS UIS 214A OF THE INCOME TAX ORDINANCE, 2001 IN THE CASE OF M/S HUAWEI TECHNOLOGIES PAKISTAN (PRIVATE) LIMITED, NTN: 1417959, FOR THE TAX YEAR 2019.

Kindly refer to above cited subject.

02. The DCIR Unit-XIX vide its letter No. 220 dated 10.12.2024 duly forwarded by the ADCIR Range-I vide order sheet No. 15 dated 10.12.2024 has stated as under:-

03. The taxpayer case was selected for audit Vide Bar Code 100000124860097 dated: 24-05-2022 by Commissioner (Audit-lI) Inland Revenue, LTO ISLAMABAD under Section 177 of the Income Tax Ordinance, 2001. In continuation, information documents request was issued dated: 22-08-2022 Vide bar code 100000128851403 under Section 177(1) of the Income Tax Ordinance, 2001. Moreover, subsequent reminder notices were issued on different dates and taxpayer has also submitted the partial record.

04. The Taxpayer has special Tax Year i.e. 1st Jan-2018 to 31st Dec-2018 and Tax Year 2019 is going to be barred by time on 31.12.2024 in term of Section 122(2) of the Income Tax Ordinance, 2001 as decided against the department by the honorable Islamabad High Court in its order in W.P. No 1183-2018 Dowell Schlumberger (Western) S.A Vs Pakistan through the Secretary Revenue FBR, Islamabad, dated 15.11.2018 and honorable Sindh High Court in its order in C.P No. D-3062 of 2020, dated 21.11.2024. The relevant part of Section 122(2) is reproduced below as ready reference:

"122. Amendment of assessments. (1) Subject to this section, the Commissioner may amend an assessment order treated as issued under Section 120 or issued under Section 121, by making such alterations or additions as the Commissioner considers necessary.

(2) No order under sub-section (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer."

29. It transpires from the above that audit in the present matter is, therefore, not an end in itself; rather, it constitutes a procedural mechanism ancillary to the exercise of assessment-amending jurisdiction under Section 122, which remains circumscribed by a definitive statutory timeframe. The question that thus emerges is whether FBR can invoke Section 214-A to enlarge the period of amendment of assessment under Section 122 beyond the statutory limitation prescribed for it. It is manifest that proceedings under Section 122(2) were not brought to their lawful culmination before the expiry of the limitation period, which stood scheduled to lapse on 31.12.2024 as per the CIR (a date asserted by the CIR as the point of expiration. While we do not agree to that computation, we refrain from rendering a definitive pronouncement on the issue for present purposes).

30. Section 214-A operates as an overriding, independent power enabling the Board or its authorized officers to condone delays to permit the performance of any statutory act and must therefore be harmoniously construed to allow for it to coexist with other time-bound provisions of the Ordinance. This, however, does not mean that in exercise of this statutory power the Board can extend time at its will since it cannot enlarge or revive a jurisdiction extinguished by the lapse of a substantive statutory limitation, as vested rights cannot be displaced by procedural law.

31. At this juncture it is appropriate to make recourse to the case of WAK Limited (Supra) which considered this aspect and the Court observed that there ought to be a period of limitation which can be contested. The relevant portion is reproduced below:

"27. The show-cause notice that, in the present context, could result in an order-in-original was, and is, required to be issued within a specified period, being five years. All sides were as one that this was a limit that could not be breached. A show-cause notice issued beyond this period was time-barred and any proceedings in respect thereof were liable to be quashed for that reason alone. However, learned counsel for the Department submitted that this was the only time bound limitation. That was all the protection accorded to the taxpayer in this regard. If the State did not act (i.e., issue the show cause notice) within time the liability of the taxpayer stood effectively extinguished since it could not thereafter be lawfully pursued. However, if, and once, a show cause notice was timely issued then an order-in-original made beyond the periods stipulated in the relevant provisions could not, for that reason alone, be invalid in law. That of course was also the point made in the referral order as noted above. The intent was only to ensure that the recovery proceedings were not prolonged and lingered on indefinitely. The tax liability could not be extinguished in this manner. We have carefully considered the point. With respect, we can see no reason why, in principle, the legislature cannot give a multi-layered protection in terms of time-bound limitation to the taxpayer. That there ought to be a period of limitation can scarcely be contested and indeed, as noted, was not questioned by learned counsel for the Department as regards the absolute or "outer" limit of five years. But why can the legislature not grant another layer of protection within that framework? Here, it must be remembered that the adjudication is by a functionary of the State itself. It is that officer whose adjudicatory powers are being circumscribed by the limits imposed by the relevant provisions. If the State wishes to tie the hands of its own functionaries in this manner (or more precisely, if the legislative branch desires to place a time bound limitation on the officers of the executive branch in the exercise of statutory powers), why should it not be able to do so? And even those periods of limitation have been leavened, as it were, in Super Asia by a generous margin in terms of Section 74. If an order-in-original is not issued even in such a statutory framework then why should not that bring matters to a close, rendering any order-in-original issued thereafter "invalid"? In the referral order, the specter of tax evasion by "manipulation" was raised. But, with respect, that apprehension can be expressed with regard to any period of limitation. Indeed, the position is arguably the converse. The double layer of protection accorded to the taxpayer shields him from unmeritorious claims and bogus show cause notices, which may be issued by the concerned officer to harass and intimidate the former and/or for ulterior motives and purposes. The conclusion that the relevant provisions are mandatory help in ensuring that it is only a genuine case, based on substance and having (objectively) a reasonable prospect of success, of alleged non-or short payment of tax that is opened against the taxpayer. It is a bogus and false claim that the concerned officer would wish to keep pending, for it to be as it were a Damocles' sword hanging over the taxpayer. A time bound closure of cases would help in reducing cases being brought for non-genuine reasons and purposes. For if the show cause notice is based on firm grounds and for lawful purposes then (subject of course to whatever reply the taxpayer may give thereto) it would be in the interest of the State (as represented by the adjudicating authority) to decide the same as expeditiously as possible, which would be well within the generous time periods allowed by the statute, as held in Super Asia. And if, in the end, a case is not made out then equally a responsible officer acting lawfully and truly motivated by the public interest would wish to bring proceedings to a close as quickly as possible, which would again be within the time periods set out in the relevant provisions. Therefore, a multi-layered protection, by way of mandatory periods of limitation, is not just well within the legislative power; it is the intent that is expressed in the relevant provisions, as rightly held in Super Asia."

32. From the perusal of the above it is reflected that statutory scheme (in the context of the above case) mandates that a show cause notice be issued within the prescribed five-year period, and this outer limit is absolute and cannot be breached. The Honorable Court even rejected the FBR's argument that only the five-year limit matters and that delays after a timely notice do not invalidate proceedings. The Court observed that additional statutory time limits, such as the time prescribed for issuing the order-in-original after a valid show cause notice are also mandatory and not merely directory by relying on the reasoning that legislature may create multi-layered, mandatory protections for taxpayers.

33. However, in the instant matter no notice under Section 122(9) (as it stood at the relevant time) had been issued prior to the lapse of the statutory period meaning thereby the proceedings have not been initiated, naturally due to the audit itself being in the initial stages as per the CIR himself. We are therefore of the view that no extension can lawfully be granted unless a notice under Section 122 has been issued within the prescribed statutory period. However, where a notice for amendment of assessment has been issued within the limitation prescribed under Section 122(2) of the Ordinance, and the final order cannot be passed for reasons manifestly justifiable and beyond the control of either the revenue authority or the taxpayer, the Board may, in our view, lawfully invoke its discretionary power under Section 214-A to extend the time for completing the proceedings within the reasonable period set. This construction preserves Section 214-A and remains consistent with the statutory authority vested in the Board.

34. However, there has been no initiation of proceedings for amended assessment and no notice has been issued. However, there is another aspect to the instant matter which is addressed below.

C. Institutionalized Manipulation

35. A Court cannot and should not in the exercise of judicial review close its eyes if there is institutionalized manipulation apparent on the face of the record. The present matter is either a classic case of institutionalized manipulation or simply negligence or incompetency. It is evident that the CIR vide its request dated 12.12.2024 sought condonation of time for amended assessment under Section 122(2) which according to the CIR was set to lapse on 31.12.2024. The CIR premised this limitation in light of the interpretation of the judgment of honorable Sindh High Court in the case titled Sabre Travel Network Pakistan Limited vs. Pakistan and others [(2025) 131 Tax 456 (H.C. Kar.)] in C.P No. D-3062 of 2020, dated 21.11.2024 and judgment of this Court titled Dowell Schlumberger (Western) S.A in W.P. No. 1183 of 2018 dated 15.11.2018. We have perused the afore-titled judgment and observed that the CIR misapplied the findings of the judgment to the facts of the present case and miscalculated the date of limitation either negligently or manipulatively. Since the judgment in Dowell Schlumberger (ibid) is presently pending adjudication before this Bench in an intra Court appeal, it would not be appropriate to offer any comments thereon at this stage. However, for the purposes of the present matter, reference may suitably be made to the judgment in Sabre Travel (Supra).

36. The rule emerging from the judgment in Sabre Travel (Supra) is that, for a taxpayer operating under an approved special tax year, the expression "financial year" in Section 122(2) must, by virtue of Section 74(10), be read as the calendar year in which the return giving rise to the deemed assessment order is furnished. The Court made a comparative analysis of pre and post of Finance Act, 2009. The period was retuned through the Finance Act, 2009 which set the limitation "of five years" from the date of filing of the return to the date of "end of the financial year" in which such return was filed and commissioner has issued or treated to have issued the assessment order to the taxpayer. Thus, the Court held that the end of the financial year is the 31st of December of the year in which the return is filed, and it is from the day immediately following that date that the five-year limitation period under Section 122(2) begins to run.

37. Applying the principle of Sabre Travel (Supra) case to the present matter, it transpires that the limitation for amended assessment ends on 31.12.2025. Since the petitioner's special tax year ran from 01.01.2018 to 31.12.2018, and the income tax return was filed on 11.03.2020. The deemed assessment order is therefore treated as having been issued during the financial year ending on 31.12.2020. In terms of the ratio in Sabre Travel (Supra), the limitation period in the present matter would commence on 01.01.2021 and expire upon the completion of five years i.e. on 31.12.2025.

38. In conclusion, it is troubling that the date of filing of the return which is an element that goes to the very root of the determination of limitation under Section 122(2), was neither disclosed nor brought to the fore in the CIR's request for condonation. The omission of such a foundational fact, whether arising from negligence or from a deliberate attempt to manipulate the record so as to procure a mechanical extension of time, reflects a degree of administrative laxity that the law cannot countenance. Actions of this nature inflict greater injury upon the public exchequer than the conduct of an evading taxpayer, for they undermine statutory safeguards, distort the proper operation of fiscal law, and result in avoidable loss solely attributable to the conduct and inaction of the department. If the concealment or misstatement was intended to secure an extension destined to be set at naught, it represents an even more troubling abdication of duty.

39. This must be viewed in conjunction with the CIR's request who sought condonation on the grounds of (i) reorganization of FBR's field formations, (ii) frequent transfers and postings of the assessing officer/unit, and (iii) delayed provision of complete records by the petitioner. However, the record contains no material to substantiate the alleged frequent transfers, and the notification relied upon for reorganization is dated 05.08.2020, whereas the petitioner's case was selected for audit on 24.05.2022, demonstrating that the reorganization occurred nearly two years prior and could not have impeded the audit within time. As regards the purported delay in records, it is evident from the record that the delay in concluding proceedings lay entirely within the Department's control and resulted from acts and omissions of the audit officers. This is further illustrated by the issuance of a penalty show cause notice on 19.05.2023 and the imposition of penalty only on 22.11.2024 under Section 182, reflecting an unexplained delay of approximately eighteen months in the enforcement of penalty.


40. Thus, it is evident that the delays were not caused by any external or unavoidable impediment, and the FBR could have proceeded within the statutory period. Ultimately, the benefit of such conduct rebounds entirely to the taxpayer, not by operation of law but through the Department's own failure to discharge its obligations with diligence and integrity. Before parting with this judgment, it is appropriate to observe that if the Department is genuinely committed to the proper discharge of its functions, it must attribute liability when called for.

41. In view of the above discussion, the instant petition is allowed. The Impugned Condonation is declared void, the respondents are restrained from seeking further information pertaining to Tax Year 2019 in pursuance of the Impugned Condonation and audit proceedings under Section 177 are declared time barred. Office is directed to send a copy of this judgment, under the seal of the Court to the Chairman FBR, for necessary action to be taken in light of the reasons recorded from paragraphs 35 -40.