IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR, HCJ 
 
 
MR. JUSTICE SH. AZMAT SAEED 
MR. JUSTICE UMAR ATA BANDIAL 
MR. JUSTICE IJAZ UL AHSAN 
MR. JUSTICE SAJJAD ALI SHAH 
 
 
CIVIL APPEAL NO.2148/2016 AND CIVIL PETITIONS NO.813-L & 
814-L/2015, 579-L, 606-L TO 608-L, 658-L, 1055-L, 1075-L, 1109-L, 
1110-L, 2029-L, 2157-L, 2365-L, 3292-L/2016, 179-L, 802-L, 1490-
L, 1634-L, 2041-L TO 2050-L, 3195-L, 3210-L, 3385-L/2017, 88-L 
AND 95-L TO 97-L/2018 
(Against the orders/judgments dated 2.3.2015, 12.1.2015, 25.11.2015, 16.11.2015, 
24.11.2015, 18.11.2015, 28.10.2015, 19.1.2016, 1.2.2016, 23.2.2016, 20.4.2016, 
7.4.2016, 
9.3.2016, 18.5.2016, 
28.11.2016, 19.1.2017, 
19.4.2017, 28.4.2017, 
5.6.2017, 1.6.2017, 11.10.2017, 25.10.2017, 14.11.2017, 2.11.2017 and 24.10.2017 of 
the Lahore High Court, Lahore passed in W.P.No.15430/2014, P.T.Rs.No.233 & 
234/2012, I.T.Rs.No.356, 321, 369 & 340/2015, I.T.A.No.286/2015, I.T.Rs.No.5 & 
34/2016, W.Ps.No.18231 & 19677/2014, I.T.Rs.No.118, 108/2016 & 87/2015, 
P.T.R.No.26/2016, 
I.T.Rs.No.343/2016 
& 
9/2017, 
P.T.R.No.7/2013, 
W.P.No.15659/2013, I.T.Rs.No.34486, 34516, 35358, 35364, 35369, 35373, 33411, 
33422, 33470, 33518, 85689, 85691 & 89724/2017, 105/2016, 23149, 90000 & 
90026/2017) 
 
 
C.A.2148/2016: 
Additional Commissioner Inland Revenue, Audit 
Range, Zone-I Vs. M/S Eden Builders Limited  
 
 
C.P.813-L/2015: 
Commissioner Inland Revenue, Zone-I, Regional 
Tax Office, Faisalabad Vs. M/s Crescent Textile 
Mills Limited, Lahore 
 
 
C.P.814-L/2015: 
Commissioner Inland Revenue, Zone-I, Regional 
Tax Office, Faisalabad Vs. M/s Crescent Textile 
Mills Limited 
 
 
C.P.579-L/2016: 
The Commissioner Inland Revenue, Zone-I, Large 
Taxpayers Unit, Lahore Vs. M/s Qureshi Textile 
Mills Limited  
 
 
C.P.606-L/2016: 
The Commissioner Inland Revenue, Zone-III Large 
Tax Payers. Tax House, Syed Mauj Drya Road, 
Lahore Vs. M/s Suraj Cotton Mills Limited 
 
 
C.P.607-L/2016: 
The Commissioner Inland Revenue, Zone-I Large 
Tax Payers Tax House, Syed Mauj Drya Road, 
Lahore Vs. M/s Al-Nasar Textile Mills Limited 
 
 
C.P.608-L/2016: 
The Commissioner Inland Revenue, Zone-I Large 
Tax Payers Lahore Vs. M/s Design Development 
Fabrication Company (Private) Limited 
 
 
C.P.658-L/2016: 
The Commissioner Inland Revenue, Zone-I, Large 
Tax Payers, Lahore Vs. M/s Fazal Cloth Mills 
Civil Appeal No.2148/2016 etc. 
-: 2 :- 
Limited, etc. 
 
 
C.P.1055-L/2016: 
The Commissioner Inland Revenue, Zone-III, Lahore 
Vs. M/s Sui Northern Gas Pipelines Limited 
 
 
C.P.1075-L/2016: 
The Commissioner Inland Revenue, Zone-III, Large 
Tax Payers Unit, Lahore Vs. M/s Prosperity 
Weaving Mills Limited, Lahore 
 
 
C.P.1109-L/2016: 
The Commissioner Inland Revenue, Zone-II, RTO, 
Lahore Vs. M/s Eehabs Engineering Company 
(Private) Limited, etc. 
 
 
C.P.1110-L/2016: 
The Commissioner Inland Revenue, Zone-II, RTO, 
Lahore Vs. M/s Down Town Private Limited, 
Lahore, etc. 
 
 
C.P.2029-L/2016: 
The Commissioner Inland Revenue, Lahore Vs. M/s 
Jamhoor Textile Mills Ltd. through its Chief 
Executive 
 
 
C.P.2157-L/2016: 
The Commissioner Inland Revenue, Lahore Vs. M/s 
Medical Equipment Systems, Lahore 
 
 
C.P.2365-L/2016: 
Commissioner Inland Revenue, Lahore Vs. M/s Atta 
Cables Pvt. Ltd., Lahore 
 
 
C.P.2392-L/2016: 
Commissioner Inland Revenue, Zone-III, Large 
Taxpayer Unit, Lahore Vs. M/s Security General 
Insurance Company Ltd. 
 
 
C.P.179-L/2017: 
Commissioner 
Inland 
Revenue, 
Lahore 
Vs. 
Shakarganj Mills Ltd., Lahore 
 
 
C.P.802-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Master Paint Industries (Pvt.) Ltd., Lahore 
 
 
C.P.1490-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Jamhoor Textile Mills Ltd., Lahore 
 
 
C.P.1634-L/2017: 
Commissioner Inland Revenue, Lahore, etc. Vs. M/s 
Kohinoor Textile Mills Ltd., Lahore, etc. 
 
 
C.P.2041-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Ejaz Spinning Mills Ltd., Lahore 
 
 
C.P.2042-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Ejaz Spinning Mills Ltd., Lahore 
 
 
C.P.2043-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Crescent Bahuman Ltd., Lahore 
 
 
C.P.2044-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Crescent Bahuman Ltd., Lahore 
 
 
C.P.2045-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Crescent Bahuman Ltd., Lahore 
 
 
C.P.2046-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Crescent Bahuman Ltd., Lahore 
Civil Appeal No.2148/2016 etc. 
-: 3 :- 
 
 
C.P.2047-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Ellcot Spinning Mills Ltd., Lahore 
 
 
C.P.2048-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Ellcot Spinning Mills Ltd., Lahore 
 
 
C.P.2049-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Ellcot Spinning Mills Ltd., Lahore 
 
 
C.P.2050-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Ellcot Spinning Mills Ltd., Lahore 
 
 
C.P.3195-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
KSB Pumps Company, Ltd., Lahore 
 
 
C.P.3210-L/2017: 
Commissioner Inland Revenue, Lahore Vs. M/s 
KSB Pumps Company, Ltd., Lahore 
 
 
C.P.3385-L/2017: 
The Commissioner Inland Revenue, Gujranwala Vs. 
M/s Tayyab Agencies 
 
 
C.P.88-L/2018: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Khawaja Spinning Mills Ltd., Lahore 
 
 
C.P.95-L/2018: 
Commissioner Inland Revenue, Lahore Vs. M/s 
Kohat Cement Ltd., Lahore 
 
 
C.P.96-L/2018: 
Commissioner Inland Revenue, Lahore Vs. M/s T.U 
Plastic Industry Company (Pvt.) Ltd., Lahore 
 
 
C.P.97-L/2018: 
Commissioner Inland Revenue, Lahore Vs. M/s T.U 
Plastic Industry Company (Pvt.) Ltd., Lahore 
 
For the Petitioner(s): 
Mr. Sajid Ijaz Hotiana, ASC 
Mr. Abdul Hameed Anjum, Secy. Legal, FBR 
 (In C.A.2148/2016) 
Mr. Sarfraz Ahmed Cheema, ASC 
(In C.Ps.813-L & 814-L/2015, 579-L, 606-L, 1055-L, 1075-L, 2157-L, 
2365-L & 2392-L/2016, 802-L, 1490-L, 1634-L, 2041-L to 2050-L, 3195-L 
 & 3210-L/2017, 88-L, 95-L to 97-L/2018) 
Mr. Ibrar Ahmed, ASC 
 (In C.Ps.579-L, 606-L, 1055-L, 1075-L, 1109-L, 1110-L/2016) 
Mr. Ijaz Ahmed Awan, ASC 
(In C.Ps.3195-L/2017) 
 
Mr. Waqar A. Sheikh, ASC 
(In C.Ps.3385-L/2017) 
 
 
For the Respondent(s):  
Ms. Ayesha Hamid, ASC 
(In C.A.2148/2016) 
Mr. Imtiaz Rasheed Siddiqui, ASC 
Mr. Shehryar Kasuri, ASC 
(In C.P.813-L/2015) 
Mr. Shahbaz Ahmed Butt, ASC 
(In C.Ps.2157-L, 608-L, 658-L, 1075-L/2016 & 1634-L, 2043-L, 2046-L to 
2050-L/2017) 
Mr. M. Ajmal Khan, ASC 
(In C.Ps.606-L, 579-L/2016, 1490-L/2017 & 88-L/2018) 
Civil Appeal No.2148/2016 etc. 
-: 4 :- 
Mr. Mansoor Usman Awan, ASC 
(In C.P.2392-L/2016) 
Mr. M. Iqbal Hashmi, ASC 
Mr. Faiz-ur-Rehman, AOR 
(In C.Ps.1055-L/2016 & 95-L to 97-L/2018) 
 
 
Date of Hearing: 
15.2.2018 
 
ORDER 
 
 
 
MIAN SAQIB NISAR, CJ.- These matters concern a common 
question of law and shall be disposed of through the instant order. 
Initially, on 16.09.2016, leave was granted by this Court in C.P. No.940-
L/2015 to consider whether or not the provisions of section 122(2) of the 
Income Tax Ordinance, 2001 (hereinafter “ITO 2001”) being procedural in 
nature would have retrospective effect. Subsequently, on 20.12.2017, the 
notice was issued in C. P. No.813-L/2015 and connected petitions to 
consider whether pursuant to the amendment brought about in section 
122(2) of the ITO 2001 through Finance Act, 2009 consequential 
extension in date of expiry of the limitation period would operate 
prospectively or since the Limitation Act 1908 is generally interpreted as 
a 
procedural 
law 
therefore 
the 
amendment 
would 
take 
effect 
retrospectively.  
2. 
 
The facts obtaining to C.A. No.2148/2016 (arising out of C. P. 
No.940-L/2015) are representative of the facts pertaining to the rest of the 
petitions and therefore we shall only mention the same, for a detailed 
recital of the facts of each petition would serve no useful purpose. In the 
aforesaid appeal the respondent filed income tax return for the Tax Year 
2008 on 30.12.2008. This was deemed to be an assessment order issued 
to the taxpayer by the Commissioner on the day the return was 
furnished in terms of section 120(1)(b) of the ITO 2001. The said deemed 
assessment order could have been amended as per section 122(2) of the 
ITO 2001 as it stood on the date of filing of the return in the following 
Civil Appeal No.2148/2016 etc. 
-: 5 :- 
terms “an assessment order shall only be amended under subsection (1) 
within five years after the Commissioner has issued or is treated as 
having issued the assessment order on the taxpayer” [hereinafter referred to as 
the “original section 122(2)”]. Therefore, in terms of section 122(2) of the ITO 
2001, as it stood on 30.12.2008 the period within which the assessment 
order could be amended was 5 years beginning from 30.12.2008 which 
would mean that the assessment order could be amended uptill 
29.12.2013. Thereafter, on 12.09.2013, the appellant issued a notice to 
the respondent under Section 122(5A) of the ITO 2001 asking the 
respondent to show-cause why the assessment order should not be 
amended for the reasons cited in the notice. Finally, on 22.05.2014 an 
amended assessment order was passed by the appellant against the 
respondent under Section 122(5A) of the ITO 2001 demanding 
Rs.49,671,892/- by way of additional tax, etc. It is to be noted that this 
amended assessment order was passed 5 months after the expiry of the 
limitation period in terms of Section 122(2) of the ITO 2001 as it stood on 
30.12.2008. However, through the Finance Act, 2009 an amendment had 
been made in Section 122(2) of the ITO 2001 to the following effect:- 
“(2) No order under subsection (1) shall be amended by 
the Commissioner after the expiry of 5 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”. [hereinafter referred to as the “amended section 
122(2)”] 
In terms of the amended section 122(2) of the ITO 2001 the period of 
limitation was to commence from 01.07.2009 and end on 30.06.2014. 
Therefore, as per the appellant/tax department’s interpretation, the 
amended assessment order was within the period of limitation. The 
Civil Appeal No.2148/2016 etc. 
-: 6 :- 
respondent challenged the amended assessment order dated 22.05.2014 
before the Lahore High Court through W. P. No.15430/2014 which was 
allowed on 02.03.2015 (the impugned order) in the following terms:- 
“The petitioner, who filed its tax return on 30.12.2008, 
will be governed by section 122(2) as it stood in the 
year 2008 and the amendment brought about in the 
said 
section 
through 
Finance 
Act 
2009 
dated 
30.06.2009 will not be attracted to the case of the 
petitioner.’ 
3. 
 
The learned counsel for the appellant argued that all 
provisions relating to limitation are procedural in nature and therefore do 
not create any vested right in favour of the respondent, therefore, the 
amendment to Section 122(2) of the ITO 2001 brought about through 
Finance Act, 2009 is to be given retrospective effect. He argued that even 
otherwise the show cause notice dated 12.09.2013 was issued to the 
respondent within the original period of limitation and therefore any 
extensions and/or adjournments sought by the respondent(s) which 
would extend the period in which the amended assessment order was 
issued beyond limitation would not operate to create benefit for the 
respondent and therefore the amended assessment order(s) were within 
time. The learned counsel for the appellant relied on the judgments 
reported as Commissioner of Income Tax vs. Asbestos Cement 
Industries Ltd (1993 SCMR 1276), S. M. Junaid vs. President of 
Pakistan (PLD 1981 SC 12), Income Tax Officer vs. Sulaiman Bhai 
Jiwa (1970 Taxation (Vol.21) page 62), Commissioner of Income Tax, 
East Karachi vs. M/s Reyaz-o-Khalid Co, Karachi (PLD 1973 SC 98), 
Kohi-Noor Textile Mills Ltd vs. Commissioner of Income Tax, Lahore 
(PLD 1974 SC 284) and Commissioner of Income Tax, Karachi vs. 
Civil Appeal No.2148/2016 etc. 
-: 7 :- 
Eastern Federal Union Insurance Co. (PLD 1982 SC 247). The learned 
counsels for the appellant department in connected petitions took the 
same grounds. 
4. 
 
Ms. Ayesha Hamid, ASC, learned counsel for the respondent 
in C. A. No.2148/2016 set out the respondent’s case: that the period of 
limitation once it begins to run cannot be interrupted or extended unless 
the legislature expressly provides for the same. She pointed out that the 
amendment brought about to Section 122(2) of the ITO 2001 does not 
extend the period of limitation from for example 5 years to 6 years. 
According to her, had the terminal date of limitation been extended while 
the original period of limitation had yet to expire, the appellant tax 
department may have had an arguable case; but in the instant case the 
terminal date was not extended and nor was the total period of limitation 
extended beyond 5 years. Instead effectively it was the commencement 
date of limitation which was disturbed and therefore through the 
amendment brought about by the Finance Act, 2009 the period of 
commencement of limitation was changed in case of the respondent from 
30.12.2008 to 01.07.2009 and this could not have been done once time 
began to run on 30.12.2008 and rights relating to limitation and further 
tax liability, etc., had come to vest in the respondent on 30.12.2008. She 
placed reliance on Commissioner Inland Revenue vs. Maj. Gen. (R) Dr. 
C. M. Anwar (2015 PTD 242) which was upheld in an unreported 
judgment 
of 
this 
Court 
dated 
03.09.2014 
passed 
in 
C. 
P. 
No.1306/2014 titled Commissioner of Income Tax vs. Maj. Gen. (R) 
Dr. C. M. Anwar (in which leave to appeal was refused against the order cited at 2015 PTD 
242), the review against the said judgment was dismissed vide order dated 
25.02.2015 on the basis of judgment reported as Nagina Silk Mill, 
Lyallpur vs. Income Tax Officer, A-Ward, Lyallpur (PLD 1963 SC 
Civil Appeal No.2148/2016 etc. 
-: 8 :- 
322). Mr. Imtiaz Siddiqi, ASC, Mr. Shahzad Butt, ASC adopted the 
arguments made by Ms. Ayesha Hamid and also supported the orders 
impugned in their petitions on the basis of the reasons cited therein and 
the fact that the vested rights of the respondents could not be lightly set 
aside by the appellant by treating limitation as merely procedural in 
these matters. 
5. 
 
We have the heard the parties and with the able assistance 
of the learned counsel examined the short point involved in these 
connected matters: whether limitation is purely procedural and therefore 
the amended Section 122(2) ought to be given retrospective effect? It is 
true that on a perfunctory level limitation has often been treated as a 
procedural law. But this is not always so. Limitation laws by regulating 
the periods during which particular remedies may be availed do create 
vested and substantive rights too. The salient features of the law of 
limitation have been examined in the judgment reported as Khushi 
Muhammad v Fazal Bibi (PLD 2016 SC 872) wherein at para 4 (i) and 
(vi) it has been held as under: 
“(i) 
The law of limitation is a statute of repose, designed to 
quieten title and to bar stale and water-logged disputes and is 
to be strictly complied with. Statutes of limitation by their very 
nature are strict and inflexible. The Act does not confer a right; 
it only regulated the rights of the parties. Such a regulatory 
enactment cannot be allowed to extinguish vested rights or 
curtail remedies, unless all the conditions for extinguishment 
of rights and curtailment of remedies are fully complied with 
in letter and spirit. There is no scope in limitation law for any 
equitable or ethical construction to get over them. Justice, 
equity and good conscience do not override the law of 
limitation. Their object is to prevent stale demands and so 
they ought to be construed strictly. 
Civil Appeal No.2148/2016 etc. 
-: 9 :- 
(vi) 
The intention of the Law of Limitation is not to give a 
right where there is not one, but to interpose a bar after a 
certain period to a suit to enforce an existing right” 
6. 
 
From the ratio of the above judgment it can be seen that the 
law of limitation in so far as it regulates the period in which one party 
can avail a remedy against another is not to be lightly disturbed as the 
certainty created by limitation is necessary for the success of trade and 
business, the more so when that limitation governs tax matters. In the 
matters in hand, the respondents, at the time of filing their tax returns 
were aware that these tax returns may be amended in terms of section 
122(5A) of the ITO 2001 at any time up to five years from the date of 
filing of the tax return itself. Thus, their planning in terms of their 
possible amended and/or revised tax liability would extend for a period 
of five years from the date of filing of their respective tax returns. After 
the said five years were up, they could be sanguine that their tax return 
was now final and they could no longer be burdened with an additional 
demand. This means that a right related to the law of limitation came to 
vest in the respondents on the date of filing of their respective returns in 
terms of the provisions of the original section 122(2). However, the effect 
of the amendment brought about through the Finance Act, 2009 was to 
change that original date of commencement of limitation. Instead of 
limitation commencing on the date of filing of the tax return, 30.12.2008 
in the case of appellant in CA 2148/2016, limitation was now to 
commence on the last day of the financial year in which the 
Commissioner has issued or treated to have issued the assessment order 
to the taxpayer, which in this particular appeal ibid would have been 
1.7.2009.  This means that the goal posts themselves were changed by 
the amendment. It was not that the period of limitation was enhanced to 
for example 6 years. On the contrary, post amendment too, the limitation 
Civil Appeal No.2148/2016 etc. 
-: 10 :- 
period remained five years. Instead, the amended to Section 122(2) of the 
ITO 2001 changed the commencement date for when limitation would 
begin to run. And this was not permissible as certain rights had already 
come to vest in the respondents on the date on which they had filed their 
tax returns under the original Section 122(2) ibid. We are fortified in our 
view by the ratio of the seminal judgment in Nagina Silk Mills’ case 
(supra) wherein it has been held that: 
“The limitation in this case under subsection (2) of section 34 
of the Act had started running on the 1st of April 1956, and 
that fixed the terminal date of the period of four years as the 
31st of March 1960, with certainty under the law as it 
then stood. It is a well-recognized principle of the law of 
limitation that once time begins to run from a specified 
date it cannot be interrupted or extended unless the 
Legislature intervenes and makes express provision to 
the contrary. 
The Courts must lean against giving a statute retrospective 
operation on the presumption that the Legislature does not 
intend what is unjust. It is chiefly where the enactment would 
prejudicially affect vested rights, or the legality of past 
transactions, or impair existing contracts, that the rule in 
question prevails. 
……. the one that saves vested rights would be adopted in the 
interest of justice, specially where we are dealing with a 
taxing statute.” 
[emphasis supplied] 
7. 
 
Because the terminal date of limitation is not changing 
through the amendment brought about through the Finance Act, 2009 
and because the period of limitation is not being extended per se 
therefore the authorities cited by the learned counsel for the appellants 
are of no avail and are distinguishable. In this view of the matter, hold 
that the various respondents, who filed their tax returns before the 
Section 122(2) of the ITO 2001 was amended through the Finance Act, 
Civil Appeal No.2148/2016 etc. 
-: 11 :- 
2009 will be governed by section 122(2) ibid as it stood before the 
amendment and the amendment brought about in the said section 
through Finance Act, 2009 dated 30.06.2009 will not be attracted to 
their cases. 
9. 
 
For the reasons above, the appeal as also the petitions are 
dismissed. 
 
CHIEF JUSTICE 
 
 
 
JUDGE 
 
 
 
JUDGE 
 
 
 
JUDGE 
 
 
 
JUDGE 
Announced in open Court 
on 4.4.2018 at Islamabad 
Approved for reporting 
Waqas Naseer