RAWALPINDI: The Lahore High Court’s (LHC) Rawalpindi bench has curtailed the Federal Board of Revenue’s (FBR) suo motu power to amend deemed tax assessments, ruling that Section 122(5A) of the Income Tax Ordinance, 2001, cannot be used for “roving or fishing inquiries” or speculative revenue recovery.

In an income tax reference, titled Commissioner Inland Revenue versus Sajid Hussain Gondal and others, Justice Mirza Viqas Rauf and Justice Jawad Hassan laid down guidance on the scope and limits of amendment powers under Section 122, bringing long-awaited doctrinal clarity to a provision frequently invoked by tax authorities.

The reference application, filed under Section 133 of the ordinance, challenged an order of the Appellate Tribunal Inland Revenue (ATIR), which had set aside an amendment made to a taxpayer’s deemed assessment for tax year 2019. The tribunal had earlier ruled that the FBR’s use of Section 122(5A) in the case was unlawful.

The taxpayer, Sajid Hussain Gondal, had filed an income tax return for 2019, which became a deemed assessment under Section 120 of the ordinance. Subsequently, the Additional Commissioner of Inland Revenue issued a show-cause notice under Sections 122(9), 111(1), and 122(5A), alleging discrepancies in declared gross revenue, purchases under Section 236A, deductions under Section 153, profit and loss expenses, and capital declarations.

The tax department claimed that these discrepancies rendered the deemed assessment erroneous and prejudicial to the interest of revenue, justifying an amendment under Section 122(5A). Despite the taxpayer’s explanation, the assessment was amended in June 2022, an action later upheld by the Commissioner (Appeals) but ultimately struck down by the ATIR in November 2023.

In a detailed ruling, the LHC reaffirmed that a deemed assessment under Section 120 cannot be unsettled lightly and drew a clear legal boundary between Section 122(5) and Section 122(5A).

It said Section 122(5) applies where an amendment is based on audit findings or definite information indicating escaped income, under-assessment, misclassification or excessive relief. By contrast, Section 122(5A) is revisional in nature and can be invoked only when the assessment order is both erroneous and prejudicial to the interest of revenue.

The bench stressed that both conditions must coexist, and that mere suspicion, arithmetic mismatch or perceived revenue loss does not meet the statutory threshold.

Justice Rauf observed that Section 122(5A) does not grant open-ended authority to revisit assessments. Rather, it is meant to correct glaring and apparent errors committed by the assessing officer where such errors are demonstrably harmful to revenue.

“The revisional jurisdiction under Section 122(5A) is not a licence for roving or fishing inquiries,” the high court held, adding that the alleged error must be evident from the record, and the claimed prejudice must be legally demonstrable, not conjectural.

Published in Dawn, February 13th, 2026

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KARACHI: Agricultural credit disbursements surged to record Rs1.412 trillion in the first half of FY26, while the number of borrowers edged up to 2.97 million.

Chairing a meeting of the Agricultural Credit Advisory Committee (ACAC) on Thursday, State Bank Governor Jameel Ahmad said that in FY25 the agricultural credit disbursement had hit a record Rs2.577tr, marking a 16 per cent year-on-year increase.

The meeting reviewed agricultural credit performance and discussed measures to strengthen inclusive and resilient farm finance.

To accelerate borrower expansion, particularly among small farmers in underserved and unserved areas, Mr Ahmad urged banks to fully utilise SBP initiatives, including the Risk Coverage Scheme for Small Farmers and Underserved Areas and Zarkheze, the central bank’s flagship digital platform for agricultural lending.

SBP chief urges banks to fully utilise initiatives for small farmers

Mr Ahmad said Pakistan’s economy had regained macroeconomic stability and was moving towards a more durable growth path. Real GDP growth reached 3.7pc in the first quarter of FY26, while full-year growth is projected at 3.75pc to 4.75pc.

The committee reviewed progress under Zarkheze, described as a major step towards the digital transformation of agricultural credit delivery. The platform enables digital onboarding for farmers, standardised credit assessment, integration with land and crop information, and end-to-end loan traceability. It also ensures financing is used for quality agricultural inputs through an integrated vendor network.

The governor said Zarkheze must be scaled up as a core delivery channel, particularly to make small-ticket lending commercially viable and expand outreach beyond traditional high-volume regions. He urged banks to ensure the timely processing of applications, strengthen internal ownership of the scheme, and further develop the vendor ecosystem to improve farmers’ access to certified inputs and advisory services.

Mr Ahmad also called on banks to fully implement their Agricultural Credit Expansion Plans for FY26 and emphasised coordination with provincial governments for digitisation of land records, as well as partnerships with fintechs, agri-tech firms and microfinance institutions to enhance outreach.

The meeting discussed the development of an Upgraded Crop Loan Insurance Scheme (CLIS+) framework under the Asian Development Bank-funded Pakistan Insurance Transformation Programme to strengthen the sector’s resilience against calamities.

The proposed scheme aims to expand crop coverage, establish an insurance consortium for improved risk-sharing and farmer payouts, and introduce technology-based calamity assessment alongside loss-of-income support. The ADB’s Solidarity Fund will also support extending coverage to non-borrowing farmers and the development of a National Insurance Policy for Agriculture.

In addition, the ACAC deliberated on scaling up Electronic Warehouse Receipt Financing to improve post-harvest liquidity, reduce distress sales and strengthen market linkages. The committee underscored the need to expand accredited warehousing infrastructure and enhance bank participation in warehouse receipt-based financing.

Published in Dawn, February 13th, 2026

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KARACHI: After overnight snapping of a three-session downturn, the equities fell like a house of cards at Pakistan Stock Exchange (PSX) on Thursday as super tax started taking its toll on corporate profitability, which triggered panic-selling by investors across the board, dragging the benchmark KSE-100 index down by over 4,000 points below 179,000 intraday.

However, late value hunting towards the end of the session helped the index trim some of its staggering losses and managed to settle above the 180,000 milestone. However, the equity investors lost over Rs271.7bn in market capitalisation in a single session.

Topline Securities said bears came out swinging, tightening their grip on the market right from the opening bell. Sentiment turned sour after Engro Fertiliser’s 4Q2025 results fell short of street expectations due to lower-than-expected gross margins, along with the one-time recognition of a super tax charge of Rs2bn, which reduced earnings per share to Rs6.26 and a muted dividend payout of Rs4.

The disappointment acted as a trigger, shifting momentum decisively in favour of the sellers.

KSE-100 index sheds 2,537 points amid panic sell-off

The index remained under relentless pressure throughout the session, nosediving to an intraday low of 4,324.56 points before closing at 180,512.65, down 2,537.16 points or 1.40 per cent. Local institutions appeared to lead the selling charge, keeping bulls firmly on the defensive.

The E&P sector took the heaviest hit, with Pakistan Petroleum Ltd (PPL) and Oil and Gas Development Company Ltd (OGDCL) alone shaving off 383 points from the index. Meanwhile, Engro Fertiliser, Hub Power, Systems Ltd, and Bank Al-Habib collectively dragged the index down by another 645 points, amplifying the rout.

On the activity front, volumes remained robust at 873million shares, with turnover clocking in at Rs 41.7 billion. K-Electric dominated the volumes chart, churning 176 million shares.

Ali Najib, Deputy Head of Trading at Arif Habib Ltd (AHL), attributes the negative session to market sentiment succumbing to selling pressure amid rumours surrounding Barrick Gold’s recent comprehensive review of its “Reko Dik Project” investments, in the backdrop of deteriorating security situation in Balochistan.

Market sentiment retreated following reports that Barrick Gold is conducting a comprehensive review of its Reko Diq project amid concerns over the deteriorating security situation in Balochistan. The speculation triggered broad-based selling, particularly across energy sector stocks. However, value buying in the final trading hour helped the index cut some early losses.

Inflation, which rose to 5.8pc in January, is expected to climb toward 8pc, dimming hopes of any near-term softening of monetary policy. IMF urges a tight stance; FY26 inflation seen averaging 6.2pc amid oil risks, reported Bloomberg.

Market participation remained higher than the previous session, with trading volume rising almost 19pc to 874m shares and traded value increasing 18pc to Rs41.7bn, indicating investors rushed to exit amid persistent volatility.

Analysts think a close above the 180,000 level in the fin al session of the week is crucial to signal continued consolidation and stability. Failure to hold this threshold could expose the index to further downside pressure in the coming sessions.

Published in Dawn, February 13th, 2026

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