COMMISSIONER OF INCOME-TAX, CENTRAL ZONE, KARACHI VS MESSRS SEVEN-UP BOTTLING CO. LTD., KARACHI
1991 P T D 860
[Karachi High Court]
Before Mamoon Kazi and Salahuddin Mirza, JJ
COMMISSIONER OF INCOME-TAX, CENTRAL ZONE, KARACHI
Versus
Messrs SEVEN-UP BOTTLING CO. LTD., KARACHI
I.T.R. No. 1 of 1983, decided on 04/04/1991.
Income-tax Act (XI of 1922)---
----Ss. 22(1-A), (2), (3) & 28---Discovery of omission or wrong statement by assessee in return---Revised return filed by assessee before the extended time---
Assessee, having not committed any default, Income-tax Officer could not impose the penalty in circumstances.
In the present case assessee although did not file any return when it was due i.e. on 31-12-1972 but it did file a return before the extended date, the same being 31-1-1973 as admittedly a return was filed by the assessee on 21-1-1973. Although subsection (3) of section 22 permits an assessee to file a return at any time before the assessment is made if he has not furnished a return within the time allowed by or under subsection (1-A) or subsection (2), or, having furnished a return under either of those subsections he discovers an omission or a wrong statement therein and subsection (1-A) or (2) does not refer to the extended time but since the revised return had been filed before the extended date, even technically the Income-tax Officer was not right in imposing the penalty. .
Assessee had not committed any default attracting the provisions of section 28.
Commissioner of Income-tax (Central Zone), Karachi v. Messrs Shahnawaz Ltd. 1985 PTD 498 ref.
Shaikh Haider for Applicant.
Iqbal Naeem Pasha for Respondent.
Date of hearing: 4th April, 1991.
JUDGMENT
MAMOON KAZI, J: --The respondent is a limited company, its return of income for the year 1972-73 was due on 31-12-1972, which was not filed. However, the respondent applied for extension of time and it was allowed to file a return up to 31-1-1973 by the Income-tax Officer. The Respondent filed a provisional return before the expiry of the said extended date but the same was not accompanied by a balance-sheet. The Income-tax Officer, therefore, found the return to be invalid, not having been filed in accordance with Rule 30 of the Income Tax Rules, and issued a notice under section 28(3) of the Income-tax Act, 1922 calling upon the respondent to show cause why a penalty should not be imposed for default under section 22 of the Income-tax Act. The explanation submitted by the respondent was not found satisfactory' and therefore, a penalty of Rs.1,000 was imposed on it. The respondent filed an appeal before the learned Income-tax Appellate Tribunal which vide its order dated 26-7-1974 cancelled the order of penalty holding as follows:--
"Section 22, does not provide for furnishing the profit and loss account and the balance-sheet; and the appellant's failure to furnish the same consequently does not amount to any default on its part which can be penalised. Moreover, it appears from the record that a revised return was actually filed on 21-1-1973 with complete papers including the balance-sheet. It may be mentioned here that the violation of rule 3o, if any, is not penal and no penalty could be imposed for that violation if the provisions of section 22 of the Income-tax Act, 1922, have been complied in substance.
For the reasons stated above, we are of the opinion that in the present case there was no default of the appellant, which could have attracted the penalty. The appeal is disposed of as above and the order of penalty is cancelled."
The department was, however, not satisfied, therefore, the learned Tribunal has referred the following question for our opinion:--
"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the assessee had not committed any default attracting the provisions of section 28.
(2) Whether the filing of return unaccompanied by all or any of them documents mentioned in Part IV under Rule 30 of the Income-tax Rules constitutes full compliance with the requirements of section 22 of the Income-tax Act."
2. So far as the first question is concerned, learned counsel have invited our attention to section 22 of the repealed Income-tax Act, subsections (1), (1-A), (2) and (3). No doubt, section 22 envisages filing of income-tax return alongwith such other particulars, statements or accounts as may be prescribed and in case of a company the return is to be filed by the fifteenth day of July next following the previous year or where the said fifteenth day of July falls before the expiry of six months from the end of the previous year, before the expiry of the said six months. But subsection (3) further provides that:
"(3) If any person has not furnished a return within the time allowed by or under subsection (1-A) or subsection (2), or having furnished a return under either of those subsections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made."
As is evident from the facts of the case the respondent although did not file any return when it was due i.e. on 31-12-1972 but it did file a return within the extended date. the same being 31-1-1973 as admittedly a return was filed by the respondent on 21-1-1973. Although subsection (3) of section 22 permits an assessee to file a return at any time before the assessment is made if he has not furnished a return within the time allowed by or under subsection (1-A) or subsection (2)a or, having furnished a return under either of those subsections he discovers an omission or a wrong statement therein and subsection (1-A) or (2) does not refer to the extended time but since the revised return had been filed before the extended date, we are of the opinion that even technically the Income-tax Officer was not right in imposing the penalty. Learned counsel have also invited our attention to a judgment of this Court in the case of Commissioner of Income-tax (Central Zone), Karachi v. Messrs Shahnawaz Ltd. 1985 P T D 498, wherein it was observed as follows:--
"In the instant case, admittedly the respondent assessee filed the revised returns even before the issuance of notice by the Income-tax Officer for making assessment for years in question. In this view of the matter, a revised return could have been filed in the terms of the subsection (3) of section 22."
3. Consequently, we are of the view that the learned Income-tax Appellate Tribunal was justified in holding that the assessee had not committed any default attracting the provisions of section 28. So far as the second question is concerned, in our view, it is not necessary for us to answer this question in view of the facts and circumstances of the case because as has already been pointed out by us the revised return admittedly was complete in all respects and had been filed before the expiry of the extended date.
4. The reference is answered accordingly and the parties are left to bear their own costs.
M.BA./C-213/K Reference answered.