I.T.AS. NOS.192/HQ AND 193/HQ OF 1990-91, DECIDED ON 2ND MARCH 1992. VS I.T.AS. NOS.192/HQ AND 193/HQ OF 1990-91, DECIDED ON 2ND MARCH 1992., 1992 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 596 (1992)

(a) Income Tax Ordinance (XXXI of 1979)--

----S.148---Power of Income Tax Officer to enforce the attendance.

Amongst the authorities created under the Income Tax Ordinance, the I.T.O. has also been given, inter alia, the power of either enforcing the attendance of any person and examining him on oath or affirmation or compelling the production of any accounts of documents. From perusal of section 148, Income Tax Ordinance. 1979 it further appears that an I.T.O. has the same powers which a Court under Code of Civil Procedure enjoys. Civil' Procedure Code by its sections 31 and 32 has vested in Court the powers of summoning a witness either to give evidence or to produce documents and in case of default, the power of enforcing its such order, and pursuant to it, Order XVI lays down elaborate provisions for both summoning the witnesses for giving evidence or producing documents and enforcing their appearance. However, there is a difference in proceedings before Civil Court trying a civil suit and an I.T.O. determining the tax liability. In civil matters, the parties to the dispute themselves pray for issuance of notices to their respective witnesses which may be served on the witnesses either through Court or the concerned party himself. However, the Court has also the power of summoning a witness suo motu or to examine in his discretion if he is present in Court. Now as far as the summoning of the witnesses at the instance of the parties to the dispute is concerned, the Court generally issues such summons at the request of the party subject to the condition of payment of the expenses. However, as far as the power of summoning of a witness suo motu or examining a witness present in Court in its discretion is concerned, it is to be exercised judiciously. In other words, such power is to be exercised when the Court feels that in the absence of the testimony of such witness, the dispute could not be decided finally and effectively; and such order is open to scrutiny by Appellate Courts.

On the other hand, in the proceedings before an I.T.O. the nature of dispute is quite different. The law has enjoined upon him to establish that an assessee is liable to pay the tax. Similarly, the burden of proving exemption from tax is on or assessee. The I.T.O., therefore, in either case may summon a witness or an assessee to either examine him on oath or to produce documents or other material. Nevertheless, his power like other powers is to be exercised judiciously which of course, is again open to judicial scrutiny of the appellate forums.

(b) Income Tax Ordinance (XXXI of 1979)---

----S.165---C.B.R. Circular No.19 of 1988, dated 5-10-1988---Income Tax Officer has the power to investigate as to whether the income claimed to be agricultural income was really income derived from agriculture---If Income Tax Officer finds that income in question was income derived from agriculture, he has no jurisdiction to proceed further---Since agricultural income had to be included in the total income in view of C.B.R. Circular No.19 of 1988 dated 5-10-1988 it became all the more necessary for the I.T.O. to examine the claim of the assessee.

1989 PTD 617 ref.

(c) Income Tax Ordinance (XXXI of 1979)--

----S.148---Assessee was given three opportunities to produce evidence in support of his claim regarding income from agriculture but he failed to do so-- Resort of S.148, Income Tax Ordinance, 1979 by the Income Tax Officer was not unjustified.

(d) Income Tax Ordinance (XXXI of 1979)--

----S.148---Power of imposing penalty by Income Tax Officer for default-- Extent---When Income Tax Officer elected to provide yet another opportunity, to the assessee to appear on or before 23-9-1989 for the same purpose of recording evidence regarding his agricultural income, he gave up his right of imposing penalty for default having been committed on 26-8-1989.

The moment the I.T.O. elected to provide yet another opportunity to the assessee to appear on or before 23rd September, 1989 for the same purpose of recording evidence regarding his agricultural income, he gave up his right of imposing penalty for default having been committed by assessee on 26th August, 1989.

Even from cursory reading of section 148 of the Income Tax Ordinance, 1979 it appears that the power of imposing penalty has been given for one default against one summons issued for specified purpose. From the scheme of the Income Tax Ordinance, it appears that if a default under section 148 is committed, the resort is to be taken to section 117(d) of the Income Tax Ordinance. Clause (6) of section 117 of the Income Tax Ordinance, 1979 lays doyen that where any person without reasonable cause, fails to comply with the notice under section 148, he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both. Here again, the legislature has used the word Notice and not Notices. Nevertheless there might be circumstances in which several notices may be issued under section 148 and consequently several penalties may be imposed on default. Supposing, a notice is served on an assessee to appear in person so that he could be examined, regarding his alleged agricultural income. He appears and he has been examined on that issue. However, before the assessment is framed, the assessing officer gets some information about some other source of income. Here he may again summon him specifying the purpose of his personal attendance. Suppose that before assessment is completed yet another information is received by the I.T.O. and he again summons the assessee under section 148 for yet another specified purpose. In all these cases, the defaults, if any, would lead only to imposing of fine for each default but even the prosecution may be started separately for each default. On the contrary, if an assessing officer goes on issuing notice after notice under section 148 for enforcing the attendance of an assessee for same purpose it would amount to harassment and the law does not appear to have given him power of imposing fine on each default of this nature. The law rather enjoins upon him to take resort to the remedy of prosecution on first default. However, if out of his commiseration or courtesy or for any other reason, he decides to serve yet another notice or notices one after another but for the same purpose he gives' up, under principles of acquiescence and waiver, his right of imposing fine or recommending prosecution for the default after which he issued fresh notice. Wherever the legislature has laid down punishment for continuing default, it has specifically done so. Reference can be made to sections 87, 88, 89 and 108 of the Income Tax Ordinance.

(e) Income Tax Ordinance (XXXI of 1979)--

----S.148---Penalty for non-appearance of assessee---Record did not show that either the approval of I.A.C. was obtained by I.T.O. or the final opportunity of being heard was given to the assessee---Penalty imposed as such was liable to be deleted.

(f) Mala fides--

---- Orders recorded either mala fide or on an irrelevant consideration, or for improper purpose, or recorded unfairly cannot be deemed to be orders recorded judiciously.

1985 CLC 2771; (1972) 2 OB 140 and (1965) 2 All. ER 193 ref:

(g) Natural justice, principles of--

--- Where an authority was not supposed to act judicially or follow principles of natural justice, even then it was required by law to act fairly.

PLD 1967 Lah. 1112 ref.

(h) Mala fides--

---- Order passed with mala fide intention is hit by principles of general ultra vires.

1984 PLC 1332 ref.

(i) Mala rides---

---- An order cannot be struck down merely on allegation of mala fides but in law it requires strong evidence.

1985 PLC 711 and PLD 1984 Kar. 114 ref.

(j) Income Tax Ordinance (XXXI of 1979)--

----S.148---Income Tax Officer issuing notices after notices under various sections of the Ordinance acted on irrelevant consideration---Record also showed that I.T.O. acted unfairly which virtually amounted to harassment and that too for the improper purpose of satisfying his ego---Such orders of I.T.O held, were not sustainable in law.

Abid Shirazi for Appellant.

Asrar Rauf, D.R. for Respondent.

Date of hearing: 12th February, 1992.

ORDER

In these appeals, a Captain of our National Flag carrier and an Income Tax Officer have crossed their swords before this Tribunal. On one side of the fence is a person whose words have the authority of law while on board but on the other side is an officer whose orders are backed by might and majesty of law. Both are discharging very important duties within the scope of their respective authority. In fact, this Tribunal has not been called upon to decide as to who is more important. The financial aspect of the matter is also negligible: only Rs.1,000 are involved in each appeal. The real question requiring adjudication seems to be as to who on either side of the fence over stepped the hot-line drawn by the Income Tax Laws. In order to appreciate the arguments of both the learned counsel for the appellant as well as learned Departmental Representative, let me first recapitulate all the facts giving rise to these appeals.

2. The appellant filed his return as usual in assessment year 1988-89 also: However, the I.T.O. by his letter, dated 27th February, 1989 called upon the appellant to furnish him with the following information:

"(1) Complete postal address of inherited house properties being No.2045/AW IX and No.544/C 11 WIX.

(2) Inheritance Certificate/transfer deed of both the properties.

(3) Rent deed of both the properties.

(4) Proof of Property Tax paid as against the said properties.

(5) Proof of dividend income received from Naubahar Bohling (Pvt.) Ltd.

(6) Please explain the reasons for claiming the entire conveyance allowance of Rs.6,000 as exempt keeping in the view that you are not maintaining any motor vehicle of your own.

(7) You have shown Agricultural Income (Exempt) at Rs.90,500. You are requested to furnish all the required documents/details/particulars in support of your declaration.

(8) You have advanced loan to Messrs Naubahar (Pvt.) Ltd., and Sindh Fruit Processing (Pvt.) Ltd. In this regard please state:

(a) Documentary evidence of execution of said loans (if any).

(b) Purpose of granting such loans.

(c) Schedule of re-payment (if any).

(d) Rate of interest charged (if any).

(9) Bank Statement for the period 1-7-1987 to 30-6-1988."

It was to be furnished by or before 3rd April, 1989. M/s. Javed Law Associates, who represented the appellant before the I.T.O., by their letter, dated 3rd April, 1989 supplied the following information:

(1) Address of inherited property

(I) House No.2054/WIX/A, Abdali Road, Fatima Jinnah Hospital, Multan.

(II) Shops S44C/WIX Androon Navan Shaher, Multan.

(III) Agricultural land at Mouza Neel Kot, Tehsil Multan.

(2) Copy of arbitration, in respect of inherited property is enclosed.

(3) Proof of property taxes paid.

(4) Proof of dividend income received."

By the same letter they also sought adjournment to furnish the I.T.O. with the remaining information on ground that the appellant was on flight. The record shows that the time was allowed up to 12th April, 1989. However, on 11th April, 1989 a letter was addressed to the I.T.O. seeking adjournment up to 20th April, 1989 for the same reason of the appellant being out on his flight. This' letter appears to have been received by the I.T.O. on 13th April, 1989 and it is also established that he granted time to the appellant up to 20th April, 1989. On 1st August, 1989, the I.T.O. addressed another letter to the appellant which was served through his lawyer on the same date with reference to his earlier letters which were required to be complied with up to 20th April, 1989. The I.T.O. also enclosed the copy of his letter, dated 4th February, 1989 which was, however, despatched on 27th February, 1989. However, the noteworthy aspect of this letter is that it also extended a threat of levy of penalty and prosecution under sections 116 and 117 of the Income Tax Ordinance and thus it displayed for the first time the consequences which have to visit a defaulting assessee under the authority of an I.T.O. Before proceeding further, let me also mention that aforesaid letter was also accompanied by a notice under section 61 of the Income Tax Ordinance on the prescribed form bearing No.I.T.190. In its paragraph 3, this notice also warns an assessee that in case of his default not only an ex parte assessment under section 63 of the Income Tax Ordinance will be framed but he would also be exposed to penalty under section 110 and prosecution under section 117 of the Income Tax Ordinance.

3. The notice and letter of the I.T.O. both dated 1st August, 1989 were responded by a request for adjournment by a letter, dated 8th October, 1989 for the reason that both M/s. Javed Ahmed Siddiqui and Abid Shirazi, Advocates were out of city. This was received in the office of the I.T.O. on 9th August, 1989. From his letter dated 16th August, 1989, the I.T.O. extended the date for compliance to 26th August, 1989 though his reluctance is very much visible. Nevertheless, by this letter he required the appellant to attend his office personally together with the following information:

"(a) Documents pertaining to sale of jeep.

(b) Proof of agricultural income of Rs.90,500 as claimed by you. You should, inter alia, bring certificates regarding Ushr, Abiana and Malia etc.

(c) You have claimed Rs.6,000 as conveyance allowance whereas you are not maintaining a car. Please give reasons.

(d) Loans to M/s. Naubahar (Pvt.) Limited, Sindh Fruit Processing (Pvt.) Ltd., Please furnish all the requisite informations asked in our previous notices and letters.

(e) Bank Statement for 1-7-1987 to 30-6-1988.

(f) Your net wealth as on 30-6-1986 as per our calculation (base on your statement) amounts to Rs.810,115 instead of Rs.957,116. In re conciliation you have shown and reconciled as sum of Rs.303,145 whereas as per our calculation, net accretion should be Rs.156,144 This has caused error in subsequent calculations and thus an amount of Rs.147,910 stands unexplained/unaccounted for."

This letter was also enclosed with notices under sections 61 and 148 on prescribed form bearing No.I.T.190 and I.T.200/U and both letter and notices were received on the same date in the office of M/s. Javed Law Associates. By their letter dated 20th August, 1989, the Advocates of the appellant offered their reply to most of the points mentioned by the I.T.O. in his letter, dated 16th August, 1989 which appears to have been received in the office of the I.T.O. on 21st August, 1989. On 26th August, 1989 the learned Advocates of the appellant addressed another letter to the I.T.O. which was received by the latter on 27th August, 1989. From perusal of this letter, it appears that it was contended in it that in the notices issued under section 148 by the I.T.O., the date of compliance was mentioned as 19th August, 1989. It is further mentioned in this letter that the learned counsel for the appellant appeared on this date before the 1.T.0. and later on submitted his detailed explanation in person. It is also clear from it that the personal appearance of the appellant assumed the nature of personal prestige of both the parties to this feud. The relevant observation is picked up from it as follows:

"At the time of hearing you were of the view that the assessee should appear personally so that the issue of agricultural income can be discussed. It was argued at that time that since in the Notice it is mentioned that either the assessee or his authorised representative can attend the case. It was further argued that it is not necessary for the assessee to appear personally when the authorised representative can furnish the details and reply the queries if any, but you have not allowed to appear through authorised representative. It is submitted that Notice under section 148 is a Summon and at the time of issuance of Summon, the assessing officer assumed the power of a Civil Judge as mentioned in the Ordinance."

However, an adjournment to a date in mid of September, 1989 was also sought for. But by his letter dated 31st August, 1989, the I.T.O. after referring to his earlier notices, once again gave the appellant an opportunity to produce his explanation for the following:

(a) Shares of M/s. Naubahar (Pvt.) Ltd. Give Proof.

(b) Loan to Sindh Fruit Processing (Pvt.) Ltd. Proof regarding.

(c) Give details of your personal expenditure during the year relating to assessment year 1988-89 i.e. from 1-7-1987 to 30-6-1988.

(d) Give your detailed Bank statement for period 1-7-1987 to 30-6-1988.

(e) State whether your wife is an assessee. If yes, give her N.T.N.

(f) Agricultural Income.

You have claimed to be owner of 26-1/2 acres of agricultural land whereas proof given establishes your ownership of 1-1/2 acres only. This means that, in case you fail to establish your ownership of remaining 25 acres of land, only a proportional share of your claimed agriculture income will be accepted as that and the remaining part will be added back in your total income as unexplained:'

4. It is also important to mention that in this letter the I.T.O. once again insisted on the personal appearance of the appellant. His aforesaid letter states:

"To discuss this and other related points regarding your agriculture income mentioned in our previous notices, it is necessary, in my opinion, that you should attend this office personally. I am therefore, issuing you another summon under section 148 of the I.T. Ordinance 1979, for compliance on 23-9-1989. The purpose is that your statement on your agriculture can be recorded. But keeping in view your pre occupation and the nature of your job, I hereby allow you to attend my office any day convenient to you not later than 23-9-1989 and not without prior appointment. I am giving my telephone number as well."

5. Before proceeding further, let me mention that aforesaid letter together with the notice under section 148 was sent to the appellant directly on his residential address under a registered cover. Mr. Asrar Rauf, the learned Departmental Representative, submits that the I.T.O. had to take to the postal course of transmission as the learned counsel for the appellant had refused to accept them.

6. In the light of facts discussed above, one can safely guess that the appellant did not turn up before the I.T.O. on or before 23rd September, 1989. Consequently, he addressed final show-cause notice on 24th September, 1989 directly to the appellant to his residential address wherein after referring to the default committed by the appellant to his letter and notices issued earlier, the I.T.O. called upon the appellant to show cause as to why he should not impose penalty of Rs. 1,000 for each default made on 26th August, 1989 and 23rd September, 1989. In this letter, he has again warned the appellant as follows:--

"In addition to this fine, your default is also liable to prosecution under section 117 of the Income Tax Ordinance, 1979 which may result in one year imprisonment. Your failure to give explanation in writing will mean that you have nothing to offer in this regard."

7. He also warned the appellant in his final show-cause notice that he would add Rs. 90,500 to the declared income as unexplained income under section 13 of the Income Tax Ordinance as he had failed to prove that it was agricultural income if he did not produce before him:

(a) Record of Rights.

(b) Mutation or degree of Court.

(c) Field crop report.

(d) Malia documents.

Mr. Abid Shirazi, the learned counsel for the appellant, firstly argues that since notices issued under section 148 of the Income Tax Ordinance were without lawful authority, no penatly could have been imposed for alleged default on 26th August, 1989 and 23rd September, 1989. The learned counsel secondly submits that since both the notices issued on 16th August, 1989 and 31st August, 1989 permitted the appellant to appear either personally or through a representative, no penalty for default could have been imposed as the appellant was represented by his duly authorised representative. Thirdly, the submission of Mr. Abid Shirazi is that since the notice, dated 16th August, 1989 was issued for 19th August, 1989, no penalty could be imposed for default on 26th August, 1989. Similarly, there was nothing on record to show that the appellant failed to turn up on 23rd September, 1989 as there is no order sheet entry to that effect on that date. According to learned counsel, the penalty imposed for this date is also illegal. The last contention of Mr. Abid Shirazi is that the I.T.O. could not have imposed two penalties under section 148 of the Income Tax Ordinance. Mr. Asrar Rauf the learned D.R. on the other hand, supports both the officers below. He vehemently argues that it is within the exclusive jurisdiction of the I.T.O. to determine as to when and why the personal attendance of an assessee or witness is necessary and that the issuance of summons cannot be questioned.

8. I have heard both the learned counsel for the appellant as well as learned D.R. Since the fate of these appeals hinges on the interpretation of section 148 of the Income Tax Ordinance relating to the power of I.T.O. to enforce the attendance, I would, therefore, like to reproduce it at this juncture, and it is as follows:

"148. Power to take evidence on oath, etc.-- (1) The Income Tax Officer, the Inspecting Assistant Commissioner, the Appellate Assistant Commissioner the Commissioner and any other officer under the administrative control of the Central Board of Revenue authorised by it in this behalf, and the appellate Tribunal shall, for the purposes of this Ordinance, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (V of 1908) when trying a suit in respect of the following matters, namely:--

(a) enforcing the attendance of any person and examining him on oath or affirmation;

(b) compelling the production of any accounts or documents;

(e) receiving evidence on affidavit; and

(2) Where a person to whom a summons is issued under subsection (1) either to attend to give evidence or to produce accounts or documents at the place and time specified in such summons fails to do so without any reasonable cause, the authority issuing such summons may, without prejudice to the provisions of any other law for the time being in force, impose upon him such fine not exceeding one thousand rupees as it thinks fit, and the fine so imposed may be recovered in the manner provided in Chapter IX.

(3) The provisions of subsection (3) of section 111 shall mutatis mutandis apply in the ease of an order made under subsection (2) by any authority (other than the Income Tax Officer) as they apply to an order made under sub-section (1) of the said section 111.

Amongst the authorities created under the Income Tax Ordinance, the I.T.O. has been given, inter alia, the power of either enforcing the attendance of any person and examining him on oath or affirmation or compelling the production of any accounts or documents. From perusal of this section, further appears that an I.T.O. has the same powers which a Court under Code of Civil Procedure enjoys. If we peruse Civil Procedure Code, it appears that its sections 31 and 32 have vested in Court the powers of summoning a witness either to give evidence or to produce documents and in case of default, the power of enforcing its such order, and persuant to a, Order XVI lays down elaborate provisions for both summoning the witnesses for giving evidence or producing documents and enforcing their appearance. However, there is a difference in proceedings before Civil Court trying a civil suit and an I.T.O. determining the tax liability. In civil matters, the parties to the dispute themselves pray for issuance of notices to their respective witnesses which may be served on the witnesses either through Court or the concerned himself. However, the Court has also the power of summoning a witness suo motu or to examine him in his discretion if he is present in Court, Now as far as the summoning of the witnesses at the instance of the parties to the dispute is concerned, the Court generally issues such summons at the request of the party subject to the condition of payment of the expenses. However, as far as the power of summoning of a witness suo motu or examining of witness present in Court in its discretion is concerned, it is to be exercised judiciously. In other words, such power is to be exercised when the Court feels that in the absence of the testimony of such witness, the dispute could not be decided, finally and effectively; and such order is open to scrutiny by Appellate Courts.

9. On the other hand, in the proceedings before an I.T.O. the nature of dispute is quite different. The law has enjoined upon him to establish that an assessee is liable to pay the tax. Similarly, the burden of proving exemption from tax is on an assessee. The ]TO, therefore, in either case may summon a witness or an assessee to ether examine him on oath or to produce documents or other material. Nevertheless, his power like other powers is to be exercised judiciously which of course, is again open to judicial scrutiny of the appellate forums.

10. From the facts reproduced above, it is clear that the ITO wanted certain information with proof thereof by his letter, dated 27th February, 1989 and it included the information regarding the proof in respect of the claim of the appellant relating to agricultural income However, it appears that by their letter, dated 3rd April, 1989, the learned counsel for the appellant furnished the ITO with partial information although the latter granted two more adjournments for this purpose at the request of the former. Consequently, the Income Tax Officer had to issue another notice on 1st August, 1989. From perusal of the order-sheet, it appears that the learned counsel for the appellant appeared before the ITO on 21st August, 1989 alongwith his reply dated 20th August, 1989. From perusal of the reply dated 20th August, 1989, it appears that it was submitted before the I.T.O. that the agricultural income being totally exempt under Income Tax Ordinance, the I.T.O. had no jurisdiction for seeking any information about it. Nevertheless, as is clear from the order-sheet, dated 21st August, 1989, the I.T.O. told the learned counsel that the appellant had to appear before him on 26th August, 1989 so that his statement about agricultural income could be recorded. Mr. Abid Shirazi, the learned counsel for the appellant calls this direction mala fide and without lawful authority. However, with due respect to him, I do not find any force in his submission. Firstly, let me point out that in a decision reported as 1989 PTD 617, it has been held by this Tribunal that it is within the power of the I.T.O. to investigate as to whether an income claimed to be agricultural income was really income derived from agriculture.

If he finds that it was income derived from agriculture, he has no jurisdiction to proceed further. Secondly, since under the Simplified Procedure as laid down in C.B.R. Circular No.19 of 1988 dated 5-10-1988, the agricultural income had to be included in the total income, it became all the more necessary for the I.T.O. to examine the claim of the appellant. Thus, the contention of Mr. Abid Shirazi raised in his letter dated 20th August, 1989 that the I.T.O. had no jurisdiction to ask for any evidence regarding agricultural income, has no legs to stand upon. The order of the I.T.O., therefore, cannot be called without lawful authority for these reasons.

11. Now,. when I went through the evidence produced by the learned counsel for the appellant before the I.T.O. through his letter dated 3rd April. 1989, I came across an arbitration award which is mentioned even in the letter dated 3rd April, 1989. From its perusal, it transpired that the arbitrators partitioned properties left behind by the father of the appellant amongst his heirs and thus, the appellant received 3 Bighas land situated in village Neelkot, Tehsil Multan. As such, the decision of the I.T.O. to examine the appellant in person as indicated by him by his notice dated 16th August. 1989 and order-sheet entry, dated 21st August, 1989, again seems to be necessary to find out as to whether the claim of the appellant regarding agricultural income to the extent of Rs.90,500 was justifiable or not in order to determine the correct tax liability of the appellant. It is important to keep in mind that he had taken resort to section 148 of the Income Tax Ordinance after giving three opportunities to the appellant to produce evidence in support of his claim regarding income from agriculture for 3rd April, 1989, 12th April, 1989 and 20th April, 1989. Thus, it cannot be said that the I.T.O. exercised power under section 148 without lawful authority. Since there is enough evidence on record to show that the appellant was served with the notices for personal appearance on 21st August, 1989 and 23rd September, 1989, therefore, by not complying with them, the appellant appears to have committed default on both the dates.

12. The next contention of Mr. Abid Shirazi is that since the notices served on the appellant permitted him to appear in person or through his authorised representative and since Mr. Shirazi appeared before the I.T.O., therefore, no default could legally be recorded. However, with due respect I again fail to find any force in this submission. It is true that in the notices issued under section 148 of the Income Tax Ordinance on 16th August, 1989 and 31st August, 1989; it is mentioned that the appellant may produce documents in person or through his authorised representative. However, as far as the personal attendance is concerned, it has not been specifically dispensed with through the authorised representative. Moreover, it is clear from the order-sheet of 21st August, 1989 that the learned counsel was specifically informed that the appellant was to appear in person before the I.T.O. on 26th August, 1989. Similarly, from the covering letter, dated 31st August, 1989, it was impressed upon the appellant that he had to appear in person on any date convenient to him not later than 23rd September, 1989. Thus, the appellant was left with no alternative but to appear in person before the I.T.O. which he did not and thus he committed defaults on both the dates.

13. The next contention of Mr. Abid Shirazi is that the notice was issued for 19th August, 1989. There seems to be some force in it as there is over writing both in the letter and the notice, dated 16th August, 1989. The date originally mentioned appears to be 19th August, 1989 in both. However, the order-sheet entry dated 21st August, 1989 removes this doubt and I reproduce it as under:

"21-8-1989

Assessee's A.R., Mr. Abid Shirazi attended and handed over his written reply to the previous queries/notices. He was clearly told that Mr. Halim himself was supposed to attend this office on 26th August, 1989 as per schedule in order to record his statement about agricultural income. Bank statement and other requirements will also be provided on the same date."

This order-sheet entry is signed by the learned counsel for the appellant as well. Thus, if any doubt was created by the letter and notice, dated 16th August, 1989, it should have been removed on' 21st August, 1989 and thus the default on 26th August, 1989 stands established. Let me mention here that the order-sheet entry on 26th August, 1989 also mentions no compliance on this date. This submission of Mr. Abid Shirazi also stands rejected.

14. Now as far as the letter and notice of 31st August, 1989 are concerned, there is no confusion in the date mentioned therein. Moreover, in the letter, the I.T.O. has permitted the appellant to appear on or before the 23rd September, 1989 before him according to his convenience. The service of these notices is not in dispute as it has been directly served on the appellant at his residential address. Moreover, the default has also been noted on 24th September, 1989. Thus, the default on this date is also established and the submission of Mr. Abid Shirazi to the contrary is rejected.

15. Lastly, the learned counsel has argued that two penalties for two defaults were not legal for the simple reason that the personal attendance was required for same purpose. Here, I find force in his submission. In my humble opinion, the moment the I.T.O. elected to provide yet another opportunity to the appellant to appear on or before 23rd September, 1989 for the same purpose of recording evidence regarding his agricultural income, he gave up his right of imposing penalty for default having been committed on 20th August, 1989.

16. Even from cursory reading of section 148, it appears that the power of imposing penalty has been given for one default against one Summons issued for specified purpose. From the scheme of the Income Tax Ordinance, it appears that if a default under section 148 is committed, the resort is to be taken to section 117(d) of the Income Tax Ordinance. Let me mention here that clause (d) of section 117 lays down that where any person without reasonable cause, fails to comply with the notice under section 148, he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both. Here again, the legislature has used the word Notice and not Notices. Nevertheless, let me explain that there might be circumstances in which several notices may be issued under section 148 and consequently several penalties may be imposed on default. Supposingly, a notice is served on an assessee to appear in person so that he could be examined regarding his alleged agricultural income. He appears and he has been examined on that issue. However, before the assessment is framed, the assessing officer gets some information about some other source of income. Here he may again summon him specifying the purpose of his personal attendance. Suppose that before assessment is completed yet another information is received by the ITO and he again summons the assessee under section 148 for yet another specified purpose. In all these cases, the defaults, if any, would lead not only to imposition of fine for each default but even the prosecution may be started separately for each default. On the contrary, if an assessing officer goes on issuing notice after notice under section 148 for enforcing the attendance of an assessee for same purpose it would amount to harassment and in my humble opinion the law does not appear to have given him power of imposing fine on each default of this nature. The law rather enjoins upon him to take resort to the remedy of prosecution on first default. However, if out of his commiseration or courtesy or for any other reason, he decides to serve yet another notice or notices one after another but for the same purpose, he gives up, under principles of acquiescence and waiver, his right of imposing fine or recommending prosecution for the default after which he issued fresh notice. Before parting with this issue, let me point out that wherever the legislature has laid down punishment for continuing default, it has specifically done so. Reference can be made to sections 87, 88, 89, and section 108 of the Income Tax Ordinance. Thus, I conclude that both the officers below fell in error in imposing penalty for default of 26th August, 1989.

17. Now as far as penalty for default committed on 23rd September, 1989 is concerned, I am afraid, it is also not sustainable in law. From perusal of the order-sheet dated 24-9-1989, it appears that the I.T.O. recorded it as under:

"No compliance to summon under section 148 and notices, under sections 61 and 116. Penalty orders of both the defaults under section 148 be forwarded to the IAC for approval. Final opportunity of being heard be given to the assessee for compliance on 7-10-1989.

(Sd.)

P.S.

Pl. post three copies of letter at assessee's residence; C/o Javed Law Associates and C/o PIAC, Karachi as well.

(Sd.)

24-9-1989."

From perusal of the order-sheet it further appears that on 25th September, 1989, the file was sent to Deputy Director (Survey) and received back on 15th October, 1989. However, on 15th October, 1989, the order-sheet entry reads as under:

"The assessee attended in person and said that agricultural land 26-1/2 acres were in the name of his father.

2. Requisite information regarding all other points will be produced on 29-10-1989.

(Sd.)

15-10-1989."

Although there may be evidence to show that the I.T.O. served notice on the appellant at his residence, C/o Javed Law Associates and C/o PIAC, Karachi, yet it is clear that the appellant presented himself in person before the I.T.O. on 15th October, 1989. Thus, there remains no doubt that if the I.T.O. had any power of imposing penalty for default committed on or before 23rd September, 1989, it was subject to the approval of IAC concerned and show-cause notice to be given for final opportunity to the appellant to appear on 7th October, 1989. However, there is nothing on record to show that either the approval of IAC was obtained or the final opportunity of being heard was given to the appellant. On the contrary, it appears from the order-sheet dated 29th August, 1989 that the I.T.O. recorded it as under:

"Fine order under section 148 is hereby sent to the IAC Range-11, for his kind approval.

(Sd.)

29/8

P-S.: Submission of fine order under section 148 withheld because of IAC's transfers/postings.

(Sd.)."

This entry is followed by an entry made on 10th September, 1989 which reads as under:

"New summon under section 148 alongwith letter and notices under section 61 was sent which the assessee's A.R, refused to receive. Mr. Asghar Abbas was sent to the assessee's residence, but Mrs. Haleem refused to receive the summon and notices etc. Post the same by Registered A/D. Compliance on 23-9-1989.

(Sd.)

10-9-89."

This entry is followed by the entry of 24th September, 1989 as reproduced above. Thus, it is clear from perusal of these order-sheet entries that even the penalty imposed for default of 23rd September, 1989 is not legally sustainable. Since the file did not remain with the I.T.O. from 25th September, 1989 to 15th October, 1989, there is nothing on record to show that the appellant defaulted on 7th October, 1989 also. On the contrary, his personal appearance is recorded on 15th October, 1989. This penalty, therefore, is also liable to be deleted.

18. Before parting with these appeals, I feel very much tempted to observe that the facts which I have reproduced above, depict a war of nerves, and personal prestige fought between a person whose order reigns supreme while in the skies and a person who wields the sceptre of might and majesty of law on the surface of the earth. If, on one hand, it appears to be the story of obstinacy of enforcing attendance through notices issued under sections 61, 110, 116, 117 and 148 by a desperate Revenue Collector, on the other hand, it also reflects the arrogance of a flier who disregarded them with impunity. Although the might of law has ultimately brought down to the earth a person who was flying high in the sky yet the question remains as to why firstly the appellant displayed his reluctance to appear in person before a first class gazetted officer and secondly why the ITO made the personal appearance of the appellant a prestige issue for himself despite the fact that he had other option also. However, instead of answering both the questions, I leave them to be pondered over in some relaxed moments by those who are directly responsible for answering them.

19. However, I am very much tempted to mention here that order recorded either mala fide (1985 CLC 2771), or on an irrelevant consideration (1972) 2 QB 140), or for improper purpose (1965) 2 All ER 193), or recorded unfairly cannot be deemed to be orders recorded judiciously. Let me also emphasise here that even where an authority is not supposed to act judicially or follow principles of natural justice, even then it is required by law to act fairly. The Lahore High Court reviewed such an order on ground of unfairness in a case reported as PLD 1967 Lahore 1112. It is also settled law that mala fide orders are hit by principles of general ultra vires (1984 PLC 1332). However, an order cannot be struck out merely on allegation of mala fide. In law it requires strong evidence (1985 PLC 711 and PLD 1984 Karachi 114). I have, therefore, in view of this plethora of case-law, examined the evidence on record in order to decide the issue as to whether the ITO recorded his orders judiciously.

20. The word "mala fide" is a strong word and needs strong evidence. But evidence on record which I have reproduced above, in my humble opinion, is not strong enough to malign the ITO with mala fide intentions. Nevertheless, I am convinced that the ITO has acted on irrelevant consideration when he went on issuing notices after notices under various sections of the Income Tax Ordinance. In my bumble opinion, it is also fully established by evidence on record that he acted unfairly which virtually amounted to harassment and that too fur the improper purpose of satisfying his ego. His both orders, therefore, are not sustainable in law in view of the case-law discussed above.

21. Before parting with these appeals I feel very much tempted to observe that as they say in England, it is good to be important but it is important to be good. But unfortunately both parties before me have demonstrated themselves to be important without being good to each other. Nevertheless I hope that in future both the assessee and Assessing Officers would be good to each other despite their being important.

22. Now to conclude, I allow both the appeals and the penalty of Rs.1000 imposed in each appeal is hereby ordered to be deleted.

M.B.A./1406/T Appeals allowed.