Income Tax Ordinance (XXXI of 1979)---

----Ss. 88 & 91---Scope and application of Ss. 88 & 91 of the Ordinance-- Penalty imposed under S.91 after return had been filed by the assessee before the Income Tax Officer under S. 54 and before passing of an order of assessment by him was illegal as in circumstances, Income Tax Officer could only invoke the provision of S.88 and subject the assessee to additional tax payable thereon.

A perusal of sections 88 and 91 of the Income Tax Ordinance, 1979 would show that if penalty is imposed for the failure of the assessee to pay income-tax alongwith the return under section 54 of the said Ordinance the, relevant provision which can be invoked by the Income Tax Officer would be section 88 of the Ordinance. However, if the assessee fails to pay tax after an order of assessment has been passed by the Income Tax Officer, the relevant provision which can be invoked in such a case would be section 91 of the Ordinance. Section 91 is of general character and would be applicable in case of every kind of default committed by the assessee in payment of income-tax, except in cases which have been expressly excluded therefrom. Needless to say, that when there is a specific provision which can be invoked while dealing with a particular situation, resort must not be had to a general provision,, notwithstanding the fact that both can be invoked to meet the situation. So far as the factual position in the present case is concerned, penalty was imposed under section 91 after return had been riled by the assessee before the Income Tax Officer and before passing of an order of assessment by him. No penalty, therefore, could be imposed upon the assessee by invoking the provisions of section 91 of the said Ordinance, but the Income Tax Officer could only invoke the provisions of section 88 of the Ordinance and subject the assessee to additional tax payable thereunder.

Samiuddin Sami for Petitioner. Shaikh Haider for Respondent.

Date of hearing: 13th January, 1992.

JUDGMENT

MAMOON KAZI, J.---The short question which arises for determination in the present case is, whether tax could be imposed on the assessee under section 91 of the Income-tax Ordinance.

Although the applicant in this case has failed to file a Statement of Facts but the admitted position is that the applicant had filed a return of Income-tax on 15-1-1980 declaring its income as Rs.50,77,159. The amount of tax, on the basis of the return filed by the applicant was admittedly payable in the sum of Rs.12,1.9,752 but the same was not paid by the applicant at the time of filing of the return as required by section 54 of the Income-tax Ordinance. The applicant requested for instalments but admittedly its request for instalments was rejected by the Income-tax Officer vide his letter dated 19-1-1980. The applicant was then directed by the Income-tax Officer vide his letter, dated 4-2-1980 to pay the tax but admittedly the tax was not paid. Thereafter the Income-tax Officer held that the applicant had committed default in payment of tax under section 54 of the Ordinance and consequently he imposed a penalty of Rs. 2 lacs and demanded its payment alongwith the admitted tax liability under section 54 of the Income-tax Ordinance. Aggrieved by the said order of the Income-tax Officer which was purportedly passed under section 91 of the Income-tax Ordinance, the applicant filed an appeal before the learned Appellate Assistant Commissioner but without any success. The appeal filed by the applicant before the learned Income Tax Appellate Tribunal was also dismissed and the order passed by the first appellate authority was upheld. Thereafter, the applicant moved the Tribunal for referring the question of law arising from the order of the Tribunal to this Court but the request of the applicant was declined by the Tribunal vide order, dated 7-9-1983 holding that there was no question of law arising under the circumstances of the case which could be referred to this Court, and hence the present application.

After hearing Mr. Samiuddin Sami, learned counsel for the applicant, and Mr. Shaikh Haider, learned counsel for the respondent, we rind that the only question which arises for our determination in the present case is whether the Income-tax Officer was justified in imposing penalty of Rs.2 lacs upon the applicant by invoking section 91 of the Income Tax Ordinance.

It is pertinent to reproduce the relevant provisions of sections 88 and 91 of the said Ordinance which provide as follows:---

"88. Charge of additional tax for failure to nab tax with the return.--Where any assessee fails to pay tax under section 54 or the tax so paid is less than the tax payable under that section, he shall be liable to pay additional tax at the rate of fifteen per cent. per annum on the amount not paid or the amount by which the tax paid by him falls short of the tax payable under that section, as the case may be, and such additional tax shall be calculated from the first day of October or the date on which the tax was payable, whichever is the later, to the date on which the tax is paid or the date on which an order under subsection (i) of section 59, section 62, section 63 or section 65 as the case may be, is made, whichever is the earlier.

91. Penalty for non-payment of tax.---(1) Where any assessee is in default in making payment of any tax (other than the tax payable under' section 53) the Income-tax Officer may impose on him a penalty not exceeding an amount equal to the said tax.

(2) The Income-tax Officer may impose a penalty under subsection (1) by one order or, in the case of a continuing default, by several orders, so, however, that the total amount of penalty does not exceed the amount of such tax.

(3) For the purpose pf subsection (1), any penalty imposed under that subsection or any additional tax levied under section 86, 87, 88 or 89 shall be excluded from the amount of tax in respect of which the penalty is imposed.'

A perusal of the above provisions would show that if penalty is imposed for the failure of the assessee to pay income-tax alongwith the return under section 54 of the said Ordinance the relevant provision which can be invoked by the Income Tax Officer would be section 88 of the Ordinance. However, if the assessee fails to pay tax after an order of assessment has been passed by the Income Tax officer, the relevant provision which can be invoked in such a case would be section 91 of the Ordinance. Section 91 is of general character and would be applicable in case of every kind of default committed by the assessee in payment of income-tax, except in cases which have been expressly excluded therefrom. Needless to say, that when there is a specific provision which can be invoked while dealing with a particular situation, resort must not be had to a general provision, notwithstanding the fact that both can be invoked to meet the situation. So far as the factual position in the present case is concerned, as is evident from the appellate order of the learned Tribunal, dated 12-4-1984 penalty was imposed under section 91 after return had been filed by the applicant before the Income Tax Officer and before passing of an order of assessment by him. We are, therefore, convinced that no penalty, could be imposed upon the applicant by invoking the provisions of section 91 of the said Ordinance, but the Income Tax Officer could only invoke the provisions of section 88 of the Ordinance and subject the applicant to additional tax payable thereunder.

In the result, we arc of the opinion that the learned Income Tax Appellate Tribunal was not justified in rejecting the appeal of the applicant and upholding the order passed by the learned Appellate Assistant Commissioner.

M.B.A./A-1187/K Appeal accepted.