ITAS. NOS. 815/LBI/SB TO 820/LBI/SB OF 1988-89 VS ITAS. NOS. 815/LBI/SB TO 820/LBI/SB OF 1988-89, 1994 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1119 (1993)

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

----S. 116---Penalty---Fact that assessee or his authorised representative did not file any defence against the notices under S.116, Income Tax Ordinance, 1979 weighed heavily against the assessee.

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

----Ss. 111 & 116---Penalty---Concealment of income ---Assessee had agreed to levy of penalties under S.111 of the Income Tax Ordinance, 1979 and defence was offered by assessee in response to the notice under 5.116, Income Tax Ordinance, 1979 and no plea of duress or coercion had been taken by assessee---Penalties imposed were ordered to be restored by the Tribunal in circumstances.

ITA No. 4359/LB of 1984-85; RNA No.47/LB/1986-87; Al-Ahram Builders (Pvt.) Lt. v. I.TA.T. 1992 PTD 1671; 1992 PTD (Trib:) 155; 1987 PTD (Trib.) 646; 1990 PTD (Trib.) 11; ITA No.1027/LB of 1991-92; 1992 PTD (Trib.) 155 and 1987 PTD (Trib.) 646 ref.

Abdul Rauf, D.R. for the Appellant.

Mirza Muhammad Waheed Baig for the Respondent.

Date of hearing: 20th September, 1993.

ORDER

INAM ELAHI SHEIKH (ACCOUNTANT MEMBER).---These six departmental appeals are directed against an order, dated 19-3-1989, recorded by the learned CIT (Appeals) to agitate the deletion of a penalty imposed under section 111 of the Income Tax Ordinance (hereinafter referred to as Ordinance) in all the years under consideration.

2.The assessee is an individual and the income was assessed under section 65/62 of the Ordinance in all the years under consideration. The assessments are said to have been made on agreed basis and according to the Department the agreement also included the imposition of penalty at the minimum amount leviable under the law. The assessing officer issued a notice under section 116 of the Ordinance and the A.R. appeared and stated that they had also agreed to the levy of minimum penalty under the law. Thus, the assessing officer imposed the penalties in all the years with the approval of the IAC. The learned CIT (Appeals) however, cancelled these penalties relying on the following decisions:---

"1. ITA No. 4359/LB/1984-85 (assessment year 1982-83), dated 1-6-1986.

2. RNA No. 47/LB/1986-87 (assessment year 1982-83), dated 10-1-1988.

3. Both the parties have been heard and the relevant order perused. The learned D.R. has strongly agitated the order of the learned CIT (Appeals) on the contention that the assessee had agreed to not only the quantum of assessment but also to the quantum of penalties to be imposed. The learned D.R. also stressed that the A.R. of the assessee had only explained, in response to the notice under section 116; that they had also agreed to the levy of minimum penalty. The learned D.R. drew our attention to the agreement made on 20-4-1988 which included the agreement for penalty as well. The learned D.R. also referred to the order-sheet entry, dated 24-5-1989 according to which Mr. M.H. Usmani, the then A.R. for the assessee had sated that the assessee had already agreed to the levy of penalties. With these arguments and on the reliance of a decision of the Supreme Court of Pakistan in the case of Al-Ahram Builders (Pvt.) Ltd. v. I.T.A.T. cited as 1992 PTD 1671, the learned D.R. supported the grounds of appeals. The learned D.R. also relied upon a decision of the Tribunal in ITA No. 1027/LB/1991-92 to support his contention.

4. The learned A.R. on the other hand, took a preliminary objection that the assessee had not been served with the copy of memorandum of appeal as required under Rule 12 of the Income Tax Appellate Tribunal Rules. The learned counsel of the assessee referred to the provisions of section 134(5) of the Ordinance and it was argued that the appeals could not be entertained as the provisions of that section have not been followed. The learned counsel of the assessee also took a plea that a penalty under section 111 of the Ordinance could not be imposed in this case as there was no addition under section 13 of the Ordinance. The learned counsel of the assessee drew our attention to the provisions of section 111(2)(c). The learned counsel of the assessee also took the plea that the assessee had nowhere admitted to the concealment and that he had made no offer to the imposition of the penalty. When confronted with the content of the agreement, which as per the Departmental record carried signatures of the assessee, the learned counsel of the assessee took the plea that the assessee was not conversant with English and he did not know he was signing any agreement which included an agreement for levy of penalties. The learned counsel of the assessee argued that the ignorance of English language was supported by the fact that he signed the order-sheet in Urdu. The learned counsel of the assessee relied on the following cases to support his contention:---

1992 PTD (Trib.) 155; 1987 PTD (Trib.) 646; 1990 PTD (Trib.) 11.

5. While disposing of all these appeals, I find that the learned CIT (Appeals) has passed a brief and summary order. The learned CIT (Appeals) has relied on two decisions of the Tribunal as mentioned earlier while cancelling the penalties but he has not elaborated on such decisions. The assessee's, ground that "no agreement for"-penalties was done" has not been dealt with. Even other grounds such as in applicability of penalties due to non existence of provisions regarding section 13 have not been dealt with. To, me this appears to be a hastily passed order. The cases relied upon by the learned D.R. on the other hand are also not of much relevance. The learned D.R. drew my attention to the remarks on page 151 of the reported cases of Al Ahram Builders wherein it has been mentioned that the assessee has also not come with clean hands. However, these remarks are irrelevant as these were not the remarks of the Hon'ble Supreme Court and also because the learned Judges of the Supreme Court ordered to ignore the remarks of the High Court with regard to the concealment. The decision in ITA No. 1027/LB/91-92 (supra) is not also relevant as the question in that case was not of penalty. However, the contention of the learned D.R. that the only reply given by the assessee's A.R. in response to the notice under section 116 of the Ordinance was that they had already agreed to the imposition of penalties, is forceful.

6. The learned counsel of the assessee has tried vigorously to make out a case out of a helpless situation for the assessee/respondent. The cases relied upon and mentioned above are not helpful to the case of the assessee. The fact that the assessee or his A.R. did not file any defence against the notice under section 116 of the Ordinance weighed heavily against the assessee. In none of the three cases referred to above, the reply to the notice under section 116 was found to be absent. In the case reported as 1992 PTD (Trib.) 155 the agreement had been made by the A.R. of the assessee and the assessee later on denied having given any specific authority for agreement to penalty. This contention is not taken in the present case. In. the case reported as 1987 PTD (Trib.) 646, the assessee denied the concealment in response to the notice under section 116 of the Ordinance. The facts in-the case reported as 1990 PTD (Trib.) 11 were also different and the penalties were cancelled, as the additions under section 13 had been made and the provisions of section 111(2)(c) of the Ordinance had been inserted subsequently. The learned counsel of the assessee has not been able to establish that the penalties could only be levied if the additions were made under section' 13 of the Ordinance. B Since, the assessee agreed to the levy of penalties under section 111 of the Ordinance and defence was offered in response to notice under section 116 and no plea of duress or coercion has been taken, I order the restoration of the penalties imposed in all the years under consideration.

7. All the six appeals succeed accordingly.

M.B.A./42/T.T.Appeals allowed.