I.T.A S. NOS.628/KB AND 629/KB OF 1998-99, DECIDED ON 26TH JUNE, 1999. VS I.T.A S. NOS.628/KB AND 629/KB OF 1998-99, DECIDED ON 26TH JUNE, 1999.
1999 P T D (Trib.) 3456
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman, S.M. Sibtain and Muhammad Mehbooh Alam, Accountant Members
I.T.A s. Nos.628/KB and 629/KB of 1998-99, decided on 26/06/1999.
(a) Words and phrases--
----"Manner"---"Style"---Manner also means "style"which connotes "a way of reckoning time, dates etc. "---[PTD 1999 (Trib.) 1661 reversed].
Sense 10:P.P.1415, ' Second College Edition of New World Dictionary of the American Language and P.P.1713 of the New Edition of the Chambers' Dictionary (Reprinted in 1993) rel.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss.144(a), (b), (c), 51, 139, 141, 142, 143, 143-A & 143-B---Power to call for information---Purpose and occasion for exercise of power by the Assessing Officer under S.144, Income Tax Ordinance; 1979 to call for information as specified in cls. (a), (b) & (c) of said section was distinct and different from the mandatory requirements of furnishing statements prescribed under Ss.51, 139, 141, 142, 143, 143-A & 143B, Income Tax Ordinance, 1979.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss. 108(b), 139, 142 & 165(2)(e)---S. R. O. No. 1116(1)/95, dated 23-11-1995---Failure to furnish return of total income and certain statements and filing of statements under Ss. 139 & 142, Income Tax Ordinance, 1979 after due date ---Penalty---Assessee' s contention was that due dates prescribed by the Central Board of Revenue while prescribing "the manner" in the rules for furnishing such statements was not valid---Held, it was mandatory obligation of Central Board of Revenue under S.165(2)(e), Income Tax Ordinance, 1979 to "provide for anything which is to be or may be prescribed under the Ordinance---Contention of the assessee was repelled -- [1999 PTD (Trib.) 1661 reversed].
1999 PTD (Trib.) 1661 reversed.
1998 PTD (Trib.) 3507 ref.
Sense 10P.P.1415 Second College Edition of New World Dictionary of the American Language rel. '
(d) Income Tax Ordinance (XXXI of 1979)---
---Ss.l08(b) & 142--Income Tax Rules, 1982, R.61---Non-filing of statements---Penalty---Contention that although there was mention of 5,142, Income Tax Ordinance, 1979 m the heading of R.61 of the Income Tax Rules, 1982, still the statement under said rule could not be said to have been prescribed under S. 141. Income Ta Ordinance, 1979 as it was established principle of interpretation of statutes that headings and marginal notes did not form part of the statutes---Validity---Principle evolved was not applicable in the context of prescribed Rules notified through Statutory Regulatory Orders (SRO) where the heading and marginal notes were part of the Notification---Such principle was to be invoked only when an issue requiring interpretation of statute arises and not in giving a finding of fact that a statement prescribed under the rule was in pursuance of the provisions of a particular section.
1996 PTD 292 ref.
(e) Income Tax Ordinance (XXXI of 1979)--
----Ss.108(b) & 116---Failure to furnish return of total income and certain statements---Imposition of penalty after notice of hearing---Notice under 5.116, Income Tax Ordinance, 1979 was not responded on the ground that statements despatched were already received in the office of the Assessing Officer---Penalty---Validity---Order of penalty passed without giving opportunity to explain reason for delay in filing the statement was unsustainable in law and was cancelled.
(f) Income Tax Ordinance (XXXI of 1979)---
----S.108(b)---Failure to furnish return of total income and certain statements---Delay of two days in submission of statements ---Penalty-- Reasonable cause ---Condonation of delay---Delay in submission of statements was caused due to inaccessibility of Income-tax Officer on account of blockade of surrounding roads by the law enforcement agencies---Penalty order was cancelled with the finding that there was reasonable cause for delay.
Syed Irfan Ahmed, I.T.P. for Appellant.
M. Mahfooz-ur-Rehman Pasha, D. R. for Respondent.
Date of hearing: 26th June, 1999.
ORDER
S.M. SIBTAIN (ACCOUNTANT MEMBER). ---These four appeals have been instituted at the instance of three different assessee against the orders of the learned CIT(A) upholding the orders passed by the Assessing Officers under section 108(b) of the Income Tax Ordinance, 1979.
2. This Full Bench has been constituted to hear these appeals because during the course of hearing of appeal in the case of Messrs Cox & Kings (Agent) (Private) Limited on 10-6-1999, a decision reported as 1999 PTD (Trib.) 1661 has been cited before the Division Bench and it has been proposed by the Division Bench that the issue decided (ibid) requires reconsideration.
3. We have heard the learned representatives of the appellants as well as the learned representative of the Department.
4. Objection has been taken in I.T.A s. Nos. 628 and 629/KB of 1998-99 against the order of the learned CIT(A) on the ground that all statement under section 139 to section 142 have been filed in time and, therefore, the penalties levied under section 108(b) were liable to be cancelled rather than confirmed.
5. Briefly, the facts are that the appellant is admittedly liable to file statement required under sections 139, 140, 141 and 142 for the month of July 1998 by 15-8-1998 and the statements required under section 139 and section 142 for the month of August, 1998 by 15-9-1998 as per impugned orders. The statements (supra) have not been filed by the due date as mentioned in the penalty orders. The learned DCIT, therefore; has issued notices under section 116 of the Ordinance requiring the assessee to explain why penalty under section 108 should not be levied for default in filing the statements. The appellant has filed statements under sections 139 and 142 in respect of July 1998 on 10-10-1998 under covering letter dated 9-10-1998. The statements required under sections 139 and 142 in respect of August 1998 have been filed on 26-9-1998 alongwith a letter of even date stating, in both the letters, that the required statements have already been sent in time by ordinary mail service. However, no evidence in support of mailing the statement has been furnished on behalf of the appellant for the statements have been received by mail in the office of tile D(T! The learned DCIT. however, has provided another specific opportunity on each occasion (supra) requiring the appellant to provide evidence in support of filing the statements in time as claimed on its behalf. The appellant. however, has not been able to furnish any evidence. The learned DCIT, therefore, has concluded that the statements for the month of July have been filed 54 days after the due date while the statements for the month of August have been filed 10 days after the due date. He, therefore, has imposed penalty @ 200 per day for each statement besides the initial penalty of Rs. 2,000 for each default-
6. Appeals have been instituted against the treatment (supra) before the learned CIT(A) who has dismissed the appeal with the observation that the normal practice followed on behalf of the appellant is to make over such documents either by hand or deliver by registered post acknowledgment and therefore, despatch of such documents by ordinary post is not understandable. It has been further observed that the decision reported in 1998 PTD (Trib.) 3507 cited on behalf of the appellant is of no avail to the appellant because it has been clearly held therein that penalty under section 108 can be imposed if there is failure to furnish any statements under the sections enumerated in section 108 viz sections 51, 139, 140, 141, 142, 143, 143-A, 143-B or 144. He has finally held that on facts and circumstances; of the case the penalty orders do not call for any interference.
7. It is in this context that the decision reported in 1999 PTD (Trib.) 1 t>61 ho. been cited wherein it is held by a Division Bench of Tribunal at Islamabad, that there is no provision under sections 139 to 143 of the Income Tax Ordinance 1979 authorising the Central Board of Revenue to prescribe the due dates for submission of statements required to be filed due under the sections (supra); the expression "within the time allowed for the purpose" as used in the sections (supra) would, therefore, mean the time allowed by the Deputy Commissioner of Income Tax for filing such statement because he is authorized under section 108 to impose penalty for default in filing such statements and as such there is no validity of the due dates prescribed by the C.B.R. while prescribing "the manner", in the Rules made by the Board, for furnishing such statements.
8. The learned authorised representative of the appellant, Mr. Irfan Zaki has submitted, following the line of arguments made on behalf of the appellant in the case decided by the Division Bench at Islamabad (ibid), that the provisions of sections 139 through 143 do not authorise the C.B.R. to specify the due dates for filing of statements under these sections. The only authority that the B.R. has, under these sections, is to prescribe the manner in which the-statements are required to be filed and to prescribe the particulars to be given in these statements. It is argued that the expression "manner" has to be construed in its ordinary dictionary meaning, connoting "method", "mode", "style", "way", in which a thing is done. It does not include the concept of time. To illustrate this point example of section 50(8)(c) has been given, which separately mentions "prescribed time" and "prescribed manner" for deposit of tax deducted or collected under section 50. The learned A.R. also states that whenever the legislature desired to specify a date or time limit for an,. act to be done, it has specified it in the relevant provisions of law itself or has specifically authorized the C.B.R. to prescribe it in the rules. For example, tree due date for filing of return of total income is specified in section 55. On the other hand, in section 50(8)(c), the C.B.R. has been authorised to prescribe the time for the deposit of tax deducted or collected under section 50. However, in sections 139 through 143, neither the due date has been specified nor the C.B.R. has been authorised to prescribe the due date.
9. The learned D.R. has submitted that the due dates for filing of statements provided under section 139 through 143 of the Income Tax Ordinance, 1979, have been omitted by Finance Act, 1995, in order to prescribe different dates according to varying time. intervals at which such statements are required to be furnished so as to ensure regular monitoring of collection and payment into the Treasury of withholding taxes. The Central Board of Revenue, therefore, has prescribed, inter alia, such dates by amending the relevant Rules vide Notification No. SRO 1116(1)/95, dated November 23,1995.
10. Regarding the view canvassed before us, on the strength of decision of the Division Bench (ibid), that the Central Board of Revenue is not vested with the authority of prescribing any due date under the provisions of sections 139 through 143, we have considered the submissions (supra) with reference to the ordinary dictionary meanings of the word "manner". It has been submitted on behalf of the appellant that the word "manner" also means "style" which connotes "a way of reckoning time, dates etc." (Sense 10: P.P.1415 Second College Edition of New Word Dictionary of the American Language). The term "old style" specifically carries the sense: 'the old method of reckoning time according to the Julian calendar, which was off one day every 128 years (P.P.991 of the Dictionary (ibid)) Similarly the term "new style" means "the method of reckoning time in accordance with the Georgian Calendar" (P.P. 958 of the Dictionary (ibid)).
11. The word "style" P.P.1713 of the New Edition of the Chambers Dictionary ('Reprinted in 1993), inter alia, means "a mode of reckoning dates, i.e. old Style, according to the Julian Calendar as in Britain till 1752, Russia till 1917, and New Style, according to the Georgian Calendar, adopted in Britain by omitting eleven days, 3rd to 13th September, 1752".
12. Thus we find that the proposition made by the learned Counsel of the appellant before the Division Bench (ibid) that the ordinary dictionary meanings of the word 'manner' do not include the concept of time is basically misleading.
13. In our considered view, while interpreting the phrase "prescribed manner" the fact that it has been substituted for the words "in the prescribed form and verified in the prescribed manner" need to be appreciated. The substituted words, as previously used in the sections (supra), in our view, restricted the powers of the C.B.R. to prescribing the form of the statement arid the manner of its verification only. The phrase 'prescribed manner", on the contrary, has a much wider connotation because after the substitution the sections supra provide that statements (supra) shall be furnished in the manner prescribed under the Rules and the manner of prescriptions shall include, besides specified information, such other particulars as may be prescribed.
14. Further we are unable to subscribe to the view that the C.B.R. does not have the powers under sections 139 through 143 of the Ordinance to prescribe the due dates for furnishing the statements (supra) because such prescription in the relevant Rules is imminent for carrying out the purposes of the Ordinance. The view implied in the finding of the Division Bench. (ibid) that the prescribed statements are not required to be furnished voluntarily but these can be called for by the DCIT by invoking the provision of section 144 is also found to be based on improper and inadequate appreciation of the provisions of section 144 as well as the provisions of sections 139 through 143 of the Ordinance. For example, there is no provision under section 144 to require any employer to furnish a statement showing the names and designations of his employees to whom he has paid for the month or income year, any salaries and allowances together with the figures of amounts paid. Further, it is mandatory under sections 139 to 143 for the persons specified therein to furnish the prescribed statements. Thus, the purposes of the Ordinance enumerated in sections 139 to 143 cannot be carried out without prescribing the dates by which such mandatory obligations are to be fulfilled by the specified persons. It is further evident from the provisions of section 108 of the Ordinance itself. Section 108 provides that where any person has without any reasonable caused, failed to furnish, within the time allowed for the purpose, any certificate, statement, accounts or information under sections 51, 139, 140, 141, 142; 143, 143-A, 143-B or 144, the Deputy Commissioner shall impose upon such person a penalty. It means that the purpose and the occasion for exercise of the power by the Deputy Commissioner under section 144 to, call for the information as specified in clauses (a) (b) and (c) thereof is distinct and different from the mandatory requirements of furnishing statements prescribed under sections 51, 139, 141, 142, 143, 143-A and 143-B. Accordingly, contrary to the finding of Division Bench in the decision (ibid), we find that it is mandatory obligation of the Central Board of Revenue p under clause (e) of subsection (2) of section 165 of the Ordinance to "provide for anything which is to be or may be prescribed under the Ordinance.
15. Another ground on which the impugned orders imposing penalty for alleged default of non-submission of statement regarding deduction of tax made from Contractors, suppliers etc prescribed under Rule 61 in pursuance of the provisions of section 142 of the Ordinance is assailed is that although there is mention of section 142 in the heading, still the statement under the said rule cannot be said to have been prescribed under section 142, because it is established principle of the interpretation of statutes that the heading and marginal notes do not form part of the statute. Ratio of decision reported in 1996 PTD 292 is cited on behalf of the appellant in support of the foregoing contention.
16. We regret we cannot subscribe to the view canvassed (supra) firstly because the principle evolved supra is not applicable in the context of prescribed--Rules notified through Statutory Regulatory Orders (SRO) where the heading and marginal notes are part of the Notification, and secondly, it is to be invoked only when an issue requiring interpretation of statute arises and not in giving a finding of fact that a statement prescribed under the Rule is in pursuance of this provisions of a particular section.
17. Accordingly, on the basis of our findings (supra), we hereby overrule the decision of the Division Bench in I.T.A. No. 120/IB of 1998-99, dated 24-12-1999 reported in 1999 PTD (Trib) 1661 wherein it is held that, the provisions of sections 139 through 143 do not authorise C.B.R. to prescribe the due dates for submission of statements under these sections, that the expression 'within the time allowed for the purpose" as used under section 108 would now mean the time allowed by the DeputyCommissioner and therefore, in the context of statements prescribed, if any, under section 139 through 143, the Deputy Commissioner shall, by a notice in writing, intimate the due date to the assessee by which he shall file such statements as he is required to file under the provisions of aforesaid sections and that the statement under Rule 61 has not been prescribed under section 142 and that consequently, the penalty under section 108(b) was not justified". '
18. Mr. Syed Irfan Ahmed, the learned authorised representative of the appellant in I.T.A. No. 737/KB of 1998-99, has submitted that the learned CIT (A) has dismissed the appeal on legal ground without considering the fact that there is no delay of 7 days as alleged by the DCIT in submission of statement required under section 142 of the Ordinance. He has submitted that notice under section 116, dated 19-9-1998 received on 26-9-1998 has not been responded because the appellant knows that the statements despatched before 15-9-1998 have already been received in the office of the learned DCIT on 22-9-1998.
19. We find on perusal of the impugned penalty order that the notice under section 116 issued for alleged non-filing of statement has been served upon the appellant after the date of receipt of the statement. Since the impugned penalty order is passed without giving opportunity to explain the reason for delay on filing the statement it is unsustainable in law, hence cancelled.
20. In I.T.A. No. 736/KB of the 1998-99 as well Mr. Syed Irfan Ahmed submitted that the learned CIT (A) has not considered appellant's submissions on facts. He submits that, admittedly, the appellant has explained before the learned DCIT that the delay of two days in submission of the statements has been caused due to inaccessibility of the Income Tax Officer on account of blockade of surrounding roads by the law enforcement agencies responsible for the security of member of the Provincial Assembly and the protection of Assembly Building itself against the agitators during the Assembly Session. The learned A.R. has submitted that the learned DCIT has not recorded any reason why he does not consider it to be a reasonable cause for the condonation of delay.
21. We find substance in the submissions (supra) hence impugned penalty order is cancelled with the finding that there is reasonable cause for delay.
22. Consequently, I.T.As. Nos. 628 and 629/KB of 1998-99 are dismissed while I.T.As. Nos.736/KB and 737/KB of 1998-99 are allowed.
C.M.A./M.A.K./76/Tax(Trib.)Order accordingly.