I. T. AS. NOS. 1868/KB AND 1869/KB OF 1997-98, DECIDED ON 18TH SEPTEMBER, 1998. VS I. T. AS. NOS. 1868/KB AND 1869/KB OF 1997-98, DECIDED ON 18TH SEPTEMBER, 1998.
1999 P T D (Trib.) 396
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman and Muhammad Mehboob Alam, Accountant Member
I. T. As. Nos. 1868/KB and 1869/KB of 1997-98, decided on 18/09/1998.
Income Tax Ordinance (XXXI of 1979)---
----S. 89---Workers Welfare Fund Ordinance, 1971, S.4(8)---Additional tax---Changeability---Assessing Officer levied additional tax on total demand inclusive of Workers Welfare Fund at the rate provided in the Income Tax Ordinance, 1979 which was confirmed by the First Appellate Authority on the ground that demand of arrears inclusive of Workers Welfare Fund fell pursuant to notice under S.89 consequent upon proceedings under S.62 which was part of Chap. VII of the Income Tax Ordinance, 1979---Validity-- Additional tax on demand of Workers Welfare Fund could be levied only at the rate provided in the Workers Welfare Fund Ordinance, 1971 and not under S.89 of the Income Tax Ordinance, 1979, which additional tax consequent upon default in payment of tax due was to be calculated after ascertaining the correct amount of outstanding demand in the relevant assessment years.
1996 PTD 3 and 1987 PTD (Trib.) 580 ref.
Qazi Anwar Kamal for Appellant.
Mrs. Shaista Abbas, D.R. for Respondent.
Date of hearing: 27th August, 1998.
ORDER
MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).---The above appeals at the instance of assessee are directed against the order, dated 28-2-1998 by the learned C.I.T.(A), in I.T.As. Nos.20 and 21 of 1998 relating to the assessment years 1994-95 and 1995-96. Both the appeals arise out of order under section 89 of the Income Tax Ordinance, 1979 whereby additional tax has been levied.
2. According to the order for the assessment year 1994-95 the audit authorities raised objection that the assessment for the assessment year 1994-95 was completed on 30-5-1995. The appellant company failed to make payment of demand within the stipulated period. The assessing officer, therefore, issued a show-cause notice for compliance on 6-2-1997. The A.R. of the appellant sought extension of time which was allowed upto 17-2-1997. On 17-2-1997 nobody attended and no explanation was furnished, therefore the assessing officer concluded the proceedings with the observation that the appellant has no objection to the charging of additional tax under section 89. He ultimately charged tax under section 89 at 15 % as follows:---
| Amount | Paid on | Default | Tax a/s. 89Charged. |
| Rs.4,20,598 | 11-6-1996 | 376 days | Rs.64,991 |
| Rs.6,00,000 | 24-7-1996 | 35 days | Rs.8,630 |
| | | Total | Rs.73,621 |
3. For the assessment year 1995-96 the assessing officer observed that the total demand of Rs.60,10,711 was created which included Workers Welfare Fund at Rs.3,64,780. He further observed that the whole, demand was required to be paid on or before 20-7-1997. However, that JAC , allowed installment. He further observed that the assessee made payments in pursuance of installment granted by IAC but not on due dates and, therefore, he calculated additional tax under section 89 on the period of default and charged the tax as follows:---
| Date of Payment | Amount paid | No of days default | Rate | Addl. Tax Amount of u/s. 89 |
| 24-7-1997 | 6,00,000 | 4 days | 24% | 1,578 |
| 21-10-1997 | 6,00,000 | 62 days | 24% | 24,460 |
| 24-11-1996 | 6,00,000 | 96 days | 24% | 37,874 |
| 26-11-1996 | 6,00,000 | 98 days | 24% | 38,663 |
| 28-12-1996 | 6,00,000 | 130 days | 24% | 51,288 |
| 31-3-1997 | 18,75,786 | 210 days | 24% | 2,59,013 |
| 22-8-1996 | 6,10,711 | 32 days | 24% | 12,850 |
| 29-5-1997 | 5,24,214 | 309 days | 24% | 1,06,509 |
| | 60,10,711 | | | 5,32,235 |
4. The appellant being aggrieved with the levy of additional taxes as above, preferred first appeal contending that the additional tax was levied without any basis and computation. It was further contended that the additional taxes were levied without affording opportunity of being heard. It was further pleaded that in the assessment year 1994-95 additional tax has been levied at Rs.73,621 on an outstanding demand at Rs.10,17,598 while the actual outstanding demand was Rs.4,20,598 which was already paid. It was further urged that the assessing officer has wrongly calculated the additional tax on Workers Welfare Fund. It was contended that under section 89 of the Income Tax Ordinance, 1979 the additional tax can be levied on the outstanding demand of income-tax and not on the outstanding demand of Workers Welfare Fund, as Workers Welfare Fund is not included in the definition of tax as provided under section 2(44) of the Income Tax Ordinance, 1979. The learned CIT(A) however, did not accept the contention. He held that outstanding demand for the two years under appeal were paid in part on several dates or by instalment allowed by JAC and, therefore, additional tax has been rightly charged from due dates to date of payment. The learned CIT(A) further observed that the assessing officer has given proper working and right of opportunity was also provided which was not availed. He further held that the calculation of additional tax on arrear demand inclusive of Workers Welfare Fund is also proper as the arrears fell pursuant to notice under section 85 consequent to proceedings under section 62 which is part of Chapter VII of the Income-tax Ordinance. Being still dissatisfied the appellant has preferred these two appeals before us.
5. We have heard Mr. Qazi Anwar Kamal, learned counsel for the appellant and Mrs.Shaista Abbas, learned representative for the department.
6. Mr. Qazi Anwar Kamal has submitted that in the assessment year 1994-95 the total outstanding demand was Rs.4,20,598 and not Rs.10,20,598 as stated in the order under section 89. In support of his contention he has produced copy of the demand notice, dated 30-5-1995 and copy of IT-30 according to which the outstanding tax demand was Rs.4,20,598 the break-up whereof is as follows:---
(a) Income-taxRs.1,17, 852
(b) W.W.F.Rs.3,02,746
For the assessment year 1995-96 the figure of total outstanding demand has not been disputed which is at Rs.60,10,711. The break-up of above demand is as follows:---
(a) Income-taxRs.56,46,931
(b) W. W. F.Rs.3,64,780
7. Mr. Qazi Anwar Kamal has submitted that a rectification application has already been submitted before the assessing officer seeking rectification in respect of the total outstanding demand. Since the issue is already under consideration before the assessing officer, therefore, we would not like to give any finding on the said point. However, we would like to observe that if he assessing officer comes to the conclusion that outstanding tax demand for the assessment year 1994-95 was Rs.4,20,598 the issue of levy of additional tax should be restricted to the extent of this amount only and the levy of additional tax on the amount of Rs.6,00,000 should be deleted.
8. Mr. Qazi Anwar Kamal has next contended that although the Workers Welfare Fund is levied by the assessing officer at the time of making an assessment order, under the Income Tax Ordinance, 1979, under subsection (4) of section 4 of the Workers Welfare Fund ordinance, 1971 but only such provisions of the Income-tax Ordinance are applicable which have been specifically made applicable under the Workers Welfare Fund Ordinance, 1971 or which are attracted impliedly in respect of which there no specific provision in the Workers Welfare Fund Ordinance. He has submitted that since it is specifically provided in section 89 of the Income-tax Ordinance that where any assessee have to pay any part of tax levied under Chapter VII he shall be liable to pay additional tax on the amount of tax which has not been paid and such additional tax shall be calculated from the date on which such tax was originally payable to the date on which it is paid, and on the other hand there is a specific provision in subsection (8) of section 4 to the effect that, "where any industrial establishment fails to pay the amount due from it as required under this section, it shall, without prejudice to any other liability to which it may be subject under this Ordinance or any other law, be liable to pay an additional amount equal to eight per cent. per annum of the amount due from it from the date on which it was originally payable to the date on which it is paid". He has submitted that in the wake of specific provision in the Workers Welfare Fund Ordinance, the provisions contained in section 89 of the Income-tax Ordinance shall not be applicable and the additional tax if any on the Workers Welfare Fund is to be levied in accordance with the provision contained in the Workers Welfare Fund and not in accordance with the provision contained in the Income Tax Ordinance, 1979. The learned DR has supported the orders of the learned two officers below.
9. We have carefully considered the contentions raised by the learned representatives for the parties and have gone through the impugned orders of the learned two officer below so far the factual aspect is concerned the learned counsel for the appellant has contested the outstanding demand in the assessment year 1994-95 only As already observed he has produced copy of demand notice and IT-30 in support of his contention and has further stated that a rectification application is also pending in this behalf before the assessing officer. The assessing officer is, therefore, directed to ascertain the fact in respect of the outstanding demand for the assessment year 1994-95. As regards period of default in respect of outstanding demand of Rs.4,20,598 in the assessment year 1994-95 and in respect of outstanding demand for the assessment year 1995-96 it is not denied. The contention that in both the assessment years under appeal the outstanding demand is inclusive of Workers Welfare Fund and there is specific provision in the Workers Welfare Fund Ordinance and, therefore, to the extent of outstanding demand pertaining to the Workers Welfare Fund the additional tax can be levied at the rate provided in the Workers Welfare Fund Ordinance and not under section 89 of the Income Tax Ordinance, 1979 carries sufficient force We are persuaded to agree with the submission of Mr. Qazi Anwar Kamal that when the Workers Welfare Fund Ordinance itself contains the provision for levy of additional tax in the case of default in payment of tax, the said provision should be pressed in service and resort should not be made to the provision contained in the Income Tax Ordinance, 1979. The principle has been accepted by the Tribunal in two earlier judgments reported as 1987 PTD (Trib.) 580 and 1996 PTD 3 with reference to the levy of Workers Welfare Fund if not levied in the assessment order itself. The plea that it is a matter of rectification, therefore, period of limitation provided in section 156 of the Income Tax Ordinance, 1979 shall be attracted was not accepted and it was held that such order is to be made in accordance with the provision contained in section 4 of the Workers Welfare Fund Ordinance itself and not by resort to provision contained in section 156 of the Income-tax Ordinance. In respect of the issue under consideration before us the principle is more explicitly applicable because under section 4(8) of the Workers Welfare Fund Ordinance there is a specific provision and, therefore, resort to the provision contained in the Income-tax Ordinance under the doctrine of legislation by reference shall not be applicable.
10. For the foregoing reasons it is held that additional tax on default of payment of the Workers Welfare Fund is to be levied under section 4(8) of the Workers Welfare Fund Ordinance, 1971 and not under section 89 of the Income Tax Ordinance, 1979. The assessing officer is, therefore, directed to calculate the additional tax on the amount representing Workers Welfare Fund for the period of default under consideration at the rate of 8 % per annum of the amount due as provided under section 4(8) of the Workers Welfare Fund Ordinance, 1971. The orders of the learned two officers below are modified as above. So far the levy of additional tax on default in payment of income-tax is concerned the same is maintained as no reason has been advanced for interference on our part. This is subject to ascertaining of correct amount of outstanding demand in the assessment year 1994-95. The appeals stand disposed of as indicated above.
C.M.A./4/Trib.Order accordingly.