Income Tax Ordinance (XXXI of 1979)---

----Ss. 52 R 50(4)---Deduction of tax at source---Liability of persons failing to deduct or pay tax---Unidentified recipient ---Responsibility of payer in respect of such recipient---Tax was the responsibility of the recipient which could not be shifted to the payer who was not receiving but was parting with money unless it could be shown that the payer of amount failed to deduct tax from a particular payment to a specified person---Whole of the tax burden will be shifted to the payer unless those persons were specified-- Section 50(8)(b) of the Income Tax Ordinance, 1979 provides that the sum deducted shall be treated as payment of tax on behalf of the assessee---Unless the assessee was identified the provision of S.50(8)(b) of the Income Tax Ordinance, 1979 will become vague, inoperative and redundant.

Mian Muhammad Tahir for Appellant (in I. T. As. Nos. 2728/LB to 2732/LB of 1999).

Sh. Muhammad Hanif, D.R. for Respondent (in ITAs.Nos.2728/LB. to 2732/LB of 1999).

Sh. Muhammad Hanif, D.R. for Appellant (in I. T. As. Nos. 2803/LB to 2807/LB of 1999).

Mian Muhammad Tahir for Respondent (in I. T. As.2803/LB to 2807/1-13 of 1999).

Date of hearing: 25th February, 2000.

ORDER

MAHMOOD AHMAD MALIK (ACCOUNTANT MEMBER).---These are cross-appeals filed against a consolidated order passed by they learned CIT (A) for the assessment years 1993-94 to 1997-98. The only issue agitated by the assessee is that the tax levied on the purchases amounting to Rs.3, 102, 998, Rs.177, 037, Rs.1, 221, 348, Rs.590, 800 and Rs.650, 000 respectively for the years 1993-94 to 1997-98, is illegal because these figures have wrongly been taken by the Assessing Officer. The department, on the other hand, has agitated tire deletion of tax charged under section 52 on the amounts of Rs.1, 000, 000, Rs.950, 000. Rs-1, 050, 000 Rs.1, 000, 000 and Rs.1, 000,000 respectively for the years under consideration.

2. The brief facts of the case are `that the assessee in this case was required to deduct tax under section 50(4) of the Income Tax Ordinance, 1979 against certain supplies/expenses but he has failed to deduct the same. Consequently, the Assessing Officer issued a show-cause notice under section 52 requiring the assessee to furnish documentary evidence in respect of tax deducted under section 50(4) from the purchases. The assessee submitted that ail the purchases were made on day to day and cash basis and as such section 50(4) was not attracted on the basis of cash purchases. However, for detailed discussion given in the body of the assessment order the Assessing Officer treated the assessee as an assessee in default under section 52/86 and tax was charged on the purchases/expenses more than Rs.25, 000 in addition to the purchases in each year for which complete particulars of the parties were not furnished. The following treatment was given by the Assessing Officer:

Accordingly the tax was charged under section 52/86 by the Assessing Officer on the abovementioned amounts. The assessee being aggrieved preferred appeal before the first appellate authority who confirmed the tax charged on purchases of Rs.25,000 and above whereas the tax charged on purchases below Rs.25,000 due to incomplete addresses of the parties was deleted in all the years under appeal.

3. Parties have been heard. The learned counsel for the assessee has submitted that the assessee has not made any payment, which covered the amount on account of supplies and as such the provisions of section 50(4) are not attracted. The learned counsel has also submitted complete list of the purchases made by the assessee giving the names of the parties from whom the purchases were made. The learned counsel also submitted that no basis was given by the Assessing Officer for estimating limit of Rs.25, 000.The learned D.R., on the other hand, has supported the orders of the Assessing Officer-for the reasons stated therein.

4. We have considered the submissions made by both the parties and also have perused the orders passed by the authorities below. The learned CIT (A) rightly, confirmed the action of tax under section 52/86 for purchases of Rs.25, 000 and above as the assessee failed to deduct tax under section 50(4) of the Income Tax Ordinance. The Assessing Officer has invoked the provisions of section 52 in respect of such purchases also which the assessee claims were made from different parties on day to day basis on cash and its none of the cases purchases involved exceeded Rs.25, 000 during the years-under appeal from a single party. The learned A.R. submitted that complete addresses of the parties had been provided to the Assessing Officer. The Assessing Officer held, as is implied from the impugned order, that a part of such purchases attracted the provisions of section 50(4) and the assessee was in default in not deducting tax under relevant provisions of law. In -the absence of any identifying particulars the Assessing Officer estimated such purchases at Rs.1, 000, 000, Rs.950, 000, Rs.1, 050,000, Rs.1, 000,000 and Rs.1, 000,000

respectively for the years 1993-94 to 1997-98 respectively and levied tax as 2.5 % along with additional tax thereon. The purchases have been estimated without identifying the particulars purchases that are covered by the provisions of section 50(4). The relevant provision is contained in clause (a) of subsection (4) of section 50 and the relevant portion is reproduced as under: ----

(4) Notwithstanding anything contained in this Ordinance

(a) any person responsible for making any payment in full or in part (including a payment by way of an advance) to any person (being resident) (hereinafter referred to respectively as 'payer' and recipient") on account of supply of goods or for service rendered to, or the execution of a contract of with the Government or a local authority, or (a company) (or a registered firm) or any foreign contractor or consultant or consortium shall, deduct advance tax. at the time of making such payment, at the rate specified in the First Schedule, and credit for the tax so deducted in any financial year shall, subject to the provisions of section 53 be given in computing the tax payable by the recipient for the assessment year commencing on the first day of July next following the said financial year or T the case of an assessee to whom section 72 or section 81 applies, the assessment year, if any, in which the 'said date' as erred to therein falls whichever is the later."

The person responsible for making any payment in full or in part is required to deduct advance tax at the time of making a payment, which attract provision of the subsection. The provisions of section 50(4) come into play when a' payment is made. It, therefore, follows that when provisions of section 52 are invoked to declare a person to be an assessee in default the particular payments are identified which are attracted by the provisions of section 50(4). As per the provisions of section 50(4) (a) reproduced above credit for tax so deducted is to be given to the recipient likewise. Section 5) also provides that the person deducting tax under section 50 shall at the time of making payment furnish to the person to whom such payment has been made a certificate to the effect that tax has been so deducted. Unless the payments which fall in the purview of section 50(4) are identified and the persons to whom such payments are made know the provisions; of section 50(4)(a) providing for allowing credit to the recipients become redundant. Similarly, if the departmental view that purchases to be subjected to the provisions of section 50(4) can be estimated is accepted the obligatory provisions of section 51 which require the person deducting tax to furnish certificate of deduction of tax also become non-operative. This is a principle of interpretation that in order to ascertain the intent of the statute the various provisions are read together. The construction should not be such so as to make any part of the raw as redundant or superfluous. It will be worthwhile to quote hereunder from Crawford's "Interpretation of laws" under the heading" source of the Legislative intent, generals": --

"Hence, the Court should, when it seeks the legislative intent, construe all of the constituent parts of the statute together and seek to ascertain the legislative intention from the whole act, considering every provision thereof in the light of the general purpose and object of the act itself, and endeavouring to make every part effective, harmonious and sensible. This means, of course, that the Court should attempt to avoid absurd consequences in any part of the statute and. refuse to-regard any word, phrase, clause or sentence superfluous, unless such a result is clearly unavoidable. The Court must construe the statute in this manner for by failing to do so the statue is not considered in its entirety and the intention of the legislature is likely to be defeated." (Note 164)

We can look at the issue from another angle also. If the persons who were made payments wherefrom deductions under section 50(4) have been made are not identified, the burden of tax under section 50(4) will fall on the payer, which could not be the intention of the legislature. Section 50 is a Part of Chapter VI of the Income Tax Ordinance and this chapter bears the heading of "Payment of tax before assessment". It is the assessment of the person who has paid some amount that the chapter deals with. The deducting authority is merely an agent acting on behalf of the Department to deduct tax. A tax that is the responsibility of the recipient cannot be shifted to the payer who is not receiving but is parting with money unless of course it can be shown that he failed to deduce tax from a particular payment to a special person. Unless those persons are specified the whole of the tax burden will be shifted to the payers. Subsection (8) of section 50 provides that the sum deducted under section 50 shall be treated as payment of tax on behalf of the assessee. Here also unless the assessee is identified this provision of law will become vague inoperative and redundant. This could not be the intention of the legislation. In these circumstances we are convicted that the provisions of section 50 (4) do not warrant making of estimates or guess work with regard to supplies made. The assessing officer s action in this regard cannot be endorsed. Therefore, no interference is made in the order passed by the assessee and the department are dismissed being devoid of merits.

C.M.A./M.A.K./32/Tax (Trib.)Appeal dismissed.