W.T.AS. NOS. 134/KB AND 138/KB OF 1994-65 VS W.T.AS. NOS. 134/KB AND 138/KB OF 1994-65
2001 P T D (Trib.) 1790
[Income-tax Appellate Tribunal Pakistan]
Before Inam Ellahi Sheikh, Chairman and S. Hasan Imam, Judicial Member
W.T.As. Nos.134/KB and 138/KB of 1994-95, decided on 23/01/2001.
(a) Civil Procedure Code (V of 1908)---
----O.VI, R.17---Pleadings---Amendment in pleadings---Conditions. The Courts of law are very liberal to allow any party at any stage of the proceedings to amend his pleadings in such manner and on such terms as may be just and necessary for the purpose of determining the real questions under controversy between the parties. The real object of the law is that if amendment is necessary for the purpose of determining the real matter in controversy it should be allowed but as a general rule, amendment will not be allowed in cases:---
(i) Where its effect would be to complete the character of the appeal and fundamental character should not be altered;
(ii)where cause of action ought not to be allowed to be substituted;
(iii)where it will work injustice to any party; and
(iv)if by the time, the amendment is sought, it has become time-barred.
(b) Civil Procedure Code (V of 1908)---
---O.VI, R.17---Pleadings----Refusal to allow amendment in pleadings-- Amendment in the pleadings was refused for the reason that new cause of action will be substituted by way of amendment for the original cause of action and amendment would also deprive the party of the defence of limitation.
(c) Appeal------
---- Two appeals against one order---Common grounds of appeal---Appeal filed subsequently having become infructuous was dismissed by the Appellate Tribunal.
(d) Finance Act (XII of 1991)---
----S.12(7)---Corporate Assets Tax---Penalty for non-filing of return in time---Penalty was levied by the Assessing Officer for non-filing of return in time ---Assessee produced evidence for filing of return before First Appellate Authority which was confirmed by the Inspector of the circle---Deletion of penalty by First Appellate Authority was upheld by the Appellate Tribunal.
Vishno Raja Qavi, D.R. for Appellant.
Ashraf Ali, A.C.A. for Respondent.
Date of hearing: 19th January, 2001.
ORDER
S. HASAN IMAM (JUDICIAL MEMBER).-----By this order we intend to decide Appeals bearing Nos. 134/KB and 138/KB pertaining to assessment year 1991-92 preferred by the Department being aggrieved from the order dated 28-1-1995 passed by the learned C.I.T.(A).
2. Common objections have been taken to the combined order passed in both the appeals cancelling the penalty amounting to Rs.342,000 levied under section 12(7) of the Finance Act, 1991.
3. Before taking into consideration the merits of the case it would not be unaccustomed to consider the request of the learned D.R. orally made during the course of arguments to permit the department to amend the grounds of appeal, in appeal bearing W.T.A. No. 138/KB.
4. The request for amending the grounds is made .in the background of the following facts:---
"Assessing Officer initially passed an order under section 12(6) of the Finance Act, 1991 observing that the assessee was under obligation to file return of corporate assets tax by 1-4-1992 and to pay tax along therewith. Since no tax was paid and return was not filed the department issued a statutory notice under section 12(4) of the Finance Act, 1991 and thereafter -determined the corporate tax liability of the assessee company hereunder:---
Value of fixed assets as per balance-sheet Rs. 27,18,09,650
Corporate Assets Tax payableRs. 20,00,000"
5. The order further reveals that "since the tax liability has not beets paid within time, additional tax at the rate of 25 % per annum is charged under section 12(8) of Finance Act, 1991 with effect from 1-4-1992 to 6-3-1993 amounting to Rs.445,809". In the same order it is also observed that penalty at Rs.1,000 per day for the period of default in tiling of returns under Corporate Assets Tax shall separately be imposed under section 12(7) of the Finance Act, 1991 and that show-cause notice for this should be issued for 7 days of the receipt of the notice. In pursuance to the above-refetre4 order penalty under section 12(7) of the Finance Act, 1991 was also passed imposing the penalty at Rs.1,000 a day with effect from 1-4-1992 to 8-3-1993 amounting to Rs.342,000.
6. The Assessee took up the matter in appeals before the learned C.I.T.(A) who was pleased to maintain the order of the W.T.O. under section 12(6). However, directed the Assessing Officer to re-compute additional tax under section 12(6) in accordance with C.B.R.'s Circular letter dated 26-4-1992. By the same order the C.I.T.(A) cancelled the imposition of penalty under section 12(7) of the Finance Act, 1991.
7. The perusal of the appeals referred to above reveal that in both the appeals only one ground (common) is taken which is reproduced hereunder:---
"The learned A.A.C. was not justified to cancel the penalty amounting to Rs.342;000 which was correctly levied under section 12(7) of the Wealth Tax Finance Act, 1991 due to non-filing of return of Corporate Assets Tax- in time."
8. The learned D.R. in the circumstances requested that he may be permitted to amend the grounds raised in Appeal bearing No. 138/KB so as to insert a fresh ground related with Corporate Asset Tax order under section 12(6) of the Finance Act, 1991.
9. We have heard, the learned D.R. namely Mr. Vishno Raja Qavi and Syed Ashraf Ali, A.C.A. appeared on behalf of the respondent, on the issue whether on the facts and circumstances of the case there appears justification to allow the amendment proposed by the learned D.R.
10. The Courts of law are very liberal to allow any party at any stage of the proceedings to amend his pleadings in such manner and on such terms as may be just and necessary for the purpose of determining the real questions under controversy between the parties. The real object of the law is that if amendment is necessary for the purpose of determining the real matter in controversy it should be allowed but as a general rule, amendment will not be allowed in cases:---
(i)Where its effect would be to complete the character of the appeal and fundamental character should not be altered;
(ii)where cause of action ought not to be allowed to be substituted;
(iii)it will work injustice to any party; and
(iv)if by the time, the amendment is sought, it has become time-barred
11. Bearing the aforesaid principles of amendment, we proceed to examine briefly the materials available as per record. The Department in appeal bearing W.T.A. No.138/KB has taken objection to the order cancelling the penalty levied under section 12(7) whereas the purpose of amendment is to substitute a new relief challenging the order of additional tax under section 12(6) of the Finance Act, therefore, we are of the considered opinion that the fundamental character would be altered and would amount to add a new cause of action and in our opinion amendment cannot be permitted to substitute by way of amendment of a new cause of action altogether different from the proposed amendment. We also find that 8 the appeal from the order on the issue of unpaid liability and additional tax to be charged under section 12(6) and (8)'has become time-barred and shall deprive a party of the defence of limitation. Besides new cause of action not to be allowed to be substituted, as it will apparently cause injustice to other side, if a new cause of action will be substituted by way of amendment for the original cause of action.
12. Substantial nature of the appeal before us also does not permit to add a cause of action for the relief already claimed.
13. We find that there is no difficulty in holding that the Department has no cause for amendment/substitution of the grounds of appeal. Opt going through the common grounds in all the appeals, we find that subsequent C Appeal bearing No.138/KB has, in the circumstances, become infructuous for the reason that two appeals have been preferred being aggrieved from the order cancelling the penalty amounting to Rs.3,42,000.
14. So far as Appeal bearing W.T.A. No.134/KB of 1994-95 is concerned, the learned C.I.T.(A) while cancelling the levy of penalty has observed:---
"The appellant has filed photocopy of receipt of in time submission of return alongwith appeal papers and produced original receipt during the course of appeal proceedings. The receipt is bearing stamp of the circle and signature of the clerk. The W.T.I. of the circle who conducted the cases of C.A.T. confirmed the signature. Additionally, the penalty order was not passed properly and legally and... "
15. Perused the case papers. The return was filed in time. Evidence of filing return was also filed in response to letter dated 27-2-1993 and the assessment has been completed on the basis of return, hence there` appears no justification for leaving penalty when the return has already been filed. It is worth mentioning that penalty order under section 12(7) of the Finance Act is a stereotyped order and the Assessing Officer has not taken D pains to strike off one of the two options i.e. show-cause notice was duly served but no reply has been received/no plausible explanation has been put forth.
16. In the circumstances (supra), we find sufficient reasons to confirm the order of the learned C.I.T.(A) deleting the penalty imposed under section 12(7) of the Finance Act.
17. As a result thereof, the appeals bearing T Nos. 134 and 138/KB of 1994-95 stand dismissed.
C.M.A./M.A.K./67/Tax(Trib.) Appeals dismissed