I.T.A. NO.674/113 OF 1997-98 VS I.T.A. NO.674/113 OF 1997-98
2001 P T D (Trib.) 2933
[Income-tax Appellate Tribunal Pakistan]
Before Jameel Ahmed Bhutto, Accountant Member and
Syed Masood ul Hassan Shah, Judicial Member
I.T.A. No.674/IB of 1997-98, decided on 19/04/2001.
(a) Income Tax Ordinance (XXXI of 1979)----
----S. 116(b)--Imposition of penalty after notice of hearing, etc.---Non -compliance of notice---Conclusion---Perpetual non-compliance at the end of assessee led the Assessing Officer to draw the conclusion that the default was wilful and committed without reasonable cause.
(b) Income Tax Ordinance (XXXI of 1979)---
----S. 108---Penalty---Excessive and harsh---Penalty in circumstances, calculated in accordance with the provisions of S.108 of the Income Tax Ordinance, 1979 was pot adjudged to be excessive and harsh.
(c) Income Tax Ordinance (XXXI of 1979)---
----S.108---Penalty---Mens tea---Department had not to establish mens tea on the part of assessee since in a fiscal law, failure to furnish the prescribed statement, without reasonable cause, attracts penalty .and the Assessing Officer was duty-bound to impose upon the defaulter the penalty under S.108(b) of the Income Tax Ordinance, 1979---No discretion available with the Assessing Officer if the failure to furnish such statement, without reasonable cause, was proved after giving a reasonable opportunity of being heard to the person failing to furnish such statement as word "may" appearing in S.108 of the Ordinance was substituted by the word "shall" through -Finance Act, 1994 leaving no discretion with the Assessing Officer.
(d) Income Tax Ordinance (XXXI of 1979)---
----S. 116(b)---Imposition of penalty after notice of hearing etc.---Non-filing of statements---Assessee was provided repeated opportunities and its persistent non-compliance with notices/letters issued by the Assessing Officer gave strong support to the fact that the assessee had failed to furnish the required statements, without reasonable cause, and had no explanation to offer when provided opportunities of being heard under S.116(b) of the Income Tax Ordinance, 1979.
(e) Income Tax Ordinance (XXXI of 1979)--
----Ss. 108(b), 142 & 50(4)---Penalty was imposed for non-furnishing monthly statements of tax deduction under S.50(4) of the Income Tax Ordinance, 1979 after giving a reasonable opportunity of being heard-- Validity---Nothing was available on record to suggest that the penalty was imposed without proper service of statutory notices---Penalty order was deemed to be correct in the absence of any evidence to the contrary---Order of Assessing Officer as well as First Appellate Authority was maintained by the Tribunal and appeal was rejected.
(f) Income Tax Ordinance (XXXI of 1979)---
----S.108---Penalty--Wrong writing of assessment year on the face of order-- Effect---Penalty order made it clear beyond doubt that the penalty was imposed for failure to furnish monthly statements under S.142 of the Income Tax Ordinance, 1979 for the month of July, 1996 to November, 1996-- Writing of assessment year 1997-98 on the face-sheet (and not in, the body of the penalty order) did not vitiate penalty proceedings.
(g) Income Tax Ordinance (XXXI of 1979)
----S. 155---Certain mistakes not to vitiate assessment, etc.---No assessment order, notice warrant or other document under the Income Tax Ordinance, 1979 shall be void or otherwise inoperative merely for want of form or for a mistake, defect or omission therein, if such want of form or mistake, defect or omission was not of a substantial nature prejudicially affecting an assessee.
Shahbaz Butt for Appellant.
Abdul Jaleel, D.R. for Respondent.
Date of hearing: 17th April, 2001.
ORDER
The above captioned appeal at the instance of the assessee is directed against the penalty order under section 108 read with appellate order, dated 9-9-1997 in respect of the assessment year 1997-98. The grounds of appeal are reproduced as under:---
(i) "That the learned CIT (Appeals) was not right in confirming penalty under section 108 of the Income Tax Ordinance without establishing mens-rea at the part of the appellant. Since the charge has been created against the assessee under punitive, provisions of the Ordinance, the onus to prove is to be discharged by the department which it has miserably failed to.
(ii) That the penalty has been illegally imposed without providing proper opportunity of being heard and without proper service of statutory notices.
(iii) That the penalty imposed under section 108 is patently illegal and without proving the mens-rea at the part of the appellant. The department has failed to discharge such onus.
(iv) That the subject penalty amounting to Rs.1,09,800 is excessive by all means and without any basis and cogent justification.
(v) That penalty is illegal also on the point that the same has been imposed for assessment year 1997-98, which assessment year has yet to commence from 1-7-1997."
2. We have heard the arguments of both the parties and considered the facts and circumstances of the case in the light of the orders passed at lower forums. We are of the considered view that the penalty amounting to Rs.1,09,800 was rightly imposed under section 108 of the Income Tax Ordinance,. 1979 (hereafter the Ordinance) and correctly upheld in first appeal: Our finding is based on the facts and circumstances of the case discussed hereunder.
3. The assessee, being a private limited company, was under legal obligation to deduct tax under section 50(4) of the Ordinance from payments made by it on account of supplies, contracts executed and services rendered by other persons. It was nowhere shown at any stage of proceedings that such payments were not made to any person or that the total value of the goods supplied, services rendered or contracts executed by any person had not exceeded the prescribed threshold during the financial year relevant to the assessment year 1997-98. It could not be imagined that a manufacturing company would not be making the said payments during the course of its normal business. Since the payments were made by the assessee-company in the financial year it was but natural to assume that it had also deducted advance tax from the persons concerned under section 50(4) of the Ordinance. The assessee-company was, therefore, required to furnish a monthly statement under section 142 of the Ordinance read with Rule 61 of the Income Tax Rules, 1982. Rule 61 requires every person making such payments and tax deduction to furnish the statement by 15th of every month in respect of the payments made during the preceding month in the prescribed form and verified in the manner indicated therein. The Assessing Officer observed that the assessee-company was under legal obligation to furnish such monthly statements of tax deduction under section 50(4) on the format prescribed under Rule 61 read with section 142 of the Ordinance. It was noted by him that the assessee-company had failed to Furnish the required monthly statements for the months of July, 1996 to November, 1996. The assessee "was then shown to have been served with a letter/reminder through registered post vide letter No.493, dated 17-12-1996 but no response was made. It was, therefore, inferred that the default of non furnishing of monthly statements under section 142 of the Ordinance was wilful and without reasonable cause. In these circumstances, the Assessing Officer issued a show cause notice under section 116(b) of the Ordinance giving a reasonable opportunity of being heard to the assessee in respect of the said default under section 108(b) for not furnishing without reasonable cause, the required monthly statements under section 142 of the Ordinance. The assessee again gave no response despite proper service of this show cause notice. A subsequent reminder to the notice under section 116(b) was also served upon the assessee through registered post for- compliance on 23-1-1997 but that too met the same fate and no reply was furnished. The perpetual non-compliance at the end of the assessee-company led the Assessing Officer to draw the conclusion that the default was willful and committed without reasonable cause. The Assessing Officer, therefore, I imposed penalty of Rs.1,09,800 under section 108 of the Ordinance with the approval of the IAC.
4. The assessee-company filed an appeal against. the aforesaid penalty order and contended that the penalty was levied without providing proper opportunity, of being heard and the same was also excessive and harsh. It was also argued that the penalty was imposed for the assessment year 1997-98 while this assessment year commenced from 1-7-199"7. The learned CIT(A), after going through the assessment record and considering the arguments of the learned AR of the assessee, came to the conclusion that the, Assessing Officer had provided at least 4 or 5 opportunities to the assessee to explain its case but the assessee did not bother to attend the office or to furnish any written defence. The objection of the assessee that no proper opportunity of being heard was given was found by the appellate authority as baseless and against the facts of the case. The amount of penalty was also adjudged to be not excessive and harsh because the same had been calculated in accordance with the provisions of section 108 of the Ordinance. The objection about the assessment year written on the face of penalty order was also not found' forceful by the learned CIT(A) because writing of assessment year 1997-98 did not vitiate the penalty proceedings (initiated for failure to furnish monthly statements for the months of July, 1996 to November, 1996) nor it affected the assessee adversely. Since the assessee was required to furnish monthly statements under section 142 of the Ordinance, which the assessee failed to do for the months of July, 1996 to November, 1996, the learned CIT(A) held that the Assessing Officer had proceeded to impose penalty after providing many chances of hearing to the assessee. In this situation, it was considered fair by him to uphold the penalty imposed by the Assessing Officer.
5. The facts and circumstances of the case stated above show that the onus to prove the default of the assessee, without reasonable cause, was discharged by the department. It was nowhere pleaded that the assessee had not made payments during the months of July, 1996 to. November, 1996 and had not made deductions of tax in respect of such payments in accordance with the provisions of section 50(4) of the Ordinance. The department had not to establish mens-rea on the part of the assessee since in a fiscal law like this Ordinance, failure to furnish the prescribed statement, without reasonable cause, attracts penalty and the Assessing Officer is duty-bound to impose upon the defaulter the said penalty under section 108(b). There is no discretion available with the Assessing Officer if the failure to furnish such v statement, without reasonable cause, is proved after giving a reasonable opportunity of being heard to the person failing to furnish such statement. Thus, the word "may" appearing in section 108 was substituted by the word "shall" through the Finance Act, 1994 leaving no discretion with the' Assessing Officer. In this case, the assessee-company Was provided repeated opportunities and its persistent non-compliance with notices/letters issued by the Assessing Officer also gave strong support to the fact that the assessee company had failed to furnish the required statements, without reasonable cause, and had no explanation to offer when provided opportunities of being heard under section 116(b) of the Ordinance.
7. There is also nothing on record to suggest that the penalty was imposed without proper service of statutory notices. In the absence of any evidence to the contrary, whatever is stated in the official documents like the penalty order under consideration is deemed to be correct. This penalty order refers to issuance of all notices/letters by registered post on specific dates. The assessment record was also seen by the learned CIT(A) who also came to the conclusion that the objection of the assessee that no proper opportunity of being heard was given was absolutely baseless and against the facts of the case.
8. It is incorrect -to suggest that the penalty was imposed for the assessment year 1997-98, which assessment year had to commence from 1-7-1997 and, therefore, it was illegal on that point. The penalty order makes it clear beyond doubt that the penalty was imposed for failure to furnish monthly statements under section 142 read with rule 61 for the months of July, 1996 to November 1996. The learned CIT(A) was justified in finding this objection without force because writing of assessment year 1997-98 on the face-sheet, (and not in the body of the penalty order) did not vitiate penalty proceedings. Section 155 of the Ordinance also provides that no assessment order, notice warrant or other document under the Ordinance shall be void or otherwise inoperative merely for want of form or for a mistake, defect or omission therein, if such want of form or mistake, defect or omission is not of a substantial nature prejudicially affecting an assessee in this case, the learned CIT(A) was justified in holding that writing of assessment year 1997-98 on the face of the penalty order did not affect the assessee adversely.
9. For the facts and reasons stated above, we find no legal infirmity, defect or error in the orders passed at lower forums. These are maintainer and the appeal of the aasessee is rejected.
C.M.A./M.A.K./107/Taa(Trib.) Appeal rejected.