W.T.A. No. 1338/LB of 2000, decided VS W.T.A. No. 1338/LB of 2000, decided, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1982 (2002)

(a) Finance Act (XII of 1991)‑‑‑

‑‑‑‑S. 12(1)(9)(10)‑‑‑Wealth Tax Act (XV of 1963), S.17A‑‑‑Corporate Assets Tax‑‑‑Limitation period provided for assessment ‑‑‑Assessee's contention was that the assessment of Corporate Assets Tax was time- barred having been finalized in deviation from the provisions of S.17A of the Wealth Tax Act, 1963‑‑‑Validity‑‑‑Provisions of S.17A of the Wealth Tax Act, 1963 were not applicable to Corporate Assets Tax as nothing could be imported beyond the intendments of the legislature‑‑‑No bar on Legislature to declare that all the provisions of the Wealth Tax Act were applicable to the assessments under Corporate Assets Tax‑‑ When it specifically mentions certain section in S.12(9) & (10) of the Finance Act, 1991 no other provision could be applied on the proceedings of Corporate Assets Tax‑‑‑Providing limitation for assessment under Finance Act, 1991 was quite unnecessary as it was a one time levy and not year to year charge‑‑‑No limitation for making an assessment under Corporate Assets Tax, therefore, was provided.

(b) Finance Act (XII of 1991)‑‑‑

‑‑‑S.12(7)‑‑‑Corporate Assets Tax‑‑‑Penalty for non‑filing of return‑‑ When return was proved to have been filed in time penalty was ordered to be cancelled by the Tribunal.

I.T.As. Nos.6872/LB of 1996 I.T.A. No.2141 and 2141 of 2001 rel.

(c) Finance Act (XII of 1991)‑‑‑

‑‑‑S. 12(8)‑‑‑Corporate Assets Tax‑‑‑Additional tax‑‑‑Levy of‑‑ Validity‑‑‑Additional tax was deleted by the Tribunal on the ground that Central Board of Revenue was not clear on a number of points.

I.T.As. Nos.6872/LB of 1996; 2411/LB of 2001; 1872/LB of 1997, I.T.A. No‑2141 of 2001 and 2001 PTD (Trib.) 2964 rel.

Kh. Muhammad Iqbal and Kh. Faisal Iqbal, F.C.A. for Appellant.

Muhammad Asif, D.R. for Respondent.

Date of hearing: 19th January, 2002.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).‑‑In this appeal appellant is the assessee. The appeal is against charge of CAT under section 12 of the Finance Act, 1991 and consequent penalty on late filing of return and additional ax for delay in payments.

Brief facts of the case are that the assessee claimed having filed return of CAT on 11‑2‑1992 in the office of the WTO Circle‑03, Lahore showing below taxable assets in the following manner:‑‑

Statement of Corporate Assets Tax as per Circular No. 17 As at September 30, 1991.

Less Liabilities:

The case was fixed for hearing by WTO Circle‑05 for 5‑1‑1993 while the notice was dated 28‑12‑1995. The assessee attended the proceedings but no further action was taken by the department for the reasons that a lot of controversy and issues required attendance by the C.B.R. and the Government with regard to this new legislation.

Later on, the assessee received show‑cause notice under section 12(2), which is dated 7‑8‑2000. The reply of which was filed on 26‑8‑2000, and 28‑8‑2000. These notices were later on withdrawn on the point of jurisdiction through a specific letter by the IAC vide letter dated 9‑2‑2000. The assessee then received show‑cause notice for default of section 12(2) vide Letter No.77/02, dated 12‑2‑2000 for compliance on 18‑9‑2000. This notice was complied with and reply was filed on 19‑9‑2000 with proof of filing returns on 11‑2‑1992 before WTO Circle‑03 who had jurisdiction over the case of that time. Other facts as reproduced above by us are also repeated while complying with the said notice. The WTO, however, did not accept assessee's contention that he had filed return in 1992 and that his assets were below taxable limit. The value, therefore, was fixed at Rs.26,67,56,115 on which tax was calculated at Rs.20,00,000 which was subsequently paid, An amount of Rs.40,60,992 for a period of more than 8 years was also charged @

24%. Further penalty under section 12(7) was also imposed for non -filing of return under section 12(2) of the said Act.

The order of the Assessing Officer charging tax and penalty speaks as follows:‑‑‑

Before, the First Appellate Authority the assessee challenged the treatment, however, without success.

Before us the arguments are mostly the same. It has been said that the proof of having filed return in time in terms of Peon Book that obtains stamp of the department also was furnished which has been rejected without any objective proof. He said that the official who received this return has also received return of several other companies and produced before us photocopies of the other‑such concerns also. It was remarked that if there was no return with the WTO there was no question of issuance of notice on 28‑12‑1992 for 5‑1‑1993 by the WTO. He produced before us‑few assessment orders under section 12(6) of the CAT to say that on the basis of same signatures and stamp the orders under section 12(6) were finalized by the WTO Circle‑03 vide order, dated 27‑6‑1992 in the case of Monowal Textile Mills and the Lahore Textile and General Mills on 9‑9‑1992 reference to these assessments he remarked is to prove that the assessee return had been received by the same official hence to say that his return could not be located, is not proper. All this evidence was confronted to learned D.R. He said that once an official of the department takes up a decision it should always be respected by the others unless proved contrary by the assessee. The argument of learned D. R. is quite valid. However, evidence produced by learned A.R. is unequivocal. The official has received various returns at one time sitting in Circle‑03 and assessments have been finalized by the WTO on the basis of these returns in other cases. There was, therefore, no reasons to hold that said official could not be located in the case of this assessee and that the assessee had not filed return in time. Giving a finding on this issue of this stage of the proceedings is necessary for the reason that the subsequent arguments advanced by the assessee are based upon the same. We, therefore, hold that return in this case was filed on 31‑3‑1992 and saying that it was not filed is just a cavil. In this regard mentioning of the letter, dated 12‑9‑2000 by the DCIT and its reply, dated 19‑9‑2000 is of relevance. This reply leaves no doubt that our finding above is correct.

Having held that the return was in time, ‑we now proceed on to the first argument by the learned A.R. He claims that the provisions of Wealth Tax Act with regard to all the proceedings including limitation to make assessments are applicable in the instant case. In this regard he brought our attention to section 12(10) of the CAT that speaks as follows:‑‑‑

"The provisions 'of sections 23, 24, 25 and 35 of the Wealth Tax Act, 1963 (XV of 1963), shall, so far. as may be, apply to an appeal, against, or revision or rectification of, an order under this section as they apply to an appeal, revision or rectification under the said Act."

Referring to the same he said that not only the abovementioned provisions but also other provisions of the Wealth Tax Act are applicable in the case. It was asked to him as to under what specific direction he considers that the whole of Wealth Tax Act is applicable on the proceedings of CAT. He again referred to sections 12(9) and 12(10). He, therefore, urged to consider the assessment as time‑barred having been finalized is deviation to the provision of section 17(A) of the Wealth Tax Act:

Coming to the charge of penalty and additional tax respectively he said that the return of the assessee was filed in time. There was, therefore, no question of any charge under section 12(7). In this regard he said that even otherwise this new levy was under lot of criticism and a great deal of debate was going on throughout the country on its illegality or otherwise. A lot of petitions were filed to declare this charge to be ultra vires to the Constitution. The scope of this charge and the "value of assets" also remained under discussion for a pretty long time and the determination as to which part of the assets is liable to CAT also remained disputed. Notwithstanding, the fact he remarked that the assessee in this case has filed return in time. All these factors make it clear that charge of CAT was a controversial issue and imposition of penalty in such cases was not justified. In this regard, he made reference to various orders of the ITAT. Regarding additional tax he said that under section 12(8) is invocable for default of section 12(5) that speaks as follows:‑‑

"(5) A Company which is liable to pay tax under this section shall pay the tax alongwith the return."

Above provision he remarked speaks of liable to pay tax under this section. The assessee when tiled return description of which has been mentioned above, had considered that the CAT is chargeable on net assets as in the case of wealth tax. Non‑reduction of the liabilities from total assets was a subsequent development. The concept of net assets being controversial the assessee had a bona fide view that he is liable to CAT on total assets less liabilities. This fact coupled with others in terms of issuance of various directions time and again by the C.B.R. and representations from the taxpayers, Chamber of Commerce and Industries etc. and similar other reasons delayed the payment. However, on final calculation when the demand was created the same was paid in full without further hesitation. This he said is still controversial in view of his arguments that the return filed by him is hit by the provision of section 17 and assessment was barred by time at the time of assessment.

Reverting back to the judgment in which similar issues, have been decided by the Honourable ITAT he said that in Sargodha Jute Mills vide I.T.A. No.6872/LB of 1996 (Assessment year 1991‑92), dated 4‑7‑2001 a Bench of this Tribunal confirmed the deletion of penalty and additional tax. The learned Tribunal in the said judgment has relied upon I.T.A. No.2411/LB of 2001 (Assessment year 1992‑93), which earlier relied upon I. T. A. No. 1872/LB of 1997 (Assessment year 1992‑93). The relevant para. from the same speaks as follows:‑‑

"Coming to the crux of the matter, we are constrained to hold that the learned CIT(A) justifiably deleted the additional tax imposed by the Assessing Officer, though for different reasons. In this regard, we stand fortified by the supra judgment (I.T.A. No. 1872/LB/97) relied upon by the assessee. It is pertinent to mention that the levy of additional tax, has been deleted by the Division Bench of the Tribunal including Mr. Muhammad Mujeebullah Siddiqui, Ex‑Chairman, now elevated to the Bench at Honourable High Court Karachi holding.

"On the basis of these provisions he has submitted that the additional tax is to be levied when the assessee fails to pay the tax and the word 'fail' contains an element of deliberate act. He has further submitted that penalty is in the nature of criminal proceeding and in the case of any doubt it is to be resolved in favour of assessee we are persuaded to agree with the submission of Mr. Saghir Tirmzi. We are of the opinion that because of misleading circulars and letter issued by the C.B.R. the assessee was misled and he honestly believed that the return was not required to be filed by it. In these circumstance we are of the opinion that in the facts and circumstances of the case additional tax is, therefore, maintained but not for the reason assigned by the learned CIT(A). The cancellation of penalty is upheld for the reasons stated by us above."

It is worth mentioning that the supra judgment was followed by the Division Bench of the Tribunal vide order LT.A. No.2141 of 2001 (Assessment year 1992‑93) in which one of us was also signatory to the judgment wherein it was held:‑‑

'Coming now to additional tax and penalty, we agree that the Tribunal in its LT.A. No.1872/LB of 1997 (Assessment year 1992‑93), dated 26‑5‑1998, has held that additional tax/penalty not be charged in the context of CAT due to confusion created in the minds of taxpayers as a result of multiple circulars is sued by the C.B.R. We, therefore, maintained order of the CIT) (A) with regard to levy of CAT (Rs.20 lacs) but levy of penalty/ additional tax is deleted.'

For the foregoing reasons, we do hereby uphold the impugned order passed by learned First Appellate Authority on the issue with the observation that deletion is being maintained in the light of findings given in the judgments of the Tribunal in I.T.As. Nos., 1872/LB/97 and I.T.A. No.2411 of 2001 and not for the reasons recorded by the leaned First Appellate Authority.

The learned D.R. very strongly opposed the argument regarding application of the wealth tax on all the proceedings of CAT. He said that liability is never charged beyond the letters of law and the Court cannot import or add any word in a Statute either directly or by way of interpretation. The law of CAT has specifically mentioned certain sections of the Wealth Tax Act with full intention and have ignored the rest including section 17 of the same. The sections of Wealth Tax Act which have been saved in CAT through its provision Nos.12(9) and 12(10) are sections 32, 23, 24, 25 and 35. The CAT has protected nothing beyond these provisions. Therefore, calling the assessment as time‑barred is a complete misconception. He remarked that the assessee action of claiming liabilities in its declared value of assets was only to deprive the department of its rights of collecting revenue in time. The concept of net assets was never a part of the scheme. It has been mentioned in un‑equivocal terms that value of assets held by a company shall be charged under CAT. The "Value of assets" was defined in clause 12(D) as to include all fixed assets held by the company. The arguments of the assessee with regard to net assets, therefore, is not valid enough to save him from the charge of taxation and for the charge of additional tax as well as the penalty. Regarding judgments of the ITAT he remarked that the same are distinguishable in the manner that in those cases the issue of inclusion of the work in progress in the definition "value of assets" was involved. In the present case the taxability of the assets was clear and the assessee retained, the money of the department on flimsy grounds. He should not be allowed to, take benefit of his undoing by playing with the language of the State.

We have heard both and have given our earnest consideration to the arguments of the two sides. The learned D.R. has made out his case to the extent of charge of wealth tax in this case and that the provisions of section 17 of the wealth tax were not applicable. It is a settled principle of law that nothing can be imported beyond the intendments of the Legislation and that of the Legislature. There was obviously no bar on the Legislature to declare that all the provisions of the wealth tax are applicable on the assessments under CAT. When it specifically mentions certain sections referred by us above in it, no other. section can be applied on the proceedings of this case. There is no doubt in our mind regarding intention of the Legislature to this extent. This was so intended for the simple reasons that CAT was a one time levy and not year‑to year charge. Providing a limitation for assessment under said Act, therefore, was quite unnecessary. Even otherwise this charge remained open to criticism from all quarters other than the beneficiary and was challenged from all angles. Besides, even the C.B.R. has been issuing a lot of misleading explanations and these matters remained un attended for a long time. There was, therefore, no limitation for making an assessment under CAT and the arguments of learned A.R. to this extent are repelled. The assessment, therefore, is well within time and that the calculation of tax is also correct appreciation of the legislation.

However, with regard to charge of penalty and additional tax the exceptions are there, regarding penalty the department's case is at a much weaker footings. Since we have already held that return of the assessee was in time, there is no reason left for us to accept departmental contention of charge of penalty on it. Notwithstanding the fact that even otherwise this Tribunal in a number of cases has deleted the same: We, cancel this penalty for the particular reason that the return was filed in time as already confirmed by us in the para. supra.

Regarding additional tax we are again persuaded to agree with learned A.R. In this regard it is true that the facts in most of the cases referred by the learned A.R. were the same as pointed out by the learned D.R. However, the findings finally are not for that reason. The Tribunal has deleted the additional tax in view of unsettled atmosphere during all these years. In fact, we have also deleted such an additional tax in our Full Bench judgment in the case of Fatima Enterprises vide I.T.A. No.897/LB of 1998 (Assessment year 1992‑93), dated 30‑11‑1999. Our reasoning for deletion of this additional tax therein is also that for imposition of CAT the C.B.R. remained quite unclear on a number of points. The charge of additional tax under the circumstances, therefore, was not justified. Following the ratio of the same as well as of the other judgments of this Tribunal referred above, we also delete the additional tax imposed on this assessee. This result in confirmation of the charge of CAT and deletion of penalty and additional tax. This obviously means that assessee appeal stand rejected to the extent of charge of CAT while on the issue of penalty and additional tax the same is accepted.

C.M.A./M.A.K./295/Tax (Trib.) Order accordingly.