Nos.264/LB, 265/LB and 266/LB of 2003 VS Nos.264/LB, 265/LB and 266/LB of 2003
2004 P T D (Trib.) 474
[Income-tax Appellate Tribunal Pakistan]
Before Khawaja Farooq Saeed, Judicial Member and Imtiaz Anjum, Accountant Member
Nos.264/LB, 265/LB and 266/LB of 2003, decided on /01/.
th
August 2003. Income Tax Ordinance (XLIX of 2003)---
----Ss.133 & 190---Penalty---Application for reduction in penalty-- Jurisdiction---Reference to High Court---Question involved in the case was whether on facts and circumstances of case Income Tax Appellate Tribunal was justified to uphold order of Commissioner of Income Tax reducing penalty under S.108(b)(ii) of the Income Tax Ordinance,' 1979---Contention of the Department was that where there was no `reasonable cause' for default, penalty should be calculated as per prescribed rates and that it could not be reduced by any Forum---Use of words `reduce', `modify' and `remand' in Ss.129 & 132 of the Income Tax Ordinance, 1-979 could not be said to be without meanings---Power of reduction of penalty was not available with Assessing Officer specifically, but Appellate Authorities, including Commissioner of Income Tax (Appeals) or any other in the hierarchy of Income Tax Department, had full power, to reduce any tax or penalty keeping in view the circumstances of each case---Assessee was not defaulter of tax and delay in filing Return had not caused any prejudice to the Revenue-- Reference of such. question, in circumstances, being only academic was not referred to High Court.
175 ITR 317 ref.
Muhammad Asif, D.R. for Applicant
Miss Rehana Meer for Respondent.
Date of hearing: 8th August, 2003.
ORDER
KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).---The following questions of law have been proposed for reference to the High Court:--
(i)Whether on the facts and circumstances of the case, learned Income Tax Appellate Tribunal was justified to' uphold the order of Commissioner of Income Tax (Appeals), reducing the penalty imposed under section 108(b)(ii) of the Repealed Ordinance of 1979 whereas, the word "shall" was inserted by Legislature instead of "may" and language of clause (ii) of the section. does q not allow any discretion?' .
(ii)Whether under the facts and circumstances of the case; learned Income Tax Appellate Tribunal was justified to uphold the reduction by Commissioner of Income Tax (Appeals) without examining, as to whether the reasonable cause of default (which is a precondition) is avoidable or not?
The A.R. says that in principle he agrees that if the imposition of penalty is without reasonable cause it should not the charged. However, otherwise than that if the Appellate Authority comes to the . conclusion that there was reasonable cause it cannot reduce the amount of penalty.. He said the word "shall" have been brought with the intention that once there is no `reasonable cause' for default the penalty g should be calculated as per prescribed rates and that it cannot be reduced by any forum. He argued that the amendment has been made with a .., purpose. and if it is not applied in its true meanings it will be like defeating the purpose of legislation.
The D.R. argued the case in the manner as if was an appeal. She referred Circular of CBR and said that word `shall' have not brought any material change and that the pre-requisite of reasonable cause is still there. She also referred a judgment of the Indian origin reported as 175 ITR 317. She said that if after assessment it is proved that there is no default and the tax deducted at source or paid in advance is equal to or in excess to the amount of tax assessed, non-filing of return in time is no default. In the garb of the above argument she said that in the present case the situation being the same the penalty should not have been reduced but cancelled. The questions therefore; should not be referred being factually not referable. We have heard both and we have no hesitation in holding that the Legislature has drafted the provisions regarding appeals advisedly and the same have been progressively amended with the development society. The usage original words in section 129 and in section 132 of the Income Tax Ordinance, 1979 i.e. `reduce', `modify' and `remand' etc, etc. cannot be said to be without meanings. This power of reduction or penalty is obviously not available, with Assessing Officer specifically but the Appellate Authorities including Commissioner of Income Tax (Appeals) or any other in the hierarchy of Income Tax proceedings have full power to reduce any tax or penalty keeping in view the circumstances of each case. The famous principle of interpretation that the words of statutes should be given their real and literal meanings is fully applicable in this case. ,
This is where relevant part of section 132 that details the powers and functions of the Commissioner of Income Tax (Appeals) needs reference:--
Section 132(1)
(b)in the case of an order imposing a penalty, confirm, set aside or cancel such order or enhance or reduce the penalty and
The provision is clear and specific. It leaves no doubt in mind to say that AAC or Commissioner of Income Tax (Appeals) does not have the power to reduce the penalty. This will be like defeating the main purpose i.e. justice for all. This provision has been drafted advisedly and it has a history behind its insertion. The words "or enhance or reduce the penalty and", fully permit the Appellate Authority to fix the penalty to a figure suitable to the circumstances of the case. Furthermore, in the present case the assessee was not defaulter of tax and the delay in filing return has not caused any prejudice to the Revenue. The reference of these questions, therefore, shall only be academic and such questions also are not referred to High Court. The application, therefore, is considered without merit and is dismissed.
H.B.T./886/Tax (Trib.) Application dismissed.