COMMISSIONER OF INCOME TAX, SPECIAL ZONE, LAHORE VS Messrs MUSARAT TEXTILE MILLS LTD., FAISALABAD, 2005 PTD-LAHORE-HIGH-COURT-LAHORE 2270 (2005)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 108(b), 129, 132, 134 & 135---Imposition of penalty under S.108(b), Income Tax Ordinance, 1979 by Assessing Officer was reduced both by the Appellate Additional Commissioner and the Income Tax Appellate Tribunal---Contention of the Department was that S.108 of the Ordinance specifically quantified the penalty to be imposed and word "shall" had been incorporated therein through an amendment, thereby it was the intention of the Legislature to denude the Deputy Commissioner of Income Tax and the Department of any discretion in the matter of imposing the penalty other than the amount specified in the said provision of law, hence the penalty could not be reduced---Validity--Held, both Income Tax Tribunal and Additional Appellate Commissioner were justified to reduce the penalty under S.108(b)---Principles.

In the present case, the penalty had been reduced by the Additional Appellate Commissioner while hearing the appeal preferred under section 129 of the Income Tax Ordinance, 1979. Section 132 of the Ordinance specifically conferred the jurisdiction upon the Additional Appellate Commissioner to pass the species of orders mentioned therein. Section 132(1)(b) clearly stipulated that in case of an order imposing penalty, the Additional Appellate Commissioner might, on appeal set aside, increase or reduce the penalty. Similarly, the Tribunal while hearing the appeal under section 134 of the Ordinance was vested with the jurisdiction under section 135(4)(5) to cancel or vary the order which was the subject-matter of the appeal.

Shahid Jamil Khan, Advocate.

JUDGMENT

Through this order, we propose to dispose of PTRs 4-2003, 400-2003, 426-2003, 20-2004, 21-2004, 22-2004, 328-2004 and 338-2004 wherein almost identical question (s) of law has been referred to this Court.

In the instant case (PTR 4 2003), the Assessing Officer imposed a penalty under section 108(b) of the Income Tax Ordinance, 1979. The assessee filed an appeal before the Appellate Additional Commissioner who reduced the penalty, but still dissatisfied, the assessee invoked the jurisdiction of the ITAT which after considering the explanation offered by the assessee, further reduced the penalty.

Through this Reference Application, it is contended that the following question of law arises requiring the expression of opinion by this Court:

"Whether under the facts and circumstances of the case, the Income Tax Tribunal was justified to reduce the penalty under section 108(b) against the mandatory quantum prescribed in the Income Tax Ordinance, 1979?"

That the contention raised on behalf of the department is that section 108 of the ITO specifically quantifies the penalty to be imposed. The word "Shall" has been incorporated therein through an amendment thereby it is the intention of the legislature to denude the DC Income Tax and Department of any discretion in the matter of imposing the penalty other than the amount specified in the said provision of law. Hence, the penalty could not be reduced.

In the instant case, the penalty has been reduced by the Additional Appellate Commissioner while hearing the appeal preferred under section 129 of the ITO, 1979. Section 132 of the Ordinance specifically confers the jurisdiction upon the Additional Appellate Commissioner to pass the species of orders mentioned therein. Section 132(1)(b) clearly stipulated that in case of an order imposing penalty, the Additional Appellate Commissioner may on appeal set aside, A increase or reduce the penalty. Similarly, ITAT while hearing the appeal under section 134 of the ITO, 1979 is vested with the jurisdiction under section 135(4)(5) to cancel or vary the order which is the subject-matter of the appeal.

Perusal of the aforesaid provisions of law make it clear and obvious that both the Additional Appellate Commissioner as well as the ITAT are vested with the jurisdiction and power to reduce the penalty.

For the foregoing facts, circumstances and reasons, it becomes clear and obvious that the Appellate Commissioner and the ITAT have the jurisdiction to reduce the penalty, therefore, the question referred to in the captioned petition is answered in the affirmative. That similar question(s) raised in the connected PTRs embodied in paragraph 1 of the order also stand disposed of accordingly.

M.B.A./C-105/LReference answered.