COMMISSIONER OF INCOME TAX, SIALKOT ZONE, SIALKOT VS Messrs Sh. ZAFAR IQBAL and others, 2007 PTD-LAHORE-HIGH-COURT-LAHORE 2150 (2007)

Wealth Tax Act (XV of 1963)---

----Ss.14, 18, 23, & 27---Imposition of penalty for filing return late---Appeal to High Court---Assessee was burdened with penalties under S.18(1)(a) of Wealth Tax Act, 1963 on account of having filed return late by a number of days---Commissioner (Appeals) refused to interfere finding the default of assessee wilful---Appellate Tribunal finding that Amount of penalties were higher than the tax demand created against assessee during each individual year, directed their reduction to the amount equal to the amount of wealth tax assessed---Validity---Appellate Commissioner and Appellate Tribunal had the jurisdiction to reduce the fixed amounts of penalties provided for under the law.

Commissioner of Income Tax, Special Zone, Lahore v. Musarat Textile Mills Ltd. Faisalabad 2005 PTD 2270 ref.

Khadim Hussain Zahid for Appellant.

ORDER

The Commissioner of Income Tax and Wealth Tax, Sialkot Zone, Sialkot claims that the order recorded by a Division Bench of the Income Tax Appellate Tribunal, Lahore on 1-3-2000 gives rise to the following question of law to be considered and answered by this Court:---

"Whether in the facts and circumstances of the case the learned ITAT was justified to direct to restrict the amount of penalty imposed under section 18(1)(a) of Wealth Tax Act, 1963 equal to the tax demand when the default for late riling of the return was wilful and deliberate since the assessee did not suo motu file Wealth Tax return as required under section 14 of the Wealth Tax Act 1963 despite the tact that he had taxable wealth on the valuation date."

2. The respondent, an individual, and a director of a private limited company was an assessee of the Wealth Tax Department. For the assessment years 1992-93 to 1996-97 he was burdened with penalties under section 18(1)(a) of the Wealth Tax Act, 1963 of different amounts on account of having filed the return late by a number of days. That order was challenged before the First Appellate Authority without a success. The C.I.T.(A), Sialkot on 30-10-1999 refused to interfere for the assessee/present respondent on finding the default to be wilful. On further appeal a Division Bench of the Tribunal finding that the amounts of penalties were higher than-the tax demand created against the assessee during each individual year directed their restriction to the amount equal to the amount of wealth tax assessed.

3. Heard the learned counsel for the appellant. The issue if a penalty imposed with reference to the provisions of law providing .for fixed amount in terms of period of default in days could be reduced by the appellate forums stands settled as far this Court is concerned. It is not denied by the learned counsel for the revenue that the same question of law was earlier considered by a Division Bench comprising both of us in W.T.A. No.31 of 2003, decided on 23-1-2003. The operative part of that order as contained in para. 6 thereof reads as under:---

"However, we will not agree. In the first instance the question as framed is more in nature of an argument rather than posing a legal question. Secondly in a number of cases we have observed that the amount of penalties prescribed in law fixed with reference to days of default both on income as well as wealth tax side art at best mandatory and require to be followed by the Assessing Officer. These provisions do not derogate from the powers of the appellate forums both the Commissioner of Appeals as well as the learned Tribunal. The penalty provisions do not in any manner control or govern the power of the Tribunal while disposing of appeals under section 24 of the Wealth Tax Act, 1963 or section 135 of the late Income Tax Ordinance, 1979. In case the interpretation of the revenue that the fixed amount of penalties cannot be interfered with by the Commissioner of Appeals or the Tribunal is accepted then the provisions providing for appeal against such penalties will become redundant. That can never be the intention of law. "

4.? In yet another case re: Commissioner of Income Tax, Special Zone, Lahore v. Musarat Textile Mills Ltd., Faisalabad 2005 PTD 2270 a Division Beach of this Court comprising one of us (Muhammad Sair Ali, J.) held that Appellate Commissioner and the ITAT had the jurisdiction to reduce the fixed amounts of penalties provided for in the lace Income Tax Ordinance, 1979. Therefore, the question if both the forums were competent to grant relief in reducing the amount of penalty was answered in the affirmative.

5. Accordingly since the legal issue already stands resolved we will refuse to admit the question and decide this appeal in the light of the said judgments.

6. This order will also dispose of I.T.As. Nos. 602, 603 and 480 of 2000.

H.B.T./C-17/L???????????????????????????????????????????????????????????????????????? Order accordingly.