VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2006 (2008)

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 184, 182, 122, & 39---Penalty for concealment of income---Interest income---Statement-for export proceeds was filed---Assessee was confronted for non-disclosure of interest income---Return declaring interest income with tax deduction at source was filed---Assessment framed was not contested in appeal but when penalty was imposed on concealment for submitting inaccurate particulars, the illegality of imposition of penalty was challenged---Assessee contented that no concealment or submission of inaccurate particulars had taken place as matter of late filing of return had been made liable to concealing or submitting inaccurate particulars which was not legally correct---Penalty could have been imposed for late filing---Total amount of bank interest had been assessed under S. 39 of the Income Tax Ordinance, 2001 by adding to it the imputable income calculated on work back-basis on the tax deducted from export realization, which was illegal and levying penalty on the basis of such illegal order would also result into illegal imposition of penalty---Validity---Assessee after confronting on not declaring the bank profit had immediately filed the Income Tax Return where tax had already been deducted at source meaning thereby that no loss of revenue took place as amount of tax was already with the taxation authorities awaiting its adjustment---Taxation Officer had failed to prove that such act of appellate-assessee amounted to concealment or submission of inaccurate particulars; secondly, it was a case of late filing of Return for which the penalty had to be imposed under S. 182 of the Income Tax Ordinance, 2001 and not for the acts as specified in S. 184 of the Income Tax Ordinance, 2001---Order passed under S.184 of the Income Tax Ordinance, 2001 was patently illegal, void ab initio which was annulled by the Appellate Tribunal.

(b) Income Tax Ordinance (XLIX of 2001)---

---S.122---Amendment of assessment---Notice captioned as under S.122(1) of the Income Tax Ordinance, 2001, omitting a statutory notice under subsection (9) of S. 122 of the Income Tax Ordinance, 2001, debars amending or further amending any assessment without a proper opportunity of being heard.

(c) Income Tax Ordinance (XLIX of 2001)---

----Ss.122 & 154(4)---Amendment of assessment---Order passed under S.122(1) of the Income Tax Ordinance, 2001 was out of jurisdiction as the Assessing Officer expressed his intention to amend the completed assessment under S. 154 (4) of the Income Tax Ordinance, 2001 which did not fall within the scope of S. 122 of the Income Tax Ordinance, 2001.

(d) Income tax---

----Proceedings in respect of complete discharge of tax liability are quite distinct from the normal law proceedings.

Siraj-ud-Din Khalid, Advocate/A.R. for Appellant.

Ashraf Ahmad Ali, D.R. for Respondent.

ORDER

The titled appeal is directed against Order dated 21-9-2006 recorded by the learned C.I.T. (A). Gujranwala so as to contest the imposition of penalty under section 184 of the Income Tax Ordinance, 2001.

2. Relevant facts in brief are that on submission of requisite statement for export proceeds, the appellant-assessee was confronted for non-disclosure of interest income earned. At this juncture, the statutory return declaring interest income earned with tax deduction at source was filed. It is in consequence to this Return that assessment was framed but it was not contested in appeal. Now, when the order under section 184 has been passed whereby penalty has been imposed on concealment/for submitting inaccurate particulars that illegality of imposition of penalty under section 184 has been challenged before us on failure at the first appellate stage.

3. The learned A.R. has challenged this imposition of penalty by firstly submitting that no concealment or submission of inaccurate particulars has taken place. It was further elaborated by submitting that simply the matter of late filing of Return has been made liable to concealing or submitting the inaccurate particulars which is not legally correct. The learned A. R. has further submitted that penalty could have been imposed for late filing under the provisions of section 182 of the Income Tax Ordinance, 2001.

4. The learned A.R. without prejudice to the earlier submissions has submitted that the order dated 28-4-2004 passed under section 122(1) whereby the total amount of batik interest has been assessed under section 39 by adding to it the imputable income calculated on work back basis on the tax deducted from export realization, is illegal and levying penalty on the basis of such illegal order will also result into illegal imposition of penalty. The learned A.R. has challenged such imposition of penalty by referring to the judgment with citation as 2006 PTD 734 [Karachi High Court] and reading out the relevant Paras 38 & 39.

5. The learned D. R. has, however, supported such imposition of penalty by reading out what given in the order under section 122(1). [Sections referred to in this order are of the Income Tax Ordinance, 2001].

6. We have heard the learned representatives of both the parties and perused the available record. The relevant provisions of law have minutely been studied and anxious thought has been given to the arguments placed at the bar before us. The learned first appellate authority has disposed of this issue in the following manner:

"The contention of the appellant that the return was filed for the first time is correct. However, the appellant committed concealment of bank profit by not filing return of income in time and by disclosing the interest later on. The return of income (first time) was filed after the Department received definite information that tax payer received interest on bank deposit and started concealment proceedings. Therefore, this ground of appeal is rejected."

7. Undisputedly, the bank profit earned in the hands of the appellant-assessee has not been disclosed by filing the statutory income tax return but only after confronting through show-cause notice immediately the same was filed. Originally, the requisite statutory statement for exporters was filed. .In the body of the assessment order, it has been acknowledged by the Assessing Officer that the income tax return declaring interest income has been filed after a show-cause notice dated 10-1-2004 as a result of initiating the proceedings under section 122(1) of the present Ordinance. This notice has been captioned as under section 122 (1) thereby omitting a stautory notice under subsection (9) of section 122 which debars amending or further amending any assessment without a proper opportunity of being heard. In the interest case before us, the Assessing Officer has expressed the intention to amend the completed assessment under section 154(4) of the present Ordinance but this section is not falling within the scope of section 122, as such the order under section 122(1) was out of jurisdiction. Apart from such illegalities, we are to express ourselves in a very clear manner that the proceedings in respect of complete discharge of tax liability are quite distinct from the normal law proceedings. The appellant-assessee after confronting on not declaring the bank profit has immediately filed the Income Tax Return where tax has already been deducted at source meaning thereby that no loss of revenue took place as amount of tax was already with the taxation authorities awaiting its adjustment. The Taxation Officer has failed to prove that such act of the appellant assessee amounts to concealment or submission of inaccurate particulars. Secondly and more importantly, we agree with the contentions of the learned A.R. that it was a case of late filing of the Return for which the penalty has to be imposed under section 182 and not for the acts as specified in section 184. Keeping in view the discussion supra, we are to form a considered view that order under section 184 is patently illegal, void ab initio which meets its fate by declaring as annulled. In the result, the appeal of the assessee stands disposed of accordingly.

C.M.A./88/Tax(Trib.)Order accordingly.