VS, 2010 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1231 (2010)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 183, 182 & 190---S.R.O. No. 708(I) of 2007 dated 14-7-2007---Penalty for non-payment of tax-Non-payment of tax for tax year 2003 as the determined refund was already with the department and the taxpayer had requested the department to adjust the tax liability from that determined refund---Return for tax year 2007 was filed in Regional Tax Office as the Federal Board of Revenue e -portal was not functioning---Levy of penalty---Cancellation of such penalties by the First Appellate Authority--Validity---Determined refund was admittedly available with the department and the taxpayer had already requested the department to adjust the tax liability from that determined refund---Likewise, Taxation Officer instead of verification to establish genuineness of submissions of return from service counter of Regional Tax Offices had imposed the penalty despite the fact that e-Portal of Central Board of Revenue was not functioning properly as was admitted by the Central Board of Revenue in the newspapers of that period:--Taxpayer had already fulfilled his obligations of filing the return on the counter of Central Board of Revenue---As the returns were filed before the Tax Facilitation Centre by the taxpayer it was established that the taxpayer had discharged his liability honestly and legally by filing his returns--Appeals filed by the Department having no merits, were dismissed by the Appellate Tribunal.

Imran Raza Kazmi, D.R. for Appellant.

Tauseef Alam Siddiqui, I.T.P. for Respondent.

ORDER

JAWAID MASOOD TAHIR BHATTI, (JUDICIAL MEMBER).--Through these three appeals the appellant department has objected to the consolidated impugned order of the learned CIT(A) dated 27-10-2009. For the tax years 2003 and 2006 the penalty imposed for non payment of tax under section 183 cancelled by the learned CIT(A) through impugned order has been objected. While for the tax year 2007 the appellant department has objected the deletion of penalty for non-filing the-return of income under section 182 of the Ordinance, 2001.

The learned D.R. representing the appellant department has contended that the learned CIT(A) has cancelled the penalty imposed for non-payment of tax demand for the tax years 2003 and 2006 outstanding against the taxpayer without considering the facts that the taxpayer has failed to liquidate the tax demand within the prescribed period despite show-cause notice issued by the Taxation Officer under section 190 read with section 183, no reply was received from the taxpayer and therefore the Taxation Officer has rightly observed that the taxpayer had nothing to say in his support and therefore the penalty under section 183 for non-payment of tax was rightly charged. He has contended that mere creation of refund cannot mean the determined refund. According to learned D.R. there is a legal process which is to be adopted through verification of challans for the creation of refund. If the taxpayer has some such clear determined refund then he may contact Enforcement Division and even can claim the compensation in this regard. Regarding the tax year 2007 learned DR has contended that the assessee has not filed return of income due to be filed on 31-1-2008 which was filed by the taxpayer on 27-5-2008 on F.B.R. e-Portal. The learned D.R. has contended that the taxpayer did not seek any adjournment from the department and the return was filed late by 117 days. The learned D.R. has contended that if the e-Portal of F.B.R. was not functional it cannot remain out of order for four months as has been contended by the taxpayer. According to learned counsel the functioning of computer may be out of work for one or two days and therefore the penalty imposed by the taxpayer was fully justified which has been deleted by the learned CIT(A) without any justification. Learned D.R. has contended that the learned CIT(A) has referred the S.R.O. No.708(I) of 2007 dated 14-7-2007 without any contest. He is of the view that S.R.Os. are procedural in nature and always have the retrospective effect and the observation in this regard by the learned CIT(A) that the S.R.O. of the C.B.R. has prospective applicability to the tax year 2008 and it is not applicable to tax year 2007 is not correct.

On the other hand, the learned counsel for the taxpayer is supporting the impugned orders of the learned CIT(A). He has contended that the learned CIT(A) has rightly cancelled the order made by the Taxation Officer. Regarding the Tax Years 2003 and 2006 learned counsel has contended that the original order for the tax year 2006 has already been cancelled by the learned CIT(A) vide order dated 25-5-2009 with the direction that effect of payment of Rs.24,00,000 be given at first instance for the tax year 2001-2002 after due verification and observing of legal and procedural formalities and requirements, therefore the appellant be allowed adjustment of refund due for the tax year 2006. As a result of this order the additional tax charged under section 205 as per impugned order also stands deleted. He has referred that the learned CIT(A) in accordance with these orders has cancelled the original order and therefore the subsequent penalty made in consequence thereof has become infructous. Learned counsel has contended that similar is the position regarding non-payment of tax for the tax year 2003 as the determined refund is already with the department and the taxpayer has already requested the department to adjust the tax liability from that determined refund. Regarding the tax year 2007 learned counsel for taxpayer has contended that return of income was duly filed on 31-12-2007 in the Regional Tax Office, Lahore as the FBR e-Portal was not functioning. He has submitted that in this regard from the newspapers of that period it may be confirmed that due to the newly settled e-Portal System in the FBR there were problems in the system. He has contended that the Taxation Officer without any justification has discarded these submissions of the taxpayer and has imposed penalty which has rightly been deleted.

After considering submissions made from both the sides I find no warrant for interference in the impugned order, as the learned CIT(A) has cancelled the penalty order for all the three years after discussing all the issues in detail. It is not disputed that the determined refund was available with the department and the taxpayer has already requested the department to adjust the tax liability from that determined refund. Likewise, the Taxation Officer instead of verification to establish genuineness of the submission of the return from the service counter of B R.T.O. has imposed the penalty despite the fact that the e-Portal of C.B.R. was not functioning properly as was admitted by the C.B.R. in the newspaper of that period also and the taxpayer has already fulfilled his obligation of filing the return on the counter of the C.B.R. In this regard as the returns were filed before the Tax Facilitation Centre by the taxpayer it is established that the taxpayer has discharged his liability honestly and legally by filing their returns. I am however of the view that the reference of the S.R.O. No.708(I) of 2007 by the learned CIT(A) in this regard is misplaced. All the three appeals filed by the department having no merits are therefore dismissed.

C.M.A./38/Tax (Trib.)Appeals dismissed.