VS, 2010 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 753 (2009)

Income Tax Ordinance (XLIX of 2001)---

----Ss.183 & 190---Penalty for non-payment of tax---Appeal before Appellate Tribunal---Stay granted against recovery---Show-cause notice for imposition of penalty for non-payment of tax---Validity---Taxation Officer had power to impose penalty in those cases in which the default in making payment of any tax was deliberate or otherwise on the part of an assessee but not because of a stay order granted by a competent authority, as such default was caused by operation of law which was protected under the principle that such passing of the stay order was material for suspending the demand and even its date of communication did not make it effective from that date---Person in whose favour stay order operates could not be held to have failed to make payment and demand would not become final when matter was sub judice before Court which had stated its recovery and that even the demand of department to levy or pay additional tax during the period in which stay was in operation was without lawful authority and of no legal effect---Stayorder in effect provisionally suspends or makes demand non existent---Further, stay was granted against the recovery of tax demand---Propriety demands that department should not opt for coercive measures till the decision of appeal---Appellate Tribunal directed that not only the cocercive measures for recovery of tax demands but also the proceedings like imposing penalty be also not initiated against the assessee till the time when stay order holds the field---Stay petition was granted for another 60 days or till the decision of main appeal whichever was earlier---Miscellaneous application was accepted by the Appellate Tribunal.

Atif Waheed for Applicant.

M. Aamir Ilyas, D.R. for Respondent.

ORDER

In this case a stay was granted for 60(sixty) days vide order in M.A. (Stay) No.50(IB)/2009 dated 23-6-2009 till 15-8-2009. This miscellaneous application has been filed by the assessee-applicant for the titled year to grant further stay against the recovery of tax demand amounting to Rs.5,929,610 till the decision of main appeal which is still pending for adjudication before the Income Tax Appellate Tribunal.

2. The learned AR states that the Department is pressing hard for the recovery of outstanding Tax Demand in an other way various notices including show-cause notice under section 190 for levy of Penalty under section 183 of the Income Tax Ordinance, 2001 have been issued in this regard as follows:-

The Department is insisting for recovery of tax demand and they have resorted to coercive measures by issuing notice under section 138. He states also that assessee has prima facie case in its favour and will be placed in a very disadvantageous position in case of recovery of the amount in question. It has been requested that tax demand in question may be stayed till the disposal of main appeal which is pending before the learned Tribunal.

3. On the other hand the learned DR states that in compliance to the said order of the Tribunal the Department has not taken any coercive measures for the recovery of Tax Demands. Imposition of penalty proceeding is a separate lawful proceedings and stay order issued by the Tribunal cannot be considered as bar for lawful proceeding for imposing penalty.

4. We have heard the arguments and perused the relevant record. Taxation Officer has power to impose penalty in those cases in which the default in making payment of any tax is deliberate or otherwise on the part of an assessee but not because of a stay order granted by a competent authority, as such default is caused by operation of law which is protected under the principle that such passing of the stay order is material for suspending the demand and even its date of communication does not make it effective from that date. The learned AR further states that person in whose favour stay order operates could not be held to have failed to make payment and demand would not become final when matter was sub judice before Court which had stayed its recovery and that even the demand of department to levy or pay additional tax during period in which stay was in operation was without lawful authority and of no legal effect. It would not be out of place to mention principle that the stay order in effect provisionally suspends or makes demand non-existent. Without commenting upon the merit of the case we deem it appropriate to further grant stay for the recovery of tax demand. Propriety demands that department should not opt for coercive measures till the decision of the appeal. Hence we direct that not only the coercive measures for recovery of Tax Demands but also the proceedings like imposing penalty be also not initiated against the assessee till the time when stay order holds the field. Stay petition is accordingly granted for another 60 days or till the decision of main appeal whichever is earlier.

5. Resultantly the miscellaneous application stands accepted.

C.M.A./177/Tax(Trib.)Application accepted.