| Case ID |
26a1c19f-87d7-4378-aafa-f440bca8fd47 |
| Body |
View case body. Login to View |
| Case Number |
I.T.A. No.6303/LB of 1985-86 |
| Decision Date |
Jul 22, 1993 |
| Hearing Date |
|
| Decision |
The appeal filed by the assessee against the penalty imposed by the I.T.O. under section 110 of the Income Tax Ordinance, 1979, has been accepted by the Income Tax Appellate Tribunal. The Tribunal has decided to cancel the penalty, thereby modifying the orders of the lower officers. This decision reinforces the correct application of the relevant sections of the Income Tax Ordinance, ensuring that penalties are imposed appropriately under the designated sections. The Tribunal clarified that the penalty under section 110 was not applicable for default under section 65, and the conversion of the penalty from section 110 to section 108 by the C.I.T.(A) was not warranted by law. As a result, the penalty imposed by the I.T.O. has been canceled, aligning with the statutory provisions of the Income Tax Ordinance, 1979. |
| Summary |
In the case of I.T.A. No.6303/LB of 1985-86, cited as 1994 SLD 364 and 1994 PTD 560, the Income Tax Appellate Tribunal rendered a pivotal decision on July 22, 1993, under the Income Tax Ordinance, 1979. Presided over by Judicial Member Abrar Hussain Naqvi and Accountant Member Inam Ellahi Sheikh, this case addressed the intricacies of penalties imposed for non-compliance with tax notices. The petitioner, an individual assessee, contested a hefty penalty levied by the Income Tax Officer (I.T.O.) under section 110 for failing to respond to a notice under section 65 of the Ordinance for the assessment year 1976-77.
Initially, the I.T.O. had imposed a penalty of Rs.2,00,000 citing section 110, which pertains to penalties for non-compliance with notices issued under sections 58 or 61. However, upon appeal, the Commissioner of Income Tax (Appeals) [C.I.T.(A)] scrutinized the applicability of section 110 in this context. The C.I.T.(A) observed that section 110 was not applicable for defaults under section 65, which specifically relates to the failure to furnish returns. Consequently, the penalty was re-evaluated under section 108, leading to a revised penalty of Rs.10,000, calculated at Rs.100 per day for the default period.
The assessee further contested this reduction, highlighting discrepancies in the dates used to calculate the penalty and questioning the jurisdiction of the C.I.T.(A) to modify the penalty from section 110 to 108. The Tribunal meticulously analyzed the provisions under the Income Tax Ordinance, emphasizing the distinct nature and quantum of penalties under sections 110 and 108. It was clarified that section 110 penalties are based on the tax amount avoided, while section 108 penalties are flat fees for each day of default in furnishing the return.
Moreover, the Tribunal underscored that the C.I.T.(A) did not have the authority to convert the penalty from section 110 to section 108 as it constituted a fresh imposition not covered under the original appeal, which solely pertained to the penalty imposed under section 110. Given the clear statutory framework, and the I.T.O.'s original intention to impose under section 110, the Tribunal affirmed that the appropriate course of action was to cancel the unlawful penalty.
This landmark decision reinforces the necessity for tax authorities to adhere strictly to the statutory provisions when imposing penalties. It delineates the boundaries of jurisdiction between different sections of the Income Tax Ordinance, ensuring that penalties are not arbitrarily converted between sections without proper legal grounding. The ruling serves as a precedent for future cases involving penalties under overlapping sections, safeguarding taxpayers' rights against misapplication of tax laws.
In essence, the Tribunal's judgment in I.T.A. No.6303/LB of 1985-86 is a testament to the judicial system's commitment to upholding legal integrity within the tax framework. By annulling the improperly imposed penalty and affirming the correct application of the Income Tax Ordinance, 1979, it provides clear guidance to both tax authorities and taxpayers. This case underscores the importance of accurate interpretation and application of tax laws, ensuring fairness and justice in tax administration. As a result, the decision is not only significant for the parties involved but also contributes to the broader discourse on tax law compliance and enforcement in the jurisdiction. |
| Court |
Income Tax Appellate Tribunal
|
| Entities Involved |
Income Tax Appellate Tribunal,
I.T.O.,
C.I.T.(A)
|
| Judges |
ABRAR HUSSAIN NAQVI,
INAM ELLAHI SHEIKH
|
| Lawyers |
Not available
|
| Petitioners |
Not available
|
| Respondents |
I.T.O.,
C.I.T.(A)
|
| Citations |
1994 SLD 364,
1994 PTD 560
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Ordinance, 1979
|
| Sections |
61,
116,
65,
143,
108,
110,
139,
58,
51,
140,
141,
142,
143A,
144,
132(1)(b),
108(a),
132(1)
|