M/s Nissan Rawalpindi Motors, G.T. Road, Sowan Camp, Rawalpindi | Applicant | |
Vs | ||
Commissioner Inland Revenue, RTO, Rawalpindi | Respondent | |
Appellant By | Mr. Nasir M. Malik, Advocate | |
Respondent By | Mr. Zaheer Qureshi, DR | |
Date of Hearing | 20.06.2019 | |
Date of Order | 20.06.2019 |
M. M. AKRAM (Judicial Member): The above titled appeals have been filed by the appellant/taxpayer
against the Order Nos.61 & 62/2017 dated 21.07.2017 passed by the learned
Commissioner Inland Revenue (Appeals-III), RTO, Rawalpindi for the Tax Years 2016
& 2017 on the same grounds as set forth in the memo of appeals.
2. Brief facts of the case are that the appellant/taxpayer being
a prescribed person under the law was required to file the withholding
statement under section 165 of the Income Tax Ordinance, 2001 (“the Ordinance”)
which it allegedly failed to do for the period July, 2015 to June, 2016 &
Period July, 2016 to November, 2016 for the Tax Year 2016 & 2017
respectively. Accordingly, show cause notices were issued to the appellant for the
imposition of penalties under section 182 of the Ordinance. In response to the
notices, the appellant submitted its reply which was not found satisfactory. In
consequence thereof, the Assessing Officer passed orders in both the years i.e.
2016 & 2017 dated 02-05-2017 whereby penalty @ Rs.10,000/- per month
totaling at Rs.120,000/- for the Tax Year 2016 & penalty @ Rs.10,000/- per
month totaling at Rs.50,000/- for the Tax Year 2017 have been imposed for
alleged non-filing of statements u/s 165 of the Ordinance. The taxpayer being
aggrieved, filed appeals before the learned CIR (A) who confirmed the impugned
penalties orders for the Tax Years 2016 & 2017 vide Appeal Order Nos.61
& 62/2017 both same dated 21.07.2017. Being aggrieved, the appellant has
now come up before this Tribunal and has assailed the impugned orders on a number
of grounds.
3. This case came up for hearing on 20-06-2019. Learned AR
reiterated the contentions already submitted in the grounds of appeals as set
forth in the memo of appeal. Learned DR opposed the appeals on the ground that
learned Commissioner (Appeals) has passed speaking orders and there is no
illegality or lacuna in his orders.
4. We have heard both the parties to the
case and perused the record-keeping in view of the judgments relied upon by the
appellant. The submissions made by the learned AR of the appellant have
substance. It is an admitted fact that the appellant filed the nil statements
for the periods under consideration but all the statements were filed after the
due date and hence, no loss of revenue was incurred to the Government
Exchequer. It is also an admitted fact that the appellant submitted its reply
in response to the show-cause notices and the assessing officer without
rebutting the stance of the appellant and giving an iota of reason imposed the
penalty in a slipshod manner. It is now well-settled law that imposition of
penalty is a deterrent to tax evasion and when there is no evasion of tax, the penalty
cannot be imposed. This Tribunal in numerous cases has deleted the penalty in
such like circumstances, reliance may be placed on the judgments reported as 2016 SLD 1193, 2017 PTD 770, and 2017 PTD
1080. In the case of M/s Resilience Expert (Pvt) Ltd. Vs
Commissioner Inland Revenue, Range-B, WHT, RTO, Karachi (2017 PTD 1080)
this Tribunal has held that:-
“7. Before parting with
this judgment, I may observe that it is an incorrect impression of the revenue
department that the penalty has to be universally imposed, without any
exception whatsoever, if there is a default. This is not the correct interpretation.
The major prerequisite for imposition of penalty has always been a default
committed “commits any offence” the onus to prove lies on the department. All
Officer Inland Revenue is directed to be judicious in the imposition of
penalty. In penalty proceedings, authorities must act fairly and honestly.
Section 182 of Income Tax Ordinance, 2001 by no means is charging provisions
and the legislature's intention was not to generate tax or revenue income and
the purpose and intention of the penal provisions is not the source of
resources mobilization. It was the only mode of ensuring collection of taxes
and compliance thereof. The revenue department cannot be allowed to use
provisions to section 182 as a substitute of normal assessment or a new source
of revenue/tax originating provisions.”
Further,
we have noticed that neither in the show cause notice nor in the penalty order,
it has been alleged or established by the Assessing Officer that the appellant
has willfully and deliberately did not comply with the provisions of section
165 of the Ordinance. For the purposes of levy of penalty, an exercise has to
be carried out by the department wherein they have to determine whether or not
the non-filing was deliberate and whether it was done with mala fide intent.
For the purpose of levy of penalty mens-rea is an essential ingredient, which has to be established in terms of
the judgment of the August Supreme Court of Pakistan rendered in a case cited
at "D.G.
Khan Cement Company Ltd and others v. Federation of Pakistan and others” (2004
SCMR 456). The Apex Court in numerous cases has observed that there are
various ingredients to invoke penal provisions which are:-
a.
Penalty proceedings being criminal or
quasi-criminal, the establishment of mens-rea is an essential ingredient, and
as such the statutory obligation is on the revenue to prove that the assessee
has acted deliberately in defiance of law or was guilty of conduct contumacious
or dishonest or acted in conscious disregard of his obligation.
b.
In the case reported as PLD 1967 SC 1it was held that “even
in the case of statutory offence the presumption is that mens-rea is an
essential ingredient.”
c. In the case reported as PLD 1991 SC 963, it was held that where it could be demonstrated that the assessee did not willfully evade the sales tax it would perhaps be permissible to spare him of the penalty.
7. The provisions of section 182 of the Income Tax Ordinance, 2001
relevant to the penalty imposed in the instant appeal read as under:
“182. Offences and penalties:- (1) Any
person who commits any offence specified in column (2) of the Table below
shall, in addition to and not in derogation of any punishment to which he may
be liable under this Ordinance or any other law, be liable to the penalty mentioned against that offence in
column (3) thereof: -
TABLE
|
S.No |
Offences |
Penalties |
Section of the Ordinance to which offence has
reference. |
|
(1) |
(2) |
(3) |
(4) |
|
IA |
Where any person fails
to furnish a statement as required under section 115, 165, or 165A or 165B
within the due date. |
Such person shall pay
a penalty of Rs.5000 if the person has already paid the tax collected or
withheld by him within the due date for payment and the statement is filed
within ninety days from the due date for filing the statement and, in all
other cases, a penalty of Rs.25000 for each day of default from the due date
subject to minimum penalty of Rs.10,000. |
115, 165, 165A and
165B |
The above provisions would clearly indicate that in case of
failure of a taxpayer to furnish a statement as required under section 115,
165, or 165A or 165B within the due date, he shall also be liable to pay
penalty. The liability is not automatic would be determined by the Assessing
Officer as to whether or not there was any reasonable ground for default in
filing the statements which could be considered to be willful and deliberate.
In the case titled Shamroz Khan and another v. Muhammad Amin and others (PLD
1978 SC 89), it was held that the expression "he shall be liable to have
his defense if any, struck off" used in Order XII, Rule 8, C.P.C.,
would mean that the Court might strike off defense in an appropriate case and
it was not incumbent upon the Court to strike off the defense on failure to
supply address. In Haji Abdul Razzak v. Pakistan through Secretary, Ministry of
Finance, Islamabad and another (PLD 1974 SC 5) by section 168 of
the Sea Customs Act No. VIII of 1878, it was provided that conveyance used in the
removal of contrabands would be liable to be confiscated. It was held that the
provision still gave discretion to the authorities to confiscate the conveyance
and that discretion had to be exercised on sound judicial principles. In Muhammad
Musa v. Settlement and Rehabilitation Commissioner and 2 others (1974
SCMR 352), the expression "shall be liable to cancellation"
was examined. It was held that expression envisaged application of mind by
appropriate authority and that failure of auction-purchaser to pay price or
installment did not operate an automatic cancellation of the auction sale. In
the case of D.G. Khan Cement Factory (supra), it was observed by reference to
section 34 of the Act that each and every case had to be decided on its merits
as to whether the evasion or non-payment of tax was willful or mala fide, the decision
of which would depend upon the question of recovery of additional tax. In the
instant case, there is no material available on record that the non-filing of
statements was mala fide or willful act or omission on the part of the
appellant.
8. Following the ratio decided in the judgments supra, the appeals
of the appellant are accepted and the penalties imposed on account of
non-filing of statements are hereby deleted.
9. The appeals are disposed of in the manner indicated above. This order consists of (04) pages and each page bears my signature.
|
Sd/- |
Sd/- (M.M. AKRAM) JUDICIAL MEMBER |
|
(DR. MUHAMMAD NAEEM) ACCOUNTANT
MEMBER |
|
CERTIFICATE U/S 5 OF THE LAW REPORT ACT
This case is fit for reporting as it settles the principles highlighted above.
No comments:
Post a Comment