APPELLATE TRIBUNAL INLAND REVENUE, BENCH-I, ISLAMABAD
ITA No.782/IB/2018
(Tax Year 2017)
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M/S Shazeb Pharmaceuticals Ind. (Pvt) Ltd. Srai Gadai Hazara Trunk Road, Haripur | Appellant | |
Vs | ||
The Commissioner Inland Revenue, RTO, Abbottabad | Respondent | |
Appellant by | Mr. Muhammad Atif Raza, FCA | |
Respondent by | Mr. Muhammad Khan, DR | |
Date of hearing | 13.05.2019 | |
Date of order | 13.05.2019 |
O R D E R
M. M. AKRAM (Judicial Member): The above titled appeal has been filed by the taxpayer against the Appeal Order No.847 dated 28.03.2018 passed by the learned Commissioner Inland Revenue (Appeals), Peshawar for the Tax Year 2017 on the grounds as set forth in the memo of appeal.
2. Brief facts of the case are that the taxpayer is a private limited company and derives income from manufacturing and sales of pharmaceutical products. The penalty order was finalized by the learned DCIR vide C.No.2319 dated 07.02.2018 u/s 182 (1A) of the Income Tax Ordinance, 2001 (“the Ordinance”) whereby penalty @ Rs.2,500/- per day for 160 days totaling at Rs.400,000/- has been imposed for alleged non-filing of statement u/s 165 of the Ordinance. The taxpayer being aggrieved, filed appeal before the learned CIR (A) who confirmed the impugned penalty order vide Appeal Order No.847 dated 28.03.2018. Being aggrieved, the appellant has now come up before this forum and has assailed the impugned order on number of grounds.
3. This case came up for hearing on 13.05.2019. Learned AR reiterated the contentions already submitted in the grounds of appeal as set forth in the memo of appeal. Learned DR opposed the appeal on the ground that learned Commissioner (Appeals) has passed a speaking order and there is no illegality or lacuna in his order.
4. We have heard both the parties to the case and perused the record keeping in view the judgments relied upon by the appellant. The submissions made by the learned AR of the taxpayer have substance. The filing of annual statement u/s 149 of the Income Tax Ordinance, 2001 is just a procedural process and non-filing of return like statements has not resulted in any loss to the Government Exchequer. Further it is settled law that imposition of penalty is deterrent to tax evasion and when there is no evasion of tax, penalty cannot be imposed. This Appellate Tribunal Inland Revenue in numerous cases has deleted the penalty in such like circumstances, reliance may be placed on the judgment 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 incorrect impression of revenue department that the penalty has to be universally imposed, without any exception whatsoever, if there is a default. This is not correct interpretation. The major prerequisite for imposition of penalty has always been a default committed “commits any offence” the onus to prove lies on department. All Officer Inland Revenue is directed to be judicious in 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 intention was not to generate tax or revenue income and the purpose and intention of the penal provisions, is not the source of resources mobilisation. It was only mode of ensuring collection of taxes and compliance thereof. The revenue department cannot be allowed to use provisions to section 182 as substitute of normal assessment or 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 mensrea 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),
6. Following the ratio decided in the judgments supra, the appeal of the appellant is accepted and the penalty imposed on account of non-filing of statements is deleted.
7. The appeal is disposed of in the manner as indicated above. This order consists of (03) pages and each page bears my signature.
Sd/- (M.M. AKRAM) JUDICIAL MEMBER | |
Sd/- (NADIR MUMTAZ WARRAICH) ACCOUNTANT MEMBER |
CERTIFICATE U/S 5 OF THE LAW REPORT ACT
This case is fit for reporting as it settles the principles highlighted above.
Sd/-
(M. M. AKRAM)
JUDICIAL MEMBER
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