APPELLATE TRIBUNAL INLAND REVENUE, BENCH-I,
ISLAMABAD
ITA
No.1787/IB/2017
(Tax Year
2013)
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Mr.
Saad Ullah; Branch Manager HBL, Jhawarian, Tehsil Shahpur, District Sargodha. |
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Appellant |
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Vs |
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The
Commissioner Inland Revenue, Zone-I, RTO, Sargodha. |
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Respondent |
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Appellant
by |
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Sardar
Abdul Wahab, Advocate |
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Respondent
by |
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Mr.
Zaheer Ahmed Quershi, DR |
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Date
of hearing |
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17.02.2021 |
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Date
of order |
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17.02.2021 |
O R D E R
M. M. AKRAM (Judicial Member): The above-titled appeal has been filed
by the appellant taxpayer against the Order No.0734 dated 06.10.2017 passed by
the learned Commissioner Inland Revenue (Appeals), Sargodha for the Tax Year
2013 on the grounds as set forth in the memo of appeal.
2. Brief facts of the case are that the appellant
taxpayer is a Branch Manager at Habib Bank Limited (HBL), Jhawarian, Tehsil
Shahpur, District Sargodha. An amount of Rs.1,770,000/- was outstanding against
the tax defaulter namely Mr. Shahzad Ahmed Khan Maken having CNIC:
38404-0948915-5. The Assessing Officer served a
notice dated 28.04.2017, purporting to be issued under section 140 of the
Income Tax Ordinance, 2001 upon the Branch Manager, HBL, Jhawarian, informing
the Bank that a sum of Rs.1,770,000/- was due from the aforesaid tax defaulter
and that any money held by it, or which may be so held in future, to the credit
of the defaulter in his Bank account, should be paid over to the Assessing
Officer to the extent of that liability but the appellant failed to do so.
Therefore, a show cause notice dated 10.05.2017 under section 182(1) of the
Ordinance was issued to the appellant in his personal capacity for the imposition
of penalties under serial Nos.10, 13, and 14 of sub-section (1) of section 182
total amounting to Rs.1,848,100/- for non-compliance of notice under section
140 ibid. In response, the appellant
vides his letter dated 12.05.2017 informing that an amount of Rs.8,238.83/- was
available in the account of the tax defaulter but it cannot be remitted without
providing a copy of the order of permission granted by the concerned
Commissioner Inland Revenue for serving notice under section 140 of the
Ordinance which is essentially required for the purpose of Bank record. The
explanation tendered by the appellant was found unsatisfactory therefore,
another opportunity was provided to him by the Assessing Officer vide letter
dated 16.05.2017 for compliance on 19.05.2017.
On the due date i.e 19.05.2017, the appellant submitted a banker cheque
for Rs.8,238,83/- in favour of the Assessing Officer. In spite of this fact,
the Assessing Officer imposed the penalties under the foregoing serial Nos. of
sub-section (1) of section 182 amounting to Rs.1,848,100/- vide order dated
19.05.2017. The appellant taxpayer being aggrieved filed an appeal before the
learned CIR (A) who vide order dated 06.10.2017 disposed of the appeal of the
appellant. Still feeling aggrieved, the appellant has now come up before this Tribunal
and has assailed the impugned order on a number of grounds.
3. This case came up for hearing on 17.02.2021.
Learned AR reiterated the contentions already submitted in the grounds of
appeal as set forth in the memo of appeal. Further contends
that the appellant finally complied with the notice issued by the Assessing
Officer by issuing a cheque of Rs.8,238.83/- in his favour. Therefore, the
proceedings under the provisions of section 182 of the Ordinance could not
be invoked by the Assessing Officer in the instant case for the purpose of
imposition of penalties. Learned
DR opposed the appeal on the ground that the 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. The submissions
made on behalf of the appellant have substance. We are of the view that the
Assessing Officer acted in excess of his jurisdiction contemplated in section
140 of the Ordinance. The first reason for holding so
is that a perusal of the record shows that the appellant informed the Assessing
Officer vide his letter dated 12th May 2017, that the account of the
tax defaulter showed a credit balance of Rs.8,238.83/- and that this amount had
been set apart by him subject to providing the copy of permission order granted
by the concerned Commissioner Inland Revenue for serving the notice under
section 140 ibid as required under Bank Ordinance and further instructions from
the Assessing Officer. On 19.05.2017 admittedly, the Bank issued a cheque of
Rs.8,238.83/- in favour of the Assessing Officer pursuant to his notice. Under
these circumstances, imposition of penalties through an order dated 19.05.2017
is unsustainable in law and uncalled for.
5. It
may also be noted that the mode prescribed by
section 140 of the Ordinance for recovering arrears of tax has vested in the Commissioner
Inland Revenue a special jurisdiction. It is a jurisdiction which extends
beyond that ordinarily enjoyed by the Commissioner in the matter of recovering
arrears of tax. It is a jurisdiction directed against a person who is not the
taxpayer, but who has been selected by the statute because money is due or may
become due from him to the tax defaulter or he holds money or may subsequently
hold money for or on account of the taxpayer/defaulter. The jurisdiction
extends not merely to require such person to pay the amount of the arrears to
the Commissioner, but further to treat him as an assessee in default under
sub-section (5) of section 140 ibid where he does not pay. It is a serious
matter for a person to be exposed to such a proceeding, where the only reason
is that he is or may become a debtor of the tax defaulter or holds or may hold
money for or on account of him. In our opinion, the powers conferred upon the Commissioner
Inland Revenue by section 140 are intended to be exercised with the greatest
caution and should be construed strictly. In the instant case, the proceedings
were initiated under section 140 of the Ordinance against the Branch Manager of
HBL, Jhawarian and the notice was issued in his personal capacity to him rather
than the Bank that is holding the money on behalf of the tax defaulter. It
was open to the Assessing Officer to recover the tax due by serving a notice
upon the Bank, which was a debtor to the tax defaulter, to pay over the money
which it held in the tax defaulter’s account. It
is well settled that the relationship between a banker and his customer in this
country is that of a debtor and his creditor where the banker holds the fund of
the customer under a saving/current account or fixed deposit. Therefore, under
the law, if the Bank commits a default then it would be entitled to treat as an
assessee in default under sub-section (5) of section 140 of the Ordinance.
6. We have also observed that the Assessing
Officer imposed penalties under Serial Nos. 10, 13, and 14 of sub-section (1)
of section 182 of the Ordinance which does not apply in the instant case. The
order passed by the Officer is considered in the nature of misuse of powers.
The offences mentioned against above mentioned serial Nos. read as under:
“10. Any person who-
a)
makes
a false or misleading statement to an Inland Revenue Authority either in
writing or orally or electronically including a statement in an application,
certificate, declaration, notification, return, objection, or other document
including books of accounts made, prepared, given, filed or furnished under
this Ordinance;
b)
furnishes
or files a false or mis-leading information or document or
statement to an Income Tax Authority either in writing or orally or
electronically;
c)
omits
from a statement made or information furnished to an Income Tax Authority any
matter or thing without which the statement or the information is false or
misleading in a material particular.
13. Any
person who obstructs any income tax authority in the performance of the
official duties.
14.
Any person who contravenes any of the provisions of this Ordinance for which no
penalty has, specifically, been provided in this section.”
7. We observe that none of the penalties
mentioned in the above para apply in the instant case. In having applied the
penalty provisions, the Assessing Officer has demonstrated a complete absence
of understanding of the law of penalty under the Ordinance. The learned
Commissioner of Appeals has equally shown an inability to check a blatant
misuse of powers by the Unit Officer. In view of the foregoing, we deem it
appropriate to send a copy of this order to the Chairman, FBR, and Member
(Operation), FBR to take notice of the misuse of powers by the concerned
Officer.
8. For what has been discussed above, the appeal of the appellant
is accepted and both the orders passed by the lower authorities are annulled.
9. This order consists
of (05) pages and each page bears my signature.
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-SD- (M. M. AKRAM) JUDICIAL MEMBER |
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-SD- (IMTIAZ
AHMED) ACCOUNTANT MEMBER |
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