Creative Packages (Pvt.) Ltd., Lahore; a private limited company was imposed penalties under section 108(b) of the Late Income Tax Ordinance, 1979 for non-filing of the monthly statements under section 142 ibid read with Rule 61 of the Income Tax Rules, 1982 on the prescribed pro forma for the months of July, 1998 to March, 1999. The respondent-assessee thereupon filed an appeal before the Commissioner of Income Tax/Wealth Tax (Appeals), Lahore challenging the imposition of such penalties. The imposition of the penalties was deleted by the CIT(Appeals) on the following ground that:--
(i) The learned Appellate Tribunal in its decision reported as 1999 PTD (Trib.) 1661 had declared such penalties to be unimposable for the reason that Rules 53,61 and 61(a) had not been framed under sections 139, 141 and 142 of the Income Tax Ordinance, 1979;
(ii) The penalty orders were passed without allowing reasonable opportunity to the assessee; (i.e) The penalty orders were not based upon the facts of the case; and
(iv) The penalty orders were imposed through a pro foma order which was illegal.
2. The Revenue went in appeal. A Division Bench of the learned Income Tax Appellate Tribunal heard the appeal on 15-4-2003. The judgment for the D.B. Was authored by the learned Accountant Member, accepting the departmental appeal on the ground that the earlier decision of the learned Tribunal reported as 1999 PTD (Trib.) 1661 had been overruled by a learned Full Bench of the Tribunal in judgment reported as 1999 PTD 3456 thus vacating the order of the CIT (Appeals) deleting the penalties.
3. The learned Judicial Member disagreeing wrote his on order. On the legal plain, he followed the judgment of the learned Full Bench of the Tribunal and then proceeded to examine other questions involved like absence of show-cause notice to the assessee etc. By observing that:-- "In this Full Bench judgment decision, as has been pointed out in the earlier paras that the penalty imposed was cancelled being unsustainable in law as the order was passed without giving opportunity to explain the reason of delay in filing.
So after stating the overruled issues, now it would be essential to state the facts involved in this appeal before us. All the penalty orders are stereotype on a format, by simply filling in the blank columns pertaining to the name of assessee: NTN, the month for which the statement was to be filed, the amount of penalty and the approval letter number of the LAC. Such penalty orders under section 108(b) of the Income Tax Ordinance, 1979 have been passed ex parte on the presumption that defaults stand established, therefore, nothing is left except to impose penalty. The visible lacunas are that such orders have been passed without mentioning about the notice specifying date for filing of impugned statement, and secondly, the date of issuance of notice, calling upon the assessee to explain about the statedly default for not furnishing of statements on a prescribed pro forma under section 142 in respect of supplier/contractor, amounts of payments and tax deductions. It was only stated by the Assessing Officer that on the format prescribed the particulars were to be furnished on 15th of every month. The Assessing Officer has not mentioned as to how the assesseeCompany was liable to file the impugned statement and the manner of conveying this statutory requirement At90 assesseeCompany with the manners of its compliance.
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4. For all the above reasons, the learned Judicial Member upheld the deletion of the penalties by the CIT (Appeals) being void ab initio for the absence of reasonable opportunity of hearing and for being not in consonance with the facts of the case.
5. Owing to the difference of the opinion between the two learned Members of the Tribunal, the matter was referred to another learned Member of the Tribunal bn the question whether on the facts and the circumstances of the case, the penalty orders are sustainable in the eye of law or not. The learned Referee Member agreeing with the learned Judicial Member for the reasons recorded by him, proceeded to answer the above question in affirmative that on the facts and the circumstances of the case, penalty orders were not sustainable under the law. As a result, the appeal of the Revenue was dismissed and by a majority decision, the order of deletion of the penalties passed by the CIT (Appeals) was maintained.
6. Department's application seeking reference to this Court was also dismissed by the learned Tribunal through order, dated 11-6-2004. Hence the presence reference petition seeking opinion of this Court on the following sole question that:- "Whether under the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified to hold that the provision-of section 108(b) are not attracted in the event of non-compliance of Rule 61 of Income Tax Rules, 1982."
7. On considering the submissions made by the learned counsel for the Revenue, adequate to state that the above-referred question of law has already been adjudged upon and answered in negative by the Division Bench (of which one of us i.e. Muhammad Sair Ali, J. Was the Member) of this Court in the case of "Commissioner of Income Tax/Wealth Tax v. Messrs Asim Textile Mills (Pvt.)
Ltd., Faisalabad" (2003 PTD 2077) through judgment, dated 17-4-2003 and also through judgments, dated 28-10-2003 in PTR No.15 of 2003 and PTR No.16 of 2003. The judgment of the Full Bench of the Tribunal was also referred to with approval by this Court in the above judgments. The controversy thus stood settled and the question of law was answered that the penal provisions of section 108 of the Ordinance of 1979 applied in the cases of non-compliance with Rules 53, 61 and 61(a) of the Rules of 1982. And that the time limit prescribed through the Rules was valid legislation even if reference to a'section from the Income Tax Ordinance was absent therein. And the said Rules, by mere non-mentioning of a particular provision of the Ordinance of 1979 did not loose their efficacy and the legal effect.
8. The learned Tribunal through order, dated 11-6-2004 also dismissed departmental application for reference of the above question to this Court for being a matter decided and settled.
9. The Revenue thus filed the present Reference Application on 22-1-2004 seeking our decision on the above reproduced question. No other question of law was referred to. The learned Tribunal had in fact upheld the deletion of the penalties by the Commissioner of Income Tax C (Appeals) on the grounds of absence of opportunity of hearing to the assessee and non-consideration of the facts and record of the case by the Assessing Officer.
10. This Reference Application has been filed by the Department without even taking into account the fact that on the question referred for our opinion:--
(a) The Tribunal had followed the judgment (1999 PTD (Trib.) 3456) of its Full Bench, approving departmental interpretation of the law, wherefor, the department neither had a reason nor grievance to file the present application on the question as framed;
(b) This application was filed by the CIT on 22-11-2004 by when the proposed question had been settled by this Court in favour of the department through judgments, dated 17-4-2003 and 28-10- 2003 as above referred; and
(c) The Tribunal had maintained the order of CIT(A) deleting the penalties for absence of assessee's hearing etc. Against which no question of law was claimed in this petition.
11. In view of what has been discussed above, this reference application is dismissed for being unmaintainable. .