The appellant-assessee, is engaged in the manufacturing of corrugated boxes, used in the packing. For the assessm ent year 1993-94, its claim of exemption from the levy of tax with reference to Clause (118-E), Part-I of Second Schedule of the Income Tax Ordinance, was accepted, but during the proceedings it was noted by the Assessing Officer that the appellant-company has purchased some machinery worth Rs.38,000, which was not reflected in the statement of accounts for the period ending on 30-6-1993. Resultantly, while exercising his powers under section 62 of the Ordinance, the ' Assessing Officer added Rs.38,000 as a deemed income, by resorting to the provisions contained in section 13(1)(c) of the Ordinance. Following by a notice under section 116 of the Ordinance for the concealment of the true particulars of total income, served upon the assessee. The assessee submitted its reply, which is reproduced as under:- "We had admitted in our two earlier letters, dated 13-10-1996 and 5-3-1996 that the machinery of worth Rs.38,000 could not be accounted for in the books of accounts. This was a negligence on the part of the accountant. There was no intention to conceal the true particulars of the income/assets as the assessee had himself provided the purchase vouchers in respect of the said machinery. Had there any intention to conceal the particulars, the company could not have filed the purchase vouchers of the machinery."
2. The Assessing Officer, finding it to be a case of concealment, by providing inaccurate particulars, imposed upon the assessee a penalty at the rate of 200%, which order was unsuccessfully challenged by the assessee before the CIT (Appeal),and thereafter, second appeal was brought before the ITAT which after considering the facts and circumstances of the case, has reduced the amount of penalty to the tune of Rs.500, finding it to be in excess and not matching to the default of the assessee. Hence this appeal under section 136 of the Income Tax Ordinance, in which, the following questions have been raised:--
(i) Whether on the facts and in the circumstances of the case, the Tribunal was right to hold that the penalty was not open to the exception?
Whether after holding that the omission to account for the assets in the Balance Sheet was not deliberate or mala fide. The Tribunal was justified to levy a Token Penalty?
3. It has been argued by the learned counsel for the appellant-assessee, that once the Tribunal finding in paragraph No.9 of its order that the assessee is an honest person and that the mistake was bona fide; even the penalty of Rs.500 should not have been imposed upon the assessee. .
4. Heard. Section 111 of the Income Tax Ordinance, 1979 has vested the Assessing Officer with the discretion to impose a penalty upon such person, who is guilty of concealment of his income or has furnished the inaccurate particulars. Obviously, from the facts and circumstances, it is clear that non-disclosure of the purchase of machinery was an inaccuracy of the particulars provided by the assessee-Company.
Therefore, if in exercise of the discretion, the officer has imposed the penalty, which order was maintained by the CIT(Appeal) also, but the Tribunal has taken a lenient view and has interpreted that the omission was a bona fide mistake, yet it does not mean that the action initiated under the above section, was illegal and the penalty could not have been imposed at all. Likewise, the Tribunal if has reduced the penalty in view of the particular facts and circumstances, it cannot be maintained that the penalty should have been essentially waived altogether.
In the light of above, we hold that the imposition of the penalty by the Assessing Officer and as maintained by the CIT(Appeal), was justified and legally tenable, however, the Tribunal has taken a lenient view in reducing the amount. The above questions are accordingly answered.