CH. ANWAAR-UL-HAQ (JUDICIAL MEMBER), J.---The titled appeals pertaining to tax years 2010 and 2011, have been preferred at the instance of Revenue calling in question the impugned consolidated order, dated 26-6-2012, passed by the learned CIR (Appeals), Multan. The appellant/department contested the order of the learned CIR (A) on the following grounds:--
(i) That the learned CIR(A) has deleted the penalty imposed under section 182(1) of the Income Tax Ordinance, 2001, on default of statutory provisions, without any justification.
(ii) That the learned CIR(A) has deleted the minimum amount of penalty imposed without any justification contrary to his own opinion in the instant order that Mere was no tax payable, hence the ACIR should have imposed minimum penalty at Rs,500 for Tax years 2008 to 2009"
2. None present on behalf of both the parties despite proper intimation of fixation of appeal on 2-5- 2014. Accordingly, the appeals of the department are disposed of ex parte on merits.
3. Briefly stated, the relevant facts in brief are that the taxpayer in this case is an individual, filed his return of income for tax years 2010 and 2011 in the following manner:-- Tax YearDate of e-filingLate by daysIncome declared 2010 5-4-2012 522 Rs,100,000 2011 5-4-2012 126 Rs .285,200 Since, the taxpayer filed the returns for both years beyond the statutory time limitation, the assessing authority issued show-cause notice to levy penalty under section 182 for late filing of the returns of income. The taxpayer responded to the show-cause but the explanation submitted was rejected by the assessing authority. Consequently, a penalty of Rs,5000 for late furnishing of return for each tax year was imposed under section 182(1) of the Income Tax Ordinance, 2001. Being aggrieved, the taxpayer went in appeal before the learned CIR(A) and contended that levy of penalty is illegal as there was no tax payable for both the years. The learned CIR(A) after relying on the decision of this tribunal reported as 2010 PTD (Trib.) 184 has deleted the penalty being unjustified as there was no tax payable in the tax years 2010 & 2011.
4. I have looked into the matter and after due consideration, I find that the assessing authority has levied minimum penalty of Rs,5000 under section 182(1) of the Income Tax Ordinance, 2001, in both the years under appeal as the taxpayer has failed to furnish the returns of income within the time prescribed under the law. Here, I deem it expedient to reproduce the relevant section 182(1) of the Income Tax Ordinance, 2001 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:-- S. No,Offences Penalties Section of The Ordinance to which offence has reference.
(1) (2) (3) (4)
1. Where any person fails to furnish a return of income or a statement as required under section 115 or wealth statement or wealth reconciliation statement or statement under section 165 within the due date.Such person shall114, 115, 116 and 165 pay a penalty equal to 0.1% of the tax payable for each day of default subject to a minimum penalty of five thousand rupees and a maximum penalty of 25% of the tax payable in respect of that tax year.
The language of the charging section 182(1) of the Income Tax Ordinance, 2001 is very clear. The penalty can be charged up to 0.1% of the tax payable or Rs,5,000 whichever is higher. However, section 182(1) specifically provides that penalty shall be imposed on the basis of the tax payable, whereas in the instant case before me no tax has become payable on deemed assessment completed for tax years 2010 and 2011. For imposing penalty for default under section 114 of the Ordinance, the pre-requisite is the "tax payable" by a taxpayer which is missing in the instant case, therefore, levy of penalty is illegal and unjustified. Furthermore, the law should not be used to penalize a taxpayer unless it can be shown that the default on the part of the taxpayer had resulted in any loss of revenue. In the present case, no such loss of revenue is evident.
5. The matter in hand has also been decided by this Tribunal in the case reported as 2010 PTD (Trib.)
184. The relevant portion of the said decision is reproduced here-under:-- Here importantly the penalty provisions are to be interpreted are to be interpreted strictly, where relevant provisions of section 182 (1) are clearly establishing the imposition of penalty is linked with the tax payable, then it has to be followed. The absence of tax payable is the fatal for it. So keeping in view the provisions of section 182(1) I do not have any hesitation in holding that penalty for default of section 114 only becomes leviable when there is a "tax payable" but in the instant case when no tax has been imposed on the Taxpayer, levy of penalty is not justified...
6. In view of the above, I am inclined to hold that the learned CIR(A) has rightly deleted the levy of penalty under section 182 for tax years 2010 and 2011 which action is hereby maintained.
7. Appeal of the department being filed without any merit or substance is hereby rejected.