' MUHAMMAD JAWED ZAKARIA (JUDICIAL MEMBER).---By this single order, I propose to dispose the above titled appeals filed by the Appellant/department against the consolidated order Nos. 1068 and 1069 dated 09.10.2014 passed by CIR(A), Hyderabad. The department has agitated the grounds of appeal as put-forth in the memo of appeal:
2. Brief facts of the case as gleaned from impugned order that the appellant being a Withholding Agent as per provision of section 153(7) of the Income Tax Ordinance, 2001 and regularly been filling monthly statement manually instead of filling electronically. The Deputy Commissioner found that the taxpayer failed to file the monthly statement electronically, issued show-cause notices. In the other hand the A/R of the appellant filed an affidavit regarding non-receipts of show-cause notices. Moreover the perusal of impugned order shows that the show-cause notices were served through Courier Service. Further perusal of impugned orders reveal that the Deputy Commissioner imposed the penalties for the default of non-filing of statement under section 165 of the Income Tax Ordinance, 2001 electronically.
3. Being aggrieved and dissatisfied with the treatment meted out by the DCIR, taxpayer preferred appeal the learned CIR(A) who vide his impugned order deleted the amounts imposed by the DCIR.
4. Feeling aggrieved and dissatisfied with the impugned order of the learned CIR(A) now the department has come up in appeal before this Tribunal.
5. This court issued notice to the parties, in response thereto, Mr. Muhammad Irtaza appeared on behalf of the Appellant as D.R. While Mr. A.S. Jaferi, Advocate appeared on behalf of the taxpayer.
6. At the very outset, learned D.R. Has argued that the order of the learned Commissioner Inland Revenue (Appeals), Hyderabad is bad in law and against the facts of the case. Learned DR, narrated that the learned Commissioner Inland Revenue (Appeals), Hyderabad was not justified to hold that the appellant had filed monthly statements manually as no such evidence was furnished during the proceedings conducted by the DCIR. Learned DR, further argued that the Commissioner Inland Revenue (Appeals) Hyderabad was not justified to delete penalty on the ground that appellant furnished statement under section 165 of the Income Tax Ordinance, 2001 manually in accordance with the law. Learned D.R further pleaded that the as per subsection (5) of section 165 read with Rule 73(2D) of Income Tax Rules, 2002, electronic filing of statements is mandatory for Association of persons since first day of July 2009 and onwards. Finally, he has prayed that the impugned order passed by the learned CIR(A) may be vacated.
7. On the other hand, learned counsel for the taxpayer strongly opposed the contentions made by the learned DR. He has supported the order passed by the learned CIR(A). Learned counsel for the taxpayer has argued that OIR has erred in charging penalty Rs,35,000/- (Rs,5000/-X 7) on account of alleged default of filing monthly statements for the month of July 2012 of January 2013 without allowing adequate opportunity of hearing to the taxpayer. Learned counsel for the taxpayer further pleaded that the taxpayer has filed monthly statements for the month of July, 2012 to January, 2013.
That filing statement electronically is not mandatory as envisaged under section 165(2) of the Income Tax Ordinance, 2001. He has further argued that the taxpayer furnished statement under section 165 of the Income Tax Ordinance, 2001 manually in accordance with law. Learned counsel for the taxpayer stated that he had already filed an affidavit in this regard. Lastly, he has prayed that the instant appeal filed by the revenue be dismissed henceforth.
8. Both the learned representatives appearing at the bar have been heard and carefully examined the available case record. It is observed that the learned CIR(A) has rightly deleted the penalty order passed by the DCIR. I have further noted that the taxpayer being a withholding agent as per provision of Section 153(7) of the Income Tax Ordinance, 2001 and regularly been filing monthly statement manually instead of filing electronically. Further taxpayer filed an affidavit of non- receipts of show-cause notice. I have further been pointed out that the taxpayer furnished statement under section 165 of the Income Tax Ordinance, 2001 manually in accordance with law.
In view of the above discussion, the order passed by the learned CIR(A) is legal and within lawful authority. Hence, the plea of the learned D.R. Of the respondent is discarded. The appeal fails on this count. In the light of foregoing discussion the impugned order passed by the learned CIR(A) is hereby maintained.
9. Before parting with this judgment we may add that Section 165 or Section 182 is not charging section and machinery provisions could not be used as substitute of charging provision of tax levy.
These provisions are also not a revenue generating provision, department in all most cases abusedly invoke penal provisions for enhancing revenue. This clearly not intention of the legislature, being withholding agent taxpayer is performing duties as a servant of the Govt., without any salary and without any benefits. He has been working on behalf of the Govt. And for the Govt.
Without passing civil service examination and instead of getting any advantage there-from he has saddled that penalty, this really highhandedness of the department which ought to be looked into the matter and not to treat these penal provisions as a revenue generating or resource mobilization provisions and these ought not to be pressed into service. In view of the above facts and circumstances of the case and these should be invoked very consciously and honestly. It is incorrect impression of revenue officer 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. The concerned OIR is directed to be judicious in imposition of penalty. In penalty proceedings authorities must act fairly, judiciously and honestly.
10. Resultantly, both the appeals filed at the instance of revenue are hereby dismissed accordingly.