ORDER.
M. M. AKRAM, JUDICIAL MEMBER. The titled appeals have been filed by the appellant/taxpayer against the Order Nos.96 and 97/2014 dated 04.02.2014 passed by the learned Commissioner Inland Revenue (Appeals-II), Islamabad for the Tax Years 2011 and 2012 on the same grounds as set forth in the memo of appeals. The facts of the case are slightly different in both the appeals but the issue involved is same and identical therefore, both the appeals are being decided through this order.
2. Brief facts of the case are that these appeals have been filed against the order passed under section 182(1) of the Income Tax Ordinance, 2001 ("the Ordinance"). The Assessing Officer observed that the appellant did not e-filed its income tax returns for the years under consideration till 11.05.2012 and 03.02.2012 regarding which the appellant was confronted through show-cause notice which remained uncomplied with. Accordingly, penalties for the said default amounting to Rs.15,43,928/- and Rs.398,291/- for the tax years 2011 and 2012 respectively were imposed by the Assessing Officer. The appellant taxpayer being aggrieved, filed appeals before the learned CIR (A) who confirmed the impugned penalties orders for the Tax Years 2011 and 2012 vide Appeal Order Nos.96 and 97/2014 dated 04.02.2014. Felt aggrieved, the appellant has now come up before this Tribunal and has assailed the impugned orders on a number of grounds.
3. This case came up for hearing on 09.09.2020. Learned AR of the appellant reiterated the contentions already submitted in the grounds of appeals as set forth in the memo of appeal.
However, for the tax year. 2011, the learned AR submits that in terms of SRO No.550(I)/2012 dated 23.05.2012 the payment of tax was allowed to be paid by 31.05.2012 and incompliance of the said SRO, the appellant filed its return well within the such period. Thus, there is no delay in filing of return. For the tax year 2012, the learned AR of the appellant contends that the appellant applied for extension in time for filing the income tax return which was allowed up to 12.11.2012 by the competent authority vide letter C.No.107 dated 02.11.2012. The appellant again submitted an application for further extension in time before the competent authority. However, before rejection of the said application, the appellant filed its return for the tax year 2012 on 03.12.2012. Further argued that notwithstanding the aforesaid, the appellant before issuance of show-cause notice filed its returns along with admitted tax liability and as such there is no loss of revenue to the Government Exchequer. It has been stated that there is no willful default on the part of the appellant which is a condition precedent for levy of penalty. He therefore pleaded that the appeals be accepted. Learned DR opposed the appeals on the ground that learned Commissioner (Appeals) has passed a speaking order and there is no illegality or lacuna in his orders.
4. We have heard both the parties to the case and perused the available record. The submissions made by the learned AR of the appellant have substance. Through SRO No.550(0/2012 dated 23.05.2012 the Federal Government had allowed the Steel Melters to deposit the tax liability by 31.05.2012 who had opted to pay sales tax under the Sales Tax Special Procedure Rules, 2007 for the tax year 2011. By availing the aforesaid benefit, the appellant paid the tax liability and filed the return for the tax year 2011 on 11.05.2012 well within the aforesaid date i.e. 31.05.2012. It is pertinent to mention here `that without depositing the admitted tax liability, the appellant could not e-filed its return. Thus, according to the said SRO there is no delay in filing the return for the tax year 2011.
As far as the tax year 2012 is concerned, we have noticed that, the appellant admittedly paid the principle tax liability along with the tax return and there is no dispute regarding the tax liability. The penalty is imposed by the assessing officer only for late filing of the return. The case of the appellant for both the tax years is fully covered in the amnesty given by the Federal Government through SRO No.494(0/2013 dated 10-6-2013 and therefore, the appellant is entitled to get relief under the said notification by deleting the penalty imposed by the assessing officer. The said notification is reproduced hereunder:- "S.R.O. 494(1)12013, dated 10th June, 2013:- In exercise of the powers conferred by section 34A of the Sales Tax Act, 1990, subsection (4) of section 16 of the Federal Excise Act, 2005, section 202A of the Customs Act, 1969 (IV of 1969) and section 183 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to exempt the whole amount of default surcharge, penalty and other surcharge payable by a person against whom an amount of sales tax, federal excise duty, customs duty or income tax (including withholding tax) is outstanding on account of any audit observation, audit report, show cause notice, adjudication or assessment order, or who has failed to pay any amount of sales tax, federal excise duty, customs duty and income tax (including withholding tax) or claimed inadmissible input tax credit, adjustment, refund, drawback or rebate due to any reason, subject to the condition that the whole outstanding principal amount of sales tax, federal excise duo, customs duty or income tax (including withholding tax), as the case may be, is paid by the 30th June, 2013.
2. The benefit of this Notification shall not be available to cases of fraudulent refunds, drawback or any case involving tax or duty fraud or where prosecution proceedings have been initiated. -SD- (Mohammad Raza Baqir; Additional Secretary"
The question may arise that whether the appellant would be entitled to exemption from whole of amount of default surcharge and penalty under the above SRO as it had already paid the due tax before issuance of the said SRO? A similar question came before the Hon'ble Division Bench of Lahore High Court in the case titled as Sheikh Wahid-ud-Din Industries v. ACST (2006 PTD 336) wherein the question was decided by their Lordships in favour of the taxpayer. The relevant extract of the judgment is reproduced hereunder:-
5. After hearing the learned counsel for the parties we are not persuaded to agree that the amnesty S.R.O. No.575(I)/98 dated 12-6-1998 is not applicable to the case of the present appellant.
It needs to be noted that the amnesty contemplated in that S.R.O. as per paras 2 and 3 thereof was also available to cases of taxpayers pending in appeals. If the interpretation of that S.R.O. as made by the Revenue Authorities as well as the Tribunal is accepted then it is likely to create an anomalous situation. It is that whereas the persons who had already paid the amount due will be deprived of the amnesty while those who will pay that amount after the issuance of S.R.O.
575(1)/98 on 12-6-1998 will be spared of the additional tax and penalty. In other words a person who had already paid the due tax to the public exchequer will be burdened with additional tax and penalty while the one who does so after issuance of that notification and having withheld the amount of the tax due from him in the meanwhile will be rewarded by allowing exemption from penalty and levy of additional tax. This could never be the intention of any superior or subordinate legislation. A person placed in similar factual situation cannot be discriminated against merely for the reason that he has first to be a continuous defaulter on a particular date of grant of amnesty in order to avail the same. The appellant having paid the fixed tax before the issuance of the said S.R.O. but before the issuance of show-cause notice was clearly entitled to the benefit of the amnesty contemplated in the S.R.O. To hold otherwise would be negation of justice fair equal protection of law. (Emphasis supplied)
6. It needs to be brought home that the amnesty granting legislation both superior as well as subordinate needs to be construed liberally so that it does not either trap an unwary taxpayer or else otherwise succeeds in taking away with the other hand while giving it by the one. The petitioner having paid the fixed tax due from him is as much entitled to the amnesty contemplated in the said S.R.O. as any other registered person/ manufacturer who pays the fixed tax amount after issuance of the S. R. O. To hold otherwise would result in the situation as noted above."
A similar benefit was also given to the taxpayer in the case titled as Yousaf Sugar Mills Ltd. v.
Government of Pakistan and others (2008 PTD 1461). The Hon'ble Division Bench of the Islamabad High Court in the case titled as Premier Kadanwari Development Co. v. State Islamabad (2013 PTD 1037) by following the judgment of the Hon'ble Lahore High Court reported as 2006 PTD 336 has also deleted the penalty and default surcharge of the registered person. Therefore, keeping in view of the aforesaid, the issue raised in this appeals have already been decided by the Hon'ble High Courts, this Tribunal is bound to follow the judgments supra. In the circumstances, these appeals are accepted on the same terms as the law enunciated and articulated in the judgments cited supra. Consequently; the orders passed by the lower authorities are annulled.
5. The appeals are disposed of in the manner as indicated above. This order consists of (04) pages and each page bears my signature.