This order decides upon the issues raised in the instant Reference Application as well as connected Reference Applications bearing PTR No. 252/2013, 253/2013 as well as 254/2013 as all Reference Applications arise out of the same impugned order and also raise common question of law and facts.
2. In this Reference Application alongwith connected Reference Applications, under Section 133 of the Income Tax Ordinance, 2001, following questions of law have been pressed and argued for our opinion:--
(i) Whether under the facts and in the circumstances of the case, the case law relied upon by the learned ATIR as M/s D.G. Cement Ltd. Vs. FOP reported as PTCL 2004 CL. 224 was squarely applicable in the instant case whereas the case law relates to, sales tax having different facts and circumstances, therefore, it cannot be applied to the instant case?
(ii) Whether under the facts and in the circumstances of the case, the learned ATIR was justified to rely upon the case law reported as 2002 PTD 629 (HC) whereas the assesses had composite business having exempt and taxable income?
3. Learned counsel for the applicant department when confronted to show the question of law arising out of the Appellate Tribunal order dated 29.05.2013, she has read the following paragraph- 06, which deals with charging of additional tax/default surcharge: '6. The appellant has also agitated the levy of additional tax/default surcharge in this case. In this regard, we find force in the contention of the learned AR that in non-profit organizations like REAP no individual gains or any monetary benefit by evasion or non-payment of taxes is involved. Thus ordinarily the mens rea or guilty intention cannot be attributed to such welfare organizations. The honourable Supreme Court of Pakistan has held in the case reported as PTCL 2004 CL. 224 in the matter of M/s D.C. Khan Cement Company Ltd. v. Federation of Pakistan that additional tax is payable only where non-payment of the tax was either willful or due to mala fide intention of evasion. It has also been held by the honourable High Court in the case reported as 2002 PTD 629 (H C.) In a case titled CIT, B-Zone, Lahore v. L.C.C.H.S., Lahore that where assesses has declared nil income in his return but after protracted litigation income is finally determined, additional tax cannot be levied. As stated earlier, it is not disputed that REAP has declared nil income for years 1999-2000 to 2002-2003 for the reason that receipts on various counts by REAP were considered by it to be exempt from levy of tax. In view of the aforesaid discussion, we are of the view that levy of default surcharge/additional tax is not tenable in this case.'
(Emphasis supplied)
4. Learned counsel for the applicant department is confronted how additional tax can be charged when no tax was payable for assessm ent year 1999-2000 and 2002-2003, In response, she submits that some activities of the respondent-taxpayer were taxable, therefore, tax was imposed which remained upheld to the Appellate Tribunal level. Adds that the additional tax was charged for the period in which this tax was liable to be paid but not otherwise. In response, learned counsel for the respondent submits that non-payment of tax has not denied the factual position, however, submits that non-payment of tax in relevant time was not intentional as the respondent-taxpayer bonafidely believed believed that the activities were not taxable, however, on later decision the tax was charged and paid, therefore, principles laid down in the case reported as "D.G. Khan Cement Company Ltd. and others v. Federation of Pakistan and others" [(PTCL 2004 CL. 224) (SCP)] were rightly applied by the Appellate Tribunal.
5. We agree with the findings rendered by the Appellate Tribunal for non-payment of tax at relevant time was not a malafide, therefore, principles laid down in DG Khan Cement case supra applies Question No. 4 is answered in affirmative i.e. against the applicant department.
6. Question No. 5 also deals with the findings in paragraph-6 ibid the Question No. 4 in this regard has already been answered, therefore, Question No. 5 is not required to be answered.
Disposed of accordingly.
7. Office shall send a copy of this order under seal of the Court to the Appellate Tribunal Inland Revenue as per Section 133(5) of the Income Tax Ordinance, 2001.