AJMAL MIAN J.-This is a petition, in which the petitioner has impugned the levy of the additional surcharge for the assessm ent years 1968-69, 1969-70 and 1970-71, namely, Rs. 10,417, Rs. 3,168 and Rs. 15,836 respectively. The relevant facts leading to the filing of the petition are that under section 3-A of the Income-tax Act (hereinafter referred to as the Act), the petitioners were required to purchase bonds in respect of refundable surcharge for the above years within the specified period.
It seems that the petitioners instead of purchasing the bonds within the specified period purchased the same on 5-10-1973 for the same required, namely, Rs. 25,000, Rs. 9,900 and Rs. 61 700 for the above three years' respectively. It further seems that respondent No. 1 on the ground of the above delay levied the above sums under section 45-A of the Act. The petitioners protested against the above levy through a letter to the Assistant Inspecting Commissioner but they were allegedly orally told that the levy was legal and, therefore, they filed the present petition.
2. (a) In support of the above petition, Mr. A.I Athar, learned counsel for the petitioners has contended that section 45-A of the Act provides the levy of penalty, which was not made expressly applicable under section 3-A of the Act in respect of the refundable charge in question and, therefore, respondent No. 1 had no right to levy the above additional amounts on the ground of failure of the petitioners to purchase the bonds within the specified period.
(b) On the other hand, Mr. Nasrullah Awan, learned counsel for the petitioners has contended as follows :-
(i) That since the petitioners had filed an appeal against the above additional levies with the Inspecting Assistant Commissioner, the petitioners should have waited for the decision and, hence the petition is not competent.
(ii) That since under subsection (2) of section 3-A of the Act, the provi--sions relating to charge, assessm ent, collection and recovery of the Income-tax under the Act has been made applicable to the refundable surcharge in question, respondent No. 1 could invoke section 45-A of the Act.
3. It may be. Advantageous to deal with the above first contention of Mr. Nasrullah Awan, namely, that the petitioners having filed as appeal before the Assistant Inspecting Commissioner could not have filed this petition without waiting for the decision. In this regard, it may be pertinent to refer to subsection (2) of section 3-A of the Act, which reads as follows :- "Section 3-A (2).--All the provisions of this Act relating to the charge, assessment, collection and recovery of income-tax except those contained in section 3, section 18, section 18-A, section 30, section 33, section 33-A, section 66 and section 66-A shall apply, so far as tray be, to the charge, assessm ent, collection and recovery of refundable surcharge."
It may be noticed that all the provisions of the Act relating to the charge, assessment, collection and recovery of income-tax except those contained in sections 3, 18, 18-A, 30, 33, 33-A E6 and 66-A have been made applicable for enforcing the recovery of non-refundable surcharge in question. In other words, the provisions relating to the right of filing of appeal before the Income-tax Appellate Commissioner or the Income-tax Appellate Tribunal or revision before Commissioner or reference to the High Court contained in above sections 30, 33, 33-A, 66 and 66-A were expressly exclude from the application. In this view of the matter, the petitioners undo law had no right to file an appeal before the Assistant Inspecting Commissioner. The mere fact that the petitioners had approached the Assistant Inspecting Commissioner under some misapprehension of law would not confer jurisdiction upon the Assistant Inspecting Commissioner to bear an appeal if the right to file an appeal has been expressly taken away under above-- quoted subsection (2) of section 3-A.
It was also contended by Mr. Nasrullah Awan that in any case the Assistant Inspecting Commissioner being a superior Officer to the Income---tax Officer could pass an administrative order and, therefore, the petitioners should have waited for such an administrative order. In our view the Assistant Inspecting Commissioner has no right to modify an order passed by an Income- tax Officer under the provisions of the Act without having the right to hear an appeal against such an order since the right of appeal has been expressly taken away by section 3-A (2), it will not be in consonance with law to hold that in spite of this express exclusion, the Assistant Inspecting commissioner retained the power to hear an appeal on administrative side. For the aforesaid reason the above contention of Mr. Awan has no merit.
4. (a) As regards the merits of the case, it may be pertinent to observe that section 3-A of the Act provides levy of refundable surcharge which cannot be equated with a levy of income-tax. An income-tax amount legally charged, is not refundable, whereas refundable surcharge provided under section 3-A was refundable after the expiry of the bond period. The very fact that Section 3-A itself describes this levy as a refundable surcharge indicates that the levy in this section is different from a levy of Income-tax. It may again be noticed that under above-quoted subsection (2) of section 3-A, all the provisions of the Act relating to charge, assessment, collection and recovery income-tax except the provisions mentioned therein were made applicable. It has been contended by Mr. A.I Athar that the fact that procedure for the recovery of this refundable surcharge is the same, which is applicable for the recovery of an income-tax amount would not entitle respondent No. 1 to levy additional tax for delayed purchase of the bond, On the other hand, has been urged by Mr. Nasrullah Away. That the effect of subsection (2) of section 3-A is to mate section 45-A applicable to the recovery of refundable Surcharge.
(b) Mr. A.I Athar has referred to the case of Commissioner of Income-tax, Lahore v. Azizuddin ((1976) 33 Taxation 258) and the case of Commissioner of Income-tax, Rawal--pindi v. Mst.
Mohmooda Sultana, Lyallpur (1978 PTD 131). In the above case (1) the facts were that under the Martial Law Regulations Nos. 43/48, income-tax was payable for the hidden concealed income. The Central Board of Revenue by its circular dated 5th September, 1979 issued a directive to the effect that the provisions of section 46 of the Income-tax Act and all orders and directions issued thereunder shall as far as may be applied to the recovery of tax payable under the aforesaid Martial Law Regulations. It seems that the Income-tax Department on the basis of the above circular invoked section 46(I) of the Income-tax Act and purported to levy penalty amount provided in the above subsection. The Income-tax Appellate Tribunal :field that the above penalty could not have been levied in respect of the income-tax payable under Martial Law Regulations Nos. 43/48, Upon reference at the instance of the Commis--sioner of income-tax, Lahore, it was held by a Division Bench of the Lahore High Court chat the aforesaid circular providing the recovery of the income- payable under Martial Law Regulations Nos. 43/48, in the manner provided under section 46(2) would not entitle the Income-tax Department to levy a penalty under subsection (1) of above section 46. In other words, the learned Judges of the Division Bench made a distinction between a recovery and a levy of penalty and it was held that the right to recover tax under the aforesaid Martial Law Regulations in the manner provided under subsection (2) of section 46 would not entitle the Income-tax Department to impose penalty under subsection (1) of the aforesaid section 46 for non---payment of above tax within time. The same view found favour with another Division Bench of the Lahore High Court in the above-cited case reported in 1978PTD131. ,
5. We are inclined to agree with the view found favour in the above two cited cases. In our view the right to recover/collect refundable surcharge under section 3-A of the Act in the manner in which an income-tax amount is recoverable by virtue of subsection (2) of section 3-A of the Act would not entitle respondent No. 1 to levy penalty provided in section 45-A of the Act in the absence of an express provision of applying for provision of above section 45-A.
6. The upshot of the above discussion is that we allow the petition and declare that the levy of the above .Three sums, namely, Rs. 10,417, Rs. 3,168 and Rs. 15,836 as illegal. However, in the circumstances of the case there will be no order as to costs.