This appeal, relating to the charge year 1984-85, is directed against the order of the learned Appellate Assistant Commissioner of Income Tax, Rawalpindi Range, Rawalpindi, dated 14-9-1987, whereby he dismissed the first appeal preferred by the assessee-appellant to contest the imposition of penalty of Rs.12,993 under section 111 of the Income Tax Ordinance, 1979 (hereinafter called the Ordinance), for concealment of income.
2. A brief account of the facts of the case is that the appellant is an individual deriving income from the sale of soap. In the original return filed under the relevant Self-Assessment Scheme, on 10-10- 1984, - the appellant declared business income at Rs.18,500. The Income Tax Officer did not accept the return under section 59(1) of the Ordinance as he got an information that the appellant has suppressed rental income from the property. During the course of proceedings, the appellant submitted a revised return, on 18-12-1985, disclosing income from property at Rs.4,695 in addition to the business income declared earlier. On being asked to furnish details of the tenants of different properties, the appellant revised his return for the second time, on 19-11-1986, and declared net income as under:--
3. After an examination of the case, the Assessing Officer determined the business income of the appellant at Rs.41,000 by estimating the sales at Rs.300,000 and applying a G.P. Rate of 15% thereon and allowing the expenses claimed at Rs.4,000. The property income declared at Rs.18,135 was, however, accepted and the total income of the appellant was assessed at Rs.59,135. For concealment of rental income by the appellant, the Income Tax Officer imposed under section 111 of the Ordinance the minimum penalty of Rs.12,993, being equal to the amount of tax which was sought to be evaded by the appellant.
4. The appellant assailed in first appeal before the learned AAC the action of the ITO in imposing penalty for concealment of income. After considering the merits of the case, the Appellate Authority below dismissed the appeal by observing that the appellant had always intended deliberately to conceal his income, that the penalty had been rightly imposed and that there was nothing wrong with the quantum of penalty because it represented the minimum amount prescribed under the law.
5. I have heard the arguments of the appellant's learned counsel, Mr. G. Abbas Chatha, and the learned Departmental Representative, Mr. Saeed-ur-Rehman, and have also scrutinized the record with their assistance.
6. Relying on a decision of the Tribunal reported as 1986 PTD (Trib) 446, the learned counsel for the appellant has contended that there was no justification to inflict a penalty on the latter for suppression of rental income as the return was revised twice during the assessment proceedings and finally true income received from property was disclosed and the same was also accepted by the Assessing Officer; that the appellant could legally revise his return during the assessment proceedings in terms of section 57 of the Ordinance; that the imposition of penalty is tantamount to a denial of permission allowed to the appellant by the Ordinance to submit a revised return; that the provisions of section 57 ibid are comprehensive and cannot be circumvented by placing a narrow and restricted construction on them; that the Ordinance does not provide any penalty in relation to the revision of returns and that the action of the officers below is not tenable in law.
7. The learned DR has submitted that there can be no cavil about the proposition that section 57 of the Ordinance permits an assessee to revise the return of his total income at any time before the assessm ent is made, but this concession is conditional inasmuch as it is without prejudice to any liability incurred by him under any provision of the Ordinance and that no exception can be taken to the levy of penalty as also to the quantum thereof, which is equal to the minimum extent provided under the Ordinance.
8. I have carefully considered the arguments advanced on behalf of the parties. In the case cited at the Bar, the Tribunal has held that since no penalty has been provided in section 57 of the Ordinance for revising a return and there is an open permission to do so during the course of proceedings, it will make no sense if permission is given as also penalty is imposed and that the imposition of penalty would mean a denial of the permission allowed by the statute. The conclusions of the Tribunal fully support the assertions of the appellant's learned counsel. In view of the legal position expounded by the Tribunal, there was no justification whatsoever for the imposition of penalty on the appellant. The orders of both the authorities below are, therefore, vacated and the penalty of Rs.12,993 imposed on the appellant under section 111 of the Ordinance is deleted.
Business incomeRs.18,500 Property incomers.Rs.18,135 Total income Rs.36,635