NASIM SIKANDAR, J.~ This is a case stated by the Lahore Bench of the Income Tax Appellant Tribunal. Following question of law has been framed for our consideration and reply:- "Whether on the facts and circumstances of the case the learned Income Tax Appellate Tribunal was justified in confirming the order of the Appellate Assistant Commissioner deleting the penalty imposed under section 91 of the Income Tax Ordinance, 1979."
2. According to the statement of the case for the Assessment Year, 1985-86, the Assessing Officer imposed a penalty of Rs. 4,468/- under Section 91 of the Income Tax Ordinance, 1979 on account of the failure of the assessee to discharge his liability towards demand created at Rs. 1,78,544/-. The learned first appellate authority finding that on appeal the demand created having been reduced considerably levy of penalty was held to be unjustified. Reliance in that regard was placed upon a reported judgment of this Court in re: C.I.T, v. Begum Mumtaz Jamal (1976) 73 Tax 288. The learned Tribunal found no exception to the view adopted by the CIT (Appeals, based upon the said judgment of this Court.
3. After hearing the learned counsel for the revenue we find that the answer to the question has to be in the affirmative, It will be noted that in the aforesaid judgment this Court expressed the view that where an assessm ent was modified in appeal, issuance of a fresh demand notice consequent upon the appellate order was necessary. Also that where the original assessment was modified in appeal the penalty already imposed did not remain in the field. These findings were recorded in the face of the provisions of section 91 of the Income Tax Ordinance as originally framed. After the aforesaid judgment, the law was amended by way of Finance Act, 1987 whereby sub-section (4-A) was inserted to the existing provision of section 91 of the Ordinance. The newly sub-section added is reproduced below:- "Sec. 91 (4-A).
"Where in consequence of any order under this Ordinance the amount of tax in respect of which penalty under this section was imposed is reduced the amount of the said penalty shall be reduced accordingly."
The purpose of the aforesaid sub-clause obviously was to party the effect of the aforesaid judgment of this Court, In other words after the insertion of the said sub-clause the consequence of the appellate order will have effect without an issuance of a fresh demand notice. The insertion of the aforesaid clause in the year 1987 indicates the desire of legislature to change law with prospective operation. Till the coming into force of said amendment the view adopted by this Court in the said judgment held the field. Therefore, our answer to the question has to be in the affirmative.