1992 PLP (Trib (PTD)

6. From. perusal of these S.R.Os., it appears that the former has 2 and 6. the latter 3 Schedules. First schedule of both specifies the Commissioners of e Tax who are designated as Commissioners of Income Tax (Survey and Registration) throughout Pakistan whereas schedule II of both mentions Red lions of Commissioners of Income Tax (Survey and Registration). However, S.R.O. 1157 has Third schedule also which mentions power of I.T.O. (Survey and Registration). Let me mention here that sections 108 and 144 have been specifically mentioned in Schedules II and III of both S.R.Os. Thus, it is clear from perusal of both S.R.Os. that the LT.O. (Survey and Registration) has been vested with the power of seeking information under section 144 and imposing penalty under section

108. However, since the penalty order in dispute was recorded on 18th August, 1991, it was governed by S.R.O.

253. The first argument of Haji Yousuf that there was no proof that I.T.O. was given such power therefore, stands repelled.

7. Now turning to section 5(2) of the income Tax Ordinance, let me firstly reproduce it and it reads as under: "Section 5(2): -Where any directions issued under subsection (1) have assigned to two or more income tax authorities the same functions or functions in respect of the same persons or classes of persons or the same area, they shall perform their functions in accordance with such orders as the central Board of Revenue, or any other authority to whom they are subordinate, may make for the allocation of functions and the distribution of the work to be performed." It is clear from it that the C.B.R. have been given the powers to make allocation of functions and the distribution of the work to be performed where they find that two or more income tax authorities have the same functions to dorm in respect of same persons or classes of persons or the same area perform? since the C.B.R. have issued aforesaid S.R.Os. in discharge of their duty, I don't find any force in submission of Haji Yousuf. It is true that in the opening part of both S.R.Os., section 5(1)(a) has been mentioned. However, I find that they have virtually exercised their powers under subsection (2) as well defines hold this view because the Second schedule of S.R.O. 253 specifically defines the functions of Commissioners of Income Tax (Survey and Registration) including those functions which are to be exercised by them under sections 108 and 144 of the Income Tax Ordinance. It is equally true that both the C.B.Rs. have made a distinction between functions and powers of the Commissioners of Income Tax (Survey and Registration) in S.R.O. 1157. Here, sections 108 and 144 have been described as powers of Commissioners of Income Tax (Survey and Registration). However, I think that this difference in both S.R.Os. simply shows the lack of proper appreciation of various provisions of the Income Tax Ordinance. Nevertheless, it does not cause any prejudice to the respondent.

8. The next argument of Haji Yousuf is that the I.T.O. (Survey and Registration) had no jurisdiction to call for information under section 144(c) of the Income Tax Ordinance from an existing assessee while conducting survey. This argument has found favour with the learned C.I.T.(A). However, with due respect I do not see any force in it. Before proceeding further, let me reproduce section 144 of the Income Tax Ordinance which is as follows: "Power to call for information.--The Income Tax Officer, the Inspecting Assistant Commissioner, the Commissioner or any other officer authorised in this behalf by the Commissioner or the Central Board of Revenue, may, by notice in writing, require

(a) any assessee to furnish within such time as may be specified in such notice a statement showing the names and addresses of all persons to whom he has paid in any income year rent, interest, commission, royalty or brokerage, or any annuity amounting to not less than four hundred rupees together with particulars of all such payments; (b) any dealer, broker or agent or any person concerned in the management of a Stock or Commodity Exchange to furnish, within such time as may be specified in such notice, a statement showing the names and addresses of all persons to or from whom he, or the Exchange, has paid or received in any income year any sum amounting to not less than five thousand rupees in the aggregate, in connection with the transfer of assets, together with particulars of all such payments and receipts; (c) any person, including a banking company, to furnish such information or such statement or accounts as may be specified in such notice: Provided that no such notice shall be issued to any banking company as respects any client, except with the prior approval of the Commissioner in the case of an Income Tax Officer, or the Central Board of Revenue or any other income-tax authority authorised by it in this behalf in the case of the other officer. From its perusal, it appears that the words underlined by all means include an I.T.O. of Survey and Registration within their fold. This is also clear from the S.R.Os. reproduced above. Thus the I.T.O. (Survey and Registration) was an officer authorised to call for information under section 144.

9. Now from perusal of clause (c), it appears that an authorised officer under section 144 may call for information from "any person". The word `person' has been defined by section 2(32) of the Income Tax Ordinance and includes an individual, a firm, an association of persons etc. etc. Thus it is clear that the respondent would fall without the definition of `person' irrespective of the fact that he is an individual or a firm or an association of persons or any other artificial juridical person. I am, therefore, unable to see anything in section 144 which may support the submission of Haji Yousuf, the learned counsel for the respondent. In my humble opinion, it was applicable in the case of respondent. However, this does not seem to be end of the matter. A part of the argument of Haji Yousuf, however, is still to be met.

10. His argument is that an I.T.O. (Survey and Registration) has no jurisdiction to call for an information from an existing assessee. I have already discussed the powers of I.T.O. (Survey and Registration) under section

144. Row let me turn to S.R.O.

253. Its Schedule II is as follows: "SCHEDULE II ??????????????????????? FUNCTIONS OF COMMISSIONER OF INCOME TAX (SURVEY AND REGISTRATION)

1. Functions as specified in sections 85 to 98, 100, 104, 108 to 120, 123, 124, 126, 134(2), 134(3), 136(1), 136(2), 137(1), 138 to 149, 156, 161, 162 of the Income Tax Ordinance, 1979 (XXXI of 1979).

2. Internal survey for collecting information under sections 139 to 144 of the Income Tax Ordinance, 1979 from various Departments and Organizations.

3. External survey of properties, business and professions.

4. Collect information concerning income tax assessees through external and internal survey, supplying it to assessing authorities and ensuring its utilization by them in a text region.

5. Preparation of Communication Slips (I.T. 93) based on information collected and their dissemination to concerned Zonal assessing officers.

6. Booking of non-filers of returns of income tax on the National Tax Register of the concerned circle as a result of internal and external survey.

7. Monitoring of tax payments under section 50 of the Income Tax Ordinance, 1979.

8. Matching important information with tax payer's declared version for detection of misdeclaration and to issue verification notes for zonal assessing officers.

11. From perusal of its clause (a), it appears that the powers under sections 108 and 144 have been described as the functions of Commissioners of Income Tax (Survey and Registration). It is also clear from perusal of its clause (6) that booking of non-filers of returns of income-tax on the national tax register has also been described as a function of the Commissioner of Income Tax (Survey and Registration). However, neither in this S.R.O. nor in S.R.O. 1157, I find any indication whatsoever that the I.T.O. (Survey and Registration) has no jurisdiction to call for information from an existing assessee. I am even prepared to hold that even if the S.R.O. should have prohibited seeking of any information from existing assessee, I would have taken it as a mere departmental direction and not a prohibition on the exercise of powers vested by section 144 of the Income Tax Ordinance for the simple reason that in such case, the S.R.O. would have been of no illegal effect being in conflict with section

144. In view of this discussion, I, therefore, find aforesaid submission of Haji Yousuf also devoid of any merits.

12. Finally, let me also point out that the argument of Haji Yousuf that since section 108 vests the power of imposing penalty in the I.T.O., it cannot be imposed by an I.T.O. (Survey and Registration) is concerned, with due respect to him, I again find no force in this submission firstly because S.R.O. 253 has specifically vested such power in the I.T.Os. (Survey and Registration) and secondly because the C.B.R. have jurisdiction of vesting such powers in him. This argument, therefore, also stands rejected.

13. In the end, let me deal with the finding of learned C.I.T. (A) as to whether the imposition of penalty is excessive. I have already pointed out that a show-cause notice was served on the assessee under section 108 read with section 116 but they sought extension of time which was refused for the reason that the respondent was adopting delaying tactics. But with due respect to the assessing officer, I do not find anything on record to show that the respondent was adopting delaying tactics. On the other hand, the facts that first notice was served on 23rd January, 1990 under section 144(c) and the reminder was issued on 10th December, 1990 and that the penalty was imposed on 18th August, 1991 after serving notice under section 116 on 7th February, 1991, indicate that it is the assessing officer who delayed the matter for reasons best known to him. Moreover, the imposition of maximum penalty of Rs.100 per day again indicates punitive approach of the assessing officer. Let me mention at this juncture that maximum penalty is imposed in the extreme cases of defiance and default. I am unable to understand that on what basis he could hold that the respondent was not prevented by any reasonable cause. Here I think that miscarriage of justice has been caused. I think that the respondent should have been given an opportunity of offering his explanation to the notice of I.T.O. (Survey and Registration) dated 46th February, 1991 under the facts and circumstances as discussed above.

14. Now as far as the citation of case-law and reliance on the taxtbooks by Haji Yousuf are concerned, with due respect to him, I do not think that they are applicable under the facts and circumstances of this case. I, therefore, refrain myself from dilating on them. Let me also mention at this juncture that there is no violation of any provision of Constitution of Islamic Republic of Pakistan as alleged by the learned counsel for the respondent inasmuch as the I.T.O: (Survey and Registration) had the legislative authority to impose the penalty on the respondent as he violated with impunity the direction contained in notices issued under section 144(c) of the Income Tax Ordinance. Nevertheless, the error of the I.T.O. (Survey and Registration) lies in the fact that he failed to provide adequate opportunity to the respondent to show cause against the notice issued under section 108 read with section 116 of the Income Tax Ordinance.

15. In view of discussion made above, I allow this departmental appeal and after setting aside the impugned order, send the matter back to the I.T.O. (Survey and Registration) with the direction that he should, after giving adequate opportunity to the respondent, record his order under section 108 of the Income Tax Ordinance as it empowers him to impose a penalty under it in case of default of notice issued under section

144. However, I feel tempted to observe that while imposing penalty, he should keep into consideration all the facts and circumstances which emerge out of the explanation offered by the respondent. Let me also mention that even if the respondent did not offer any explanation, he should not record his order with punitive approach.

16. The appeal stands disposed of accordingly. M.BA./1619/T???????????????????????????????????????????????????????????????????????????????????? Order accordingly.