2004 PLP (Trib (PTD)

INAM ELLAHI SHEIKH, (CHAIRMAN).

These three departmental appeals are directed against the combined order of the learned CIT(A) Zone-I, Islamabad, dated 16-7-2002 on the following:-- "That the learned CIT(A) was not justified to delete the tax charged under sections 52/86 on the ground that the purchases were below Rs.25,000 from each 'party".

2. Relevant facts in brief are that the assessee derived income from manufacture of poultry feed. The Assessing Officer perused the accounts and details and found that the assessee had shown cost of sale at approx. Rs. 32.2 millions, Rs.17.9 millions and Rs.6.8 millions in the years under consideration. The assessee also showed work in progress. at Rs.21.9 millions, 23.2 million and Rs.27 million approximately in the three years under consideration in addition to an amount of Rs.29.6 millions in the assessment year 1997-98 in work-in-progress. The Assessing Officer asked the assessee to show if tax had been deducted under section 50 of the Income Tax Ordinance. 1979. The assessee took the plea that no purchases of amount exceeding Rs.25,000 had been made and that part of the purchases were in respect of agriculture produce which were not taxable. The details of work-in-progress were also provided which have been reproduced in assessment order in the following manner:--

1. Crush Rs. 27,500

2. Gera for floor. Rs. 23,700

3. Sand for floor/wall Rs. 24,500

4. Iron Rs. 24,201

5. Labour/Masons daily wage, Rs.230,308 6 Carriage/labour for bricks Rs.110,201 7 Bricks. Rs.376,325 8 Cement. Rs.128,125

3. The Assessing Officer issued various notices under section 144 of the Income, 1979 but no response was received. Hence the Assessing Officer assessed levied of tax in respect of purchases which were considered to be taxable under section 52 of the Income Tax Ordinance. 1979 either as those chargeable, at special rate or at normal rate, ignoring the pleas that purchases were less than Rs.25,

000. The leaned CIT(A) deleted the levy of tax after holding that the purchases made by the assessee were below 25,000 and thus not liable to deduction of tax.

4. The learned DR objected to the order of the learned CIT(A) with the submissions that the assessee had not filed the details or were not verifiable. The learned DR was invited to point out the provisions of law under which the Assessing Officer could demand such information from the assessee. The learned DR was unable to point out any such provision of law in this regard. The Assessing Officer has not pointed out any single instance where the payment to one party had been made in excess of Rs.25,

000. The Assessing Officer proceeded on presumptions and surmises. The learned CIT(A) has produced the following extract of the assessment order which amply shows that the Assessing Officer has proceeded on presumption and surmises:- "The Company tried to restrict the purchases less than Rs.25,000 for each party. However, in support no purchase vouchers were produced. Even in the case of crush. Gera and sand/iron party-wise details of purchases were not produced. In support of cost of labour, wages and carriage no documentary evidence whatsoever were produced. Therefore, the claim of the assessee-company regarding purchases less than Rs.25,000 from single party and cost of labour/carriage are not 100% verifiable."

5. In a number of cases we have said that the provision of section 50 read with section 52 and other related sections such as 139, 140 and 142 etc. of the Income Tax Ordinance, 1979 are harsh and extraordinary burden on taxpayers or on any person who is not earning income on which the tax is being charged under these provisions. 13 Various specified persons have been entrusted with task to deduct tax at the time of making payments and then deposit the same into the Government treasury alongwith specific information and then file specified statements with the Revenue offices. Although there is no benefit to the person collecting the tax he is burdened with various liabilities. If he fails to deduct tax or if the tax is not deposited, he himself becomes liable to pay such tax and also suffer additional tax and penalties for non-deduction or non deposit of tax or non filing of various statements. In such circumstances the department has to proceed strictly in accordance with the law before levying burden on the person who may or who may not have been required to deduct or who may or who may not have for defaulted in such duties. The department cannot proceed ors surmises and presumptions to levy such taxes or penalties. The learned DR has raised a question at the bar as to how the Revenue Officer supposed to know whether somebody has made any such payment which attracts the provisions of section 50 or section 52 of the Income Tax Ordinance, 1979. We may say it is for the law to make clear provisions to empower an officer to proceed in such matters. In the absence of such powers the department could use the information obtained by it from the assessee in the shape of details of supplies and sales made to various parties and claim of tax deduction therein. With these observations we dismiss these departmental appeals being without any force. C.M.A./959/Tax (Trib.) Appeals dismissed.