1999 PLP 1661 (PTD)

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14. STATEMENTS TO MONITOR WITHHOLDING TAX. Sections 139, 140, 141, 142 and 143 prescribe annual statements regarding salary, dividends and bonus etc. In order to ensure regular monitoring of withholding taxes, these sections have been amended so as to prescribe furnishing of statements at different time intervals." Thus, the view of the C.B.R. is that omission of due date in sections 139 through 143, for purpose of filing of prescribed statements, was intended to allow C.B.R. to specify different dates for different statements under these sections. Consequently, amendments were made in the Income Tax Rules, 1982, vide S.R.O. 1116(1) of 1995, dated 23-11-1995, whereby 15th day of each 'month has been specified as the due date for filing of monthly statements under Rules 53, 61 and 61-A. Differing with this view, the learned A.R. states that the provisions of sections 139 through 143 do not authorise the C.B.R. to specify the due dates for filing of statements under these sections. The only authority that the C.B.R. has, under these sections, is to prescribe the manner in which the statements are required to be filed and to prescribe the particulars to be given in these statements. It is argued that the expression "manner" has to be construed in its ordinary dictionary meaning, connoting "method", "mode", "style", "way", in which a thing is done. It does not include the concept of time. To illustrate this point, example of section 50(8)(c) has been given, which separately mentions "prescribed time" and "prescribed manner" for deposit of tax deducted or collected under section

50. The learned A.R. also states that whenever the legislature desired to specify a date or time limit for any act to be done, it has specified it in the relevant provisions of law itself or has specifically authorised the C.B.R. to prescribe it in the rules. For example, the due date for filing of return of total income is specified in section

35. On the other hand, in section 50(8)(c), the C.B.R. has been authorised to prescribe the time for the deposit of tax deducted or collected under section

50. However, in section 139 through 143, neither the due date has been specified nor the C.B.R. has been authorised to prescribe the due date. The upshot of the submissions made by the learned A.R. is that since no due date for filing of statements under section 139 through 143 has been specified in these sections, penalty under section 108(b) cannot be imposed for non-filing of these statements by the dates specified in the Income Tax Rules, as such specification is without lawful authority.

6. We have given anxious consideration to this issue and we tend to agree with the learned A.R. Mr. Habib Fakhar-ud-Din, that the provisions of sections 139 through 143 do not authorise C.B.R. to prescribe the due dates for submission of statements under these sections. Now the question that arises is that on account of non-specification of due date in sections 139 through 143 and without authority of C.B.R. to prescribe such date, how can the provisions of these sections operate, When this question was posed to the learned counsels of the assessee, Hafiz Muhammad ldrees, Advocate, answered that the Deputy Commissioner can exercise his powers under section 144 to call for all the information and particulars that are otherwise to be furnished in the statements under section 139 through

143. In other words, he is of the view that after amendments through Finance Act, 1995, the provisions of sections 139 through 143 have become inoperative. The solution suggested by him is not satisfactory nor does it answer the question which relates to operation of sections 139 through 143 and not section

144. To understand the operation of the aforesaid sections, as these stand after amendments, we may refer to section 108(b) which reads as follows:

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108. Penalty for failure to furnish return of total income and certain statements.

Where any person has, without reasonable cause, failed to furnish, within the time allowed for the purpose, (a) ................................ (b) any certificate, statement, accounts or information under sections . 51, 139, 140, 141, 142, 143, 143-A, 143-B or 144, the Deputy Commissioner shall impose upon such person penal .." The above quoted provision of law shows that the Deputy Commissioner can impose penalty under section 108(b) if the defaulting person has, without reasonable cause, failed to furnish the prescribed statements "within the time allowed for the purpose", which expression would now mean the time allowed by the Deputy Commissioner. This is so because there is no time limit specified in section 139 through 143, and thus, penalty can be imposed only after expiry of time allowed by the authority which is empowered to' impose the penalty for default. Therefore, in the context of statements prescribed, if any, under section 139 through 143, the Deputy Commissioner' shall, by a notice in writing, intimate the due date to the assessee by which he shall file such statements as he is required to file under the provisions of aforesaid sections.

7. Mr. Habib Fakhar-ud-Din has raised another objection to the imposition of. penalty on the ground that in sections 139 through 143, the words "in the prescribed form and verified" have also been omitted, with the result that the C.B.R. has been divested of the authority to prescribe statements under these sections. Therefore, as there are no prescribed statements, there cannot be an obligation to file the same. Consequently, the question of default of non-filing of such statements does not arise and hence penalty under section 108(b) cannot be imposed. In the context of obligation to furnish the statements under section 139 through 143, we may compare the key words in these sections, before and after amendments through Finance Act, 1995, as under:

Before Amendment

" ..furnish ..a statement in the prescribed form and verified in the prescribed manner, showing " After amendment:

" .furnish a statement in the prescribed manner, showing .." A comparison of the language of the provision of law, before and after amendments, would show that the words "prescribed form" stand replaced by the words "prescribed manner". The question that arises is whether "prescribed manner" includes "prescribed form" or not. Section 139 through 143 lay down the type of information and such particulars, as may be prescribed, that are to be given in the statements under these sections, Now it is quite evident that the information and particulars required by law are to be furnished in the form of a statement. It is equally evident that such information and particulars are to be furnished to a systematic and logical manner or arrangement (form) so as to be of any use. Therefore, in our view, the expression "prescribed manner" includes the "prescribed form" in which the statements under the aforesaid sections are required to be furnished.

8. The imposition of penalty has also been assailed on the ground that the statements prescribed under Rules 53, 61 and 61-A have not been prescribed under sections 139, 141 and

142. The argument advanced by Mr. Habib Fakhar-ud-Din, the learned A.R., is that there is no mention of these sections in the aforesaid rules. The relevant statements are the ones prescribed under Rules 197, 200 and

201. In this connection, reliance has been placed on a reported case of this Tribunal cited as 1998 PTD (Trib.) 3507, wherein it has been held that the statement required under Rule 53 is not the requirement of any section enumerated in section 108(b). Similar is the position in respect of Rules 61 and 61-A. Although in Rule 61, there is mention of section 142 in the heading, still the statement under the said rule cannot be said to have been prescribed under section 142, because it is established principle of the interpretation of statutes that the heading and marginal notes do not form part of the statute. If any authority is needed, one may refer to 1996 PTD

292. Therefore, we have no hesitation in holding that the statements under Rules 53, 61 and 61-A have not been prescribed under sections 139, 141 and

142. Consequently, the penalty under section 108(b) was not justified.

9. The order of penalty has also been challenged on the ground of lack of jurisdiction of the officer who passed the order. It is stated that the jurisdiction over the case of assessee, for assessment purposes, lies with another officer, while the penalty order has been passed by a Tax Recovery Officer. It is argued that section 108 authorises the Deputy Commissioner to impose' the penalty and it refers to the same officer who has jurisdiction for assessment purposes. The learned D.R., on the other hand, states that once a default has occurred, it is only a matter of computation of penalty which function can be assigned to any officer We find that while exercising powers under clause (c) of subsection (1) of section 5 of the Income Tax Ordinance, 1979, the learned Commissioner of Income Tax, Companies Zone, Islamabad, through an order, dated 26-8-1997, assigned jurisdiction to various Tax Recovery Officers in his Zone. Through this order, the following functions have been assigned to the said officers, namely: (1) Recovery as Tax Recovery Officer. (2) Monitoring of deduction or collection of tax under section 50, and ensuring correct deduction or collection and deposit to the credit of Government. (3) Officer authorised to receive statements under section 139 through

143. Mr. Zia H. Rizvi, Advocate, pointed out that the C.B.R. has, vide Circular No. 12 of 1996, clarified that the action under section 52 shall be taken only the assessing officer of the withholding agent. He stresses that on the same principle, penalty under section 108 can also be imposed only by the assessing officer holding jurisdiction over the paying assessee, since the penalty is for non-filing of statements which required furnishing of particulars of payments and tax deducted there from under section.50. He expressed the view that more than one officer cannot hold jurisdiction over an assessee, for different purposes. For facility of reference, we reproduce the relevant portion of section 5(1)(c) as under: "(c) the Inspecting Additional Commissioners and the Deputy Commissioners shall perform their functions in respect of such persons or classes of persons or such areas as the Commissioners to whom they are subordinate may direct; " It can easily be seen from the provisions of law, quoted above, that a Deputy Commissioner is to perform all his functions under the Income Tax Ordinance, 1979, in respect of persons, classes of persons or areas assigned to him by the Commissioner. There is no provision in law permitting allocation of various statutory functions, in respect of the same persons or classes of persons or the areas, to different Deputy Commissioners. Therefore, unless any provision of law specifically assigns a certain function to any officer (for example, recovery functions of a Tax Recovery Officer under section 93), different functions of a Deputy Commissioner under the Income Tax Ordinance, 1979, cannot be assigned to different officers under the provisions of section 5(1)(c). We may refer to a reported case 1994 PTD (Trib) 786, wherein penalty under section 108 levied by the officer holding assessment jurisdiction over the assessee was upheld and the assessee's contention that penalty could be imposed by the officer authorised to receive statements under section 143 was rejected. We, also find that "monitoring" Of tax deducted or collected under section 50 is a function or activity about which the Income Tax Ordinance, 1979, is silent, and it cannot be held that the power to impose the penalty under section 108 is derived from this function. We also find that under the law the statements under section 139 through 143 are required to be furnished to the Deputy Commissioner (having jurisdiction over the paying person) or any other person authorised in this behalf by the C.B.R. Since the Tax Recovery Officer, in the present case, did not have jurisdiction over the assessee, only the C.B.R. could authorise him to receive the aforesaid statements. In this respect also the authorisation made by the Commissioner is without lawful authority. In view of foregoing, we hold that the Tax Recovery Officer, in the present case, had no lawful jurisdiction to pass an order under section 108(b).

10. For the reasons given in the paragraphs above, the impugned order of penalty under section 108(b) is cancelled. The assessee's appeal, consequently, succeeds. C.M.A./22/Tax/(Trib) Appeal accepted.