1989 PLP (Trib (PTD)

(5) In the course of proceedings under Income Tax Ordinance (XXXI of 1979), in respect of the assessment year 1986-87, I,/the, Appellate Tribunal am/is satisfied that you have in the course of the said proceedings relating to the assessment in respect of the same income year, concealed the particulars of your income/furnished inaccurate particulars of your income; (6) .......................................... (7) ........... ... (8) .......................................... You are, hereby called upon in pursuance of section 116 of the said Ordinance to show cause at my/Tribunal's office at 25, Islamabad, on 18 4-1987, at 9.00 A.M. why a penalty under sections 108-110 of the said Ordinance should not be imposed on you. For the purpose of hearing in compliance with this notice, you may either appear m person or through a representative duly authorised under section 157 of the said Ordinance."

6. He also cited section 111 of the Ordinance which reads as under: Section 111 of the Ordinance. Where, in the course of any proceedings under this Ordinance, the Income Tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal is satisfied that any person has, either in the said proceedings or in any earlier proceedings relating to as assessment in respect of the same income year, concealed his income or furnished inaccurate particulars of such income, he or it may impose upon such person a penalty not exceeding two and a half times but in no case less than the amount of tax which would have been avoided if the income as returned by such person had been accepted as the correct income"

7. Learned Authorised Representative was of the view that the words "inaccurate particulars of income of an assessee" as mentioned in the show-cause notice under section 116 and the penalty order under section 111 of the Ordinance were not are attracted to the residential status of the respondent but are the factors having a being on the quantification of income.

8. After a careful consideration of facts as brought out by both the- contesting parties,' I have reached the conclusion that the residential status of an assessee very much falls within the scope of total income, and therefore, is covered by the expression "particulars of income". It would be pertinent to a reproduce section 11 of the Income Tax Ordinance, which defined the scope of total income as under: Section 11: (1) Subject to the provisions of this Ordinance, the total income, in relation to any assessment year, or a person- (a) who is a resident, includes all incomes from whatever source derived, which (i) is received, or is deemed to be received, in Pakistan in the income year by, or on. behalf of, -such person, or (ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year, or (iii) accrues or arises to him outside Pakistan during such year; . (b) who is a non-resident, includes all income 'from whatever source derived, which (i) is received, or is deemed to be received, in Pakistan in the income year by, or on behalf of, such person; or (ii) accrues or arises, or is deemed to accrue or arise; to him in Pakistan during such year; (2) notwithstanding anything contained in subsection (1), where any amount consisting of either the whole or a part of any of income has been included m the total income a person on the basis that it has accrued or arisen, or is deemed to have accrued or arisen, to him in. any year, it shall not be included again in his total income on, the basis that it is received, or is deemed to be received, by him in Pakistan in any other year.

6. It would thus be observed that quantum of total income is very much dependent on the residential status of an assessee. The total income involves two ingredients: (a) As income must comprise of total amount of income, profit and gain referred to in section 11 of the Ordinance; and (b) it must be computed in the manner laid down in the Ordinance. The manner of computation laid down by the Ordinance forms very much an intergral part of the expression "the total income". The current method of approach is to treat nothing as being charged to tax unless by the process of computation laid down by the Ordinance.

7. Subject to the provisions of Ordinance, section 9 charges income on the Mme, section 11 defines the scope of total income in terms of residence. Total income of a non-resident comprises of only income which accrues or is or deemed to accrue or to be received in Pakistan while a resident's total consists of income accruing in any part of the world After determining lion of residential status of an assessee items of income includible m his total income must 'be ascertained with reference to section 11, and then income be computed in the manner laid down in the Ordinance. It, therefore emerges that residential status of an assessee is very much relevant for the determination of total income of an assessee and forms a-part of the particulars of income of an assessee. I, therefore, hold that wrong furnishing of the residential status by an assessee would fall. within the `ambit of expression "inaccurate particulars of income" and would tie hit by the mischief of section 111 of the Ordinance.

8. However, it has to be seen as to whether under the facts and the circumstances of the present appeal; default on the part of the respondent was wilful? Wined Authorised Representative - has stated 'the fact that the respondent enjoyed the status of, a resident in Pakistan for 7 years prior to the charge year 1986-87. Besides the respondent is not a full time business woman, In fact she has been a partner in a firm, which runs a petrol pump which was acquired a few years back by her father who was our Ambassador to Argentina. It appears to be a mistake committed by her authorised representative as admitted by him during the course of hearing of this appeal. Since the default does not appear to be deliberate or wilful, the imposition of penalty for concealment of income was unwarranted under the facts and the circumstances of this case as rightly held by learned A A C. Therefore, order passed by learned A A C is confirmed.

9. The departmental appeal fails and is hereby rejected. M.B.A/ 626/T Appeal dismissed.