2001 PLP 19 (PTD)

At the instance of the revenue, the Lahore Bench of the Income Tax Appellate Tribunal has referred following questions of law which are stated to have arisen out of their order recorded on 7-1-1987:-- "(i) Whether on the facts and in the circumstances of the case the Tribunal was justified in knocking off the penalty of Rs.5,000 imposed under section 108 of the Income Tax Ordinance, for default of section 58(2) of the Ordinance? (ii) Whether an assessee who fails to file the wealth statement as required under subsection (2) of section 58, renders himself liable to a penalty under section 108 of the Income Tax Ordinance? (iii) Whether section 108 and section 110 of the Income Tax Ordinance read together expressly or by implication provide for any penalty for default under subsection (2) of the section 58 of the Income Tax Ordinance?

2. The assessee an individual was burdened with a penalty of Rs.5,000 under section 108 of the Income Tax Ordinance, on his failure to file wealth statement alongwith Income return for the year 1983-84. On being served with a notice it was pleaded that wealth statement could not be filed with the income tax return due to oversight that excuse was not found tenable. The learned first appellate Authority on 30-1-1985 maintained the levy of penalty though its amount was reduced to Rs.4,

000. The learned Tribunal held the view that no' penalty for default could be imposed under section 108 of the Income Tax Ordinance, 1979. 3: After hearing the learned counsel for the revenue, we are of the opinion that answer to the first question has to be in the affirmative. Subsection (2) of section 58 of the Income Tax Ordinance which stands deleted by. Finance Act, 1996 at the relevant time provided as under:

"Notwithstanding anything contained in subsection (1), every assessee, whose total income is not less than Rs.50,000 shall furnish a wealth statement alongwith his return of total income and all the provisions of this Ordinance shall, so far as may be, apply to the wealth statement as they apply to a return of total income." The aforesaid minimum limit of income was subsequently enhanced to Rs.1,00,000 by Finance Ordinance, 1984:

4. The view adopted by the Tribunal that for the said default a penalty under section 108 was not exigible appears correct. It will be noted that provisions of section 108 specify the default with reference to specific sections and section 58 or any of its subsection does not figure out there. It is established law that penalty provisions must be construed strictly, particularly, in fiscal matters. It will also be noted that section 110 of the Ordinance makes a specific reference to section 58 and also provides for a mode of calculating penalty' in case of default. On the other hand, the penalties provided under section 108 are fixed and have nexus with the default in terms of days. The penalty provided under section 110 of the Income Tax Ordinance is co-related with the amount of tax which would have been avoided if the income as returned by such person had been accepted as correct income. Therefore, in presence of a specific provision of law applicable to the situation, the Assessing Officer could not have resort to any other provision of law. All the moreso when the method of calculation of amount of penalty was totally different from the applicable provisions of section 110 of the Ordinance. The view taken by the Tribunal in the circumstances of the case appearing justified, our answer to the question No. l is in the affirmative.

5. The question No.2 as framed is only another form to say what has been said in question No.1. Therefore, it shall also be answered in the affirmative. .

6. Question No.3 as framed does not arise out of the order of the Tribunal inasmuch as the issue raised in this question does not appear to have been raised and pressed before the Tribunal. Since this question as such does not arise out of the order of the Tribunal, we will refuse to answer the same.

7. Reference disposed of in the above terms.

8. The Registrar of this Court shall send a copy of this judgment under the seal of the Court and his signature to the concerned Bench of the Income Tax Appellate Tribunal. C.M.A./M.A.K./C-23/L Order accordingly.