1985 PLP 796 (PTD)

NAIMUDDIN, J. ‑This is an application under section 66(2) of the Income tax Act, 1922 filed by the Commissioner of Income‑tax (Central Zone), Karachi, referring the following question of law said to arise out of the order, dated 22‑7‑1975, passed by the Income‑tax Appellate Tribunal, Karachi Bench, Karachi : "Whether on the facts and in the circumstances of the case, the Income- tax Appellate Tribunal was justified in holding that the assessee did not commit any default under section 18(A) (1) and that the penalty levied on the assessee was improper."

2. The facts` giving rise to this reference are that the respondent was assessed under section 23(4) of the Act for the assessment year 1971‑72, on an income of Rs. 1,87,656 on 23‑11‑

197. Accordingly, the respondent was liable to pay advance tax under section 18‑A(1) of the Act for the assessment year 1973‑74, but he filed estimates of total income on 14‑9‑1972, and 14‑12‑1972, disclosing his income to be below Rs. 25,

000. He again filed an estimate of income on 13‑3‑1973, showing a loss of about 1,00,

000. He ultimately on 15‑7‑1973, filed a regular return under section 22(1) of the Act, showing a loss of Rs. 94,895.

3. The Income‑tax Officer, Company Circle X, Karachi, issued a show cause notice to the assessee to show cause why penalty should not be levied for default in payment of advance tax payable under section 18‑A(1) of the Act. The assessee by his reply, dated 28‑2‑1973, stated that law was not clear to them, as such they could not act accordingly. However, the Income- tax Officer did not accept the explanation and imposed penalty as detailed below for the alleged two defaults committed on 15.9‑1972 and 15‑12‑1972. Instalment date Amount Penalty Rate Amount Rs. 25,799 15‑9‑1972 5 % Rs. 1,290 15‑12‑1972. 5 % Rs. 1,290

4. The respondent filed a direct appeal before the Income‑tax Appellate Tribunal, which accepted the same by holding that as the assessee, had filed his own estimates of Income under section 18‑A (2) of the Act and he was not covered by section 18‑A (1) of the Act and, he therefore, could not be held to be a defaulter.

5. The argument of the Department's representative before the Tribunal was that the respondent should have specified the quantum of income in the two estimates filed by him, and in their absence he made himself liable to pay penalty. The Tribunal found no force in this argument as in this case the provisions of subsection (2) of section 18‑A of the Act were applicable and section 18‑A (1) of the Act was not applicable which according to the tribunal were mutually exclusive. The Tribunal further observed that the provisions also did not indicate anywhere that the quantum of income should be specified if the assessee filed his estimates of below taxable income.

6. We have heard Mr. Shaikh Haider learned counsel for the applicant. The respondent has remained absent.

7. It is submitted by Mr. Shaikh Haider that the respondent while submitting his estimates for the two quarters should have specified the amount of income and mere mentioning that his income for the quarter was below Rs. 25,000 was not sufficient compliance of the provisions of section 18(2) of the Act. According to Mr. Shaikh Haider at least it was a technical defect. However, we do not find any force in this submission of the learned counsel for the Department. Before we give our reasons it would be convenient, if we reproduce the provisions of section 18‑A (2) of the Act, which read as follows : "(2) If any assessee who is required to pay tax under subsection (1) estimates at any time before the last instalment is due that the part of his income to which that subsection applies for period which would be the previous year for an assessment‑ for the year next following is less than the income on which he is required to pay tax and accordingly wishes to pay an amount less than the amount which he is so required to pay, he may send to the Income‑tax Officer an estimate of the tax, payable by him calculated in the manner laid down in subsection (1) on that part of his income for such period, and shall pay such amount as accords with his estimate in equal instalments on such of the dates specified in subsection (1) as have not expired or in one sum of only the last of such dates has not expired Provided . .. (Not relevant) 8. 1t is not disputed before us by Mr. Shaikh Haider that the provisions of sections 18‑A (1) and 18‑A (2) of the Act are independent of each other as held by the Tribunal. Accordingly, if the applicant sent his estimate under section 18‑A (2) of the Act that his income was below Rs. 25,000 he was not required to pa v any advance tax tinder section 18‑A (1) and if the respondent's income was below Rs. 25,000 he by filing his estimate of quarterly income by due date, in our opinion, substantially complied with the provisions of section 18‑A (2) of the Act. The fact that he did not mention the figure of his A estimated income for the two quarters would not make him a defaulter, if otherwise his income was below Rs. 25,000 as it caused no prejudice to the Department because in such a case the provisions of section 18‑A (1) of the Act were not attracted. Therefore, the Tribunal was right in holding that there was no default on the part of the respondent. We. cannot even call it a technical default as convassed by Mr. Shaikh Haider, learned counsel for the applicant, for the respondent had in our opinion reasonably complied with the provisions of subsection (2) of section 18‑A of the Act by stating that his income was below Rs. 25,000.

9. We, therefore; answer the question in affirmative. Since the respon dent has remained absent. We do not award any costs. M. B. A. Question answered in negative.