1981 PLP (Trib (PTD)

3. Before proceeding to make any comments on the submissions made by the learned counsel for the appellant, we would like to state, shortly the facts. The assessee admittedly filed return on 15‑1‑1980 declaring an income of Rs. 50,77,

159. The amount of tax, on the basis of the return, was admittedly payable in the sum of Rs. 12,19,

752. It is also not disputed that the said amount of tax was not paid by the assessee although, at the close of his arguments. Mr. Nasim Ahmad Khan faintly attempted to do so. He could not however, substantiate it by producing the relevant challan or any other material whatsoever. As per order of Assessment, the assessee's request for grant of instalments was rejected by the I.-T. O. vide his letter dated 19‑9‑1980. The assessee was then again directed by the I.‑T. O. vide his letter dated 4‑2‑1980, to pay the demand and produce the paid challan before him by 9‑2‑1980. On the last mentioned date. Mr. Aminuddin Ansari of Ford, Rhodes, Robson, Morrow, Chartered Accountants appeared before the Assessing Officer and repeated his request for grant of instalments. The I. T. O. refused to do so and held the assessee to have deliberately committed default in the payment of tax liability, under section 54 of the Ordinance. Consequently he imposed a. penalty of Rs. 2,00,000, and demanded its payment alongwith the admitted tax liability under section 54 amounting to Rs. 12,19,754, by 15th February, 1980. He further threatened the assessee that further penal action would follow if his order was riot complied with. Aggrieved by the order of the Income‑tax Officer made under section 91 of the Ordinance, the assessee carried an appeal to the learned Appellate Assistant Commissioner who, by a short order reproduced below, confirmed the order appealed against: "The appellant was in default of making payment due under section 54 on the basis of returned income. The I.‑T. O. was therefore, fully justified in imposing a penalty of Rs. 2,00,

000. The quantum of penalty is also reasonable and, therefore, confirmed."

4. We have given our earnest consideration to the submission made by Mr. Nasim Ahmed Khan, and have not the least hesitation in holding that they are devoid of force. Section 54 of the Ordinance provides that every person, who is required under this Ordinance to furnish a return of total income shall pay the tax payable, on the basis of such return, on or before the date on which he is so required to furnish such return. Section 91 of the Ordinance empowers the I.‑T. O. to impose a penalty for non‑payment of tax. It reads as follows:‑- "

91. Penalty for non‑payment of tax.‑‑(1) Where any assessee is in default in making payment of any tax (other than the tax payable under section 53) the I: T. O. array impose on him a penalty not exceeding an amount equal to the said tax. (2) The I.‑T. O. may impose a penalty under section (1) by one order or, in the case of a continuing default, by several orders, so, however, that the total amount of penalty does not exceed the amount of such tax. (3) For the purpose of subsection (1), any penalty imposed under that subsection or any additional tax levied under section 86, 87, 88 or 89 shall be excluded from the amount of tax in respect of which the penalty is imposed." (The rest omitted being not relevant for our purpose). The sole and primary question for determination, therefore, is whether the penalty levied under section 54 is proper, legal and valid? How a reference to section 54 clearly indicates that every person who is required, under the Ordinance, to furnish a return of total income is also legally obliged to pay the tax payable, on the basis of such return, on or before the date on which he is required to furnish such return. The non‑compliance of the provisions of section 54, either wholly or partially renders the assessee in default liable, both to pay additional tax as envisaged by section 88 as well as the penalty, under section 91 of the Ordinance. Mr. Nasim Ahmad Khan's argument that section 91 stands excluded by section 88 of the Ordinance and that section could not in the facts of this case, he pressed into service is untenable, section 88 of the Ordinance runs as under:-- "

88. Charge of additional tax for failure to pay tax with the return.

Where an assessee fails to pay tax under section 54 or the tax so paid is less than the tax payable under that section, he shall be liable to pay additional tax at the rate of fifteen per cent per annum on the amount not paid or the amount by which the tax paid by, him falls short of the tax payable under that section, as the case may be and such additional tax shall be calculated from the first day of October, or the date on which the tax was payable, whichever is the later, to the date on which the tax is paid or the date on which an order under section (1) of section 59, section 62 section 63 or section 65, as the case may be, is made, whichever is the earlier." Now a cursory reading of section 88 makes it absolutely clear that it may applied in two cases. Firstly, where an assessee fails to pay tax under section 54, secondly where the tax so paid is less than the tax payable under that section. To the facts of the case in hand it is the first part of the section which stands attracted. Now what does this section lay down, in so fax as it is relevant for our purpose, is that where an assessee fails to pay tax under section 54 he shall be liable to pay additional tax at the rate of fifteen per cent. per annum on the amount not paid and such additional to shall be calculated from the first day of October, or the day on which the tax was payable whichever is late, to the date on which the tax is paid or the date, on which as order under subsection (1) of section 59 (self assessment) section 62 (assessment), section 63 (best judgment assessment), or section 65 (Additional assessment) is made. Section 88 is self‑contained inasmuch as it provides the rate of additional tax as well as the period for which it is to be levied. Now in this case the starting point in terms of sec tion 88 was available but not the point of terminus, by the time the impugned order was passed inasmuch as neither the tax was paid nor an order under section 59, 62, 63 or 65 was passed. The imposition of additional tax unlike the levy of penalty under section 91 is to be made only once at the given rate and for the specified period. In this view of the matter, it is evidently clear to us that in the present case an order under section 88 could not legally be passed, as neither the assessee had paid the tax on any date earlier than the date of passing of the impugned order under section 91, nor was the assessment made under any of the section 59(1) 62 and 63 of the Ordinance. See (1965) 2 Taxation 39 (Trib). Now we proceed to examine the applicability or otherwise of section 91(1) of the Ordinance. It in specific terms lays down that where any assessee is in default in making payment of any tax other than the tax payable under section 53, the I.‑T. O. may impose on him a penalty not exceeding an amount equal to the said tax. The assessee‑appellant had failed to pay the tax under section 54 of the Ordinance and hence it inter alia, rendered itself liable to be penalized under section

91. By not having specifically excluded from the purview of section 91, the default in making payment of tax under section 54 from the perviso of section 91 as it has been done in the case of the tax payable under section 53, the Legislature manifestly made section 91 applicable to all such cases where an assessee is in default in making the payment of tax payable under section

54. The contention of the learned counsel for the appellant is, therefore devoid of merit. The next contention of the counsel is that the appellant would be penalized for more than once if the impugned order of penalty is upheld inasmuch as 'after the date of payment of tax payable under section 54 or the date on which an order of assessment is made, the assessee may again be charged with or made to pay the additional tax in terms of section 88 of the Act. In this connection it is to be borne in mind that section 88 provides for levy of additional tax which as held by the Lahore High Court, while considering the levy of additional tax under section 45‑A of the repealed Act, in the case reported as (1976) 33 Taxation 237 is recompense for delayed payment, whereas section 91 of the Ordinance provides for the leavy of penalty for non‑payment of any tax (other than the tax payable under section 53). By having committed default in making payment of tax payable under section 54, the assessee could not legally escape the levy of penalty provided therefore, vide section 91 of the Ordinance. The law does specifically provide the levy of both the penalty as well as the additional tax.

5. Now the only contention raised on behalf of the appellant in this regard that survives for consideration is the effect of subsection (3) of sec tion

91. According to the counsel for the appellant by virtue of subsection (3. of section 91, the additional tax levied under section 86, 87, 88 or 89 is to excluded from the amount of tax in respect of which penalty is imposed and hence the absence of levy of additional tax under section 88, would operate as a bar to the coming into force of subsection (1) of section 91, or to put it differently in his submission, levy of additional tax under section 88 in the instant case was a condition precedent for invoking the provisions of section 91(1) of the Ordinance. We are afraid, we cannot persuade ourselves to accept the contention of the appellant's counsel. In our opinion, it is wholly fallacious and is obviously the outcome of the faulty reading of subsection (3) of section

91. The word `tax' as defined in subsection (43) of section 2, means Income‑tax super‑tax surcharge and additional tax chargeable or payable under the Ordinance, and includes any penalty, fee or other charge or any sum or amount leviable or payable under the Ordinance. The Legislature, therefore, with a view to ensure that penalty for default in making payment of any tax (other than the tax payable under section 53) did not exceed the amount of tax in default, specifically excluded the addition of the amount of penalty imposed under subsection (1) of section 91 or any additional tax levied under section 86, 87, 88 or

89. Had it been not specifically provided in subsection (3), the I.‑T. O. could improse a penalty on the total amount of tax in default plus the amount of penalty or additional tie levied under any or more of the aforesaid sections 86, 87, 88 and 89 inasmuch as the word `tax as already stated, includes any penalty, fee, or other charge etc. leviable or payable under the Ordinance. Moreover, subsection (3) specifically excludes the amount of penalty leviable under subsection (1) of section 91 as well, and hence if we accept the contention of the learned counsel for the appellant, it would of necessity go to the length of saying that no penalty under subsection (1) of section 91 can in any case be levied.

6. This leaves for consideration the alternative plea raised on or exorbitently high. We find that by virtue of subsection (1) of section 91, the I.-T. O. may impose on an assessee in default a penalty to the extent of the amount of any tax, the payment of which has been defaulted. In the instant case, the penalty could, therefore, be levied to the extent of Rs. 12,19,

752. The I.‑T. O. has levied a penalty only in the sum of Rs. 2 lacs. He has thus in our opinion, been neither harsh nor unreasonable, more particularly in view of the fact that the said tax was payable by the assessee on the basis of the return of total income filed by it. The circum stance which led the assessee to commit the default in payment of the admitted tax liability and which justify a still lenient treatment have not even been narrated to us. In this view of the matter, we do not find any substitute in this appeal. It is dismissed accordingly. Appeal dismissed.