1986 PLP (Trib (PTD)

This is a departmental appeal preferred against the order of learned Appellate Assistant Commissioner, dated 18‑3‑1984, relating to charge year 1981‑82, by which he cancelled the penalty imposed on the assessee under section 91(1) of the Income‑tax Ordinance, 1979, holding that no notice as required was issued prior to imposing the penalty. The assessee is a registered firm engaged to the business of imports and exports on commission basis. As such a demand for payment of super‑tax amounting to Rs.1,815 was created against it‑and by notice, dated 28‑6‑1984 it was directed to pay‑tax. The 'notice was served on 15‑7‑1984 and on failure of the firm to satisfy the demand within the specified period of 30 days penalty was imposed on it under section 91(1) vide order, dated 14‑2‑1985 by the assessing officer. The firm challenged the order by way of appeal before Appellate Assistant Commissioner, containing that no notice was given to it before imposing penalty and that the amount of penalty was excessive. The learned Appellate Assistant Commissioner upheld the plea that requisite notice had been issued to which the firm was entitled under the law so as to be apprised of the action intended to be taken against it and accordingly he ordered annulment of the penalty as per order aforesaid. Against the same this second appeal has been preferred by the department and it is contended that notice demanding payment of the tax had been issued and indeed served on the, firm which it ignored and defaulted to make payment and as a consequence incurred liability to suffer penalty under section 91 (ibid) and that no notice was essential to be given to the firm before imposing penalty, as provisions to that effect contained in section 91(5)(a) is very clear and the same dispenses with any such requirement of prior notice. That notice demanding, payment of the super tax was issued cannot be denied. The assessee admits having received this notice. But what is disputed by the assessee is that‑ it allowed to time to make payment it demanded payment of the amount to be made the same day of which it was issued, i.e., 28‑6‑1984. But it was not served the same day. It was served on 1,5‑7‑1984. How could then the payment be made when the time set for the purpose had already expired, the assessee contended. Further arguing in this behalf, it was stated that adequate time had to be allowed for the purpose as requirement of the statute, which, it was not open to the assessing officer to deny as he did, and the assessee as a result stood absolved of the responsibility to make payment on a notice which was not legally enforceable against it. That prior notice was must is riot being disputed by the department. And correctly so, because the question is now well‑settled by pronouncements of the superior Courts‑ made from time to time. E Some of tire judgments go to the extent of laying down that even a built‑in provision in any enactment to the contrary can be ignored. Because the underlying principle is that no one should be condemned unheard. This maxim, as held in P I. D 1964 SC 410, is not confined to Courts but extends to all proceedings, by whom ever held which may affect the person or property or other right of the parties concerned in tire dispute, and the maxim will apply with no less force to proceedings which affect liability to pay a tax." The Tribunal vile 1981 P T D (Trib.) 1,79 has also held to this effect. So, it is clear that notice before levying penalty was necessary to be given, but has not been given. Also it is clear that the demand notice by which super tax amounting td Rs.1,815 was required .to be paid did not allow any time to the assessee to pay the amount. The notice was issued on 28‑6‑1984 setting the same date, i.e., 28‑6‑1984 as the date of paying tax. But it has not been denied that it did not reach the assessee the same day on which it was issued. It was delivered much later on 15‑7‑1984. The date set for depositing the amount had thus already expired when the notice reached the assessee. Under section 85 of the Income‑tax Ordinance, 1979 payment of the tax' demanded has to be made within the time specified in the notice. The notice, specified the same day as the time for payment, but it was served on the assessee the same day. Accordingly, it could not be complied with. In fact the assessing officer wanted to allow time for payment, as in 'the subsequent order by which he imposed penalty it is stated that the demands has not met within the period of 30 days allowed for the purpose and, therefore, penalty is being levied. But somehow he omitted in the demand notice to specify the time of 30 days for payment. Accordingly, it was not a valid notice in true sense of the term, allowing no time to satisfy the demand made by it. It as such could be ignored. The amount of penalty imposes was also excessive. At 10% of the amount due was the penalty imposed. As held in 1981 P T D (Trib.) 179 for first default, the amount of penalty should be lower, about 2 %. Though adequate proof on record has not been supplied in this behalf, yet if in fact it was so adjustment in tax was required to be allowed. It was stated that from the previous year refund in tax was due to the assessee as its appeal was accepted reducing the total liability. The amount payable by way of refund should have been, it is urged, adjusted towards super‑tax. As already said, if refund was really due its adjustment towards the tax could be made under sections 59 and 108 of the Ordinance. But this would require proof that refund was clue, which ore the existing record is not available. But there is no doubt as to issuance of the prior notice. It not having been issued, penalty was on a leviable. The result is that the order of penalty deserved to be annulled and the learned Appellate Assistant Commissioner did not err in so ordering. The appeal fails and is hereby dismissed. M. Y. H Appeal dismissed.