Law: Income Tax Ordinance, 2001

Section: 114,115,116,165,182(1)

THIS ORDER PASSED BY: UMAR ATA BANDIAL, JUSTICE:---.--- These appeals involve a common question of law, namely, whether the default by an assessee to file his income tax return within the prescribed time attracts the penalty imposed under the Table appended to section 182(1) of the Income Tax Ordinance, 2001, Sr. No.1 whereof provides as follows: S. No. Offences Penalties Section of the Ordinance to which, offence has reference (1) (2) (3) (4) 1 Where any person fails to furnish a return of income or a statement as required under section 115 or wealth statement, wealth reconciliation statement or statement under section 165 within the due date. Such person shall pay a penalty equal to 0.1% of the tax payable for each day of default subject to a minimum penalty of five thousand rupees and maximum penalty of 25% of the tax payable in respect of that tax year. (emphasis supplied) 114, 115, 116 and 165 2. The difference of opinion between the parties is whether the expression tax payable pertains to the amount of tax that remains to be deposited with the return or the expression refers the total tax liability of the assessee for the income year in question. In Civil Appeal No.1269 of 2013 as well as the other connected appeals the respondent assessee claims that the entire amount of tax chargeable upon him for the tax years 2008 and 2009 (in case of C.A. 1269 of 2013) was deducted at source as withholding tax. Consequently, no amount of tax was liable to be deposited along with the tax return for both the tax years. In these circumstances, the learned High Court has held that the minimum penalty of Rs.5000/- provided in Table 1 can be lawfully collected from the respondent. It has supported its view by reference to an Explanation that was inserted in Column 3 of the Table by the Finance Act, 2011 to the following effect: Explanation.---For the purposes of this entry, it is declared that the expression tax payable means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under sections 120, 121, 122 or 122C. (emphasis supplied). 3. The learned High Court has held that the Explanation expends the meaning of the expression…

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