Law: Income Tax Ordinance, 1979

Section: 80C(4),89

(a) Income Tax Ordinance (XXXI of 1979) [since repealed]---.--- ---.----Ss. 80-C(4) & 89---.---Presumptive Tax Regime---.---Charge of additional tax for failure to pay tax or penalty---.---Scope---.---Section 89 of the Income Tax Ordinance, 1979 empowered the department to levy and recover additional tax only in case an assessee failed to pay the whole or any part of tax levied under Chapter VII or the whole or any part of the penalty levied under Chapter XI of the Income Tax Ordinance, 1979. For the assessment year 1991-92 a sum of Rs.240,260/- was payable by the taxpayer as tax on or before 30.09.1991 in terms of section 80-C(4) of the Income Tax Ordinance, 1979. Amount in question was not paid on its due date. It was paid subsequently over a period of time in instalments. This prompted the Income Tax Department to issue a show cause notice calling upon the taxpayer to explain why additional tax in the sum of Rs.164,823/- may not be recovered from him in terms of section 89 of the Income Tax Ordinance, 1979. Contention of department that since the taxpayer failed to pay tax on or before the due date, the department was justified in resorting to the provisions of section 89 of the Ordinance to levy and recover additional tax. Section 89 of the Income Tax Ordinance, 1979 empowered the department to levy and recover additional tax only in case an assessee failed to pay the whole or any part of tax levied under Chapter VII or the whole or any part of the penalty levied under Chapter XI of the Income Tax Ordinance, 1979. Tax recoverable from the assessee had neither been levied under Chapter VII nor had any penalty been imposed under Chapter XI of the Ordinance which was sought to be recovered. Tax liability of the assessee arose under section 80-C(4) of the Ordinance which fell under Chapter VIII and was therefore beyond the purview of Section 89 of the Ordinance. Further, the competent authority had not allowed stay of payment of tax or payment of the same in installments that may have furnished any justification to invoke the provisions of section 89 of the Income Tax Ordinance, 1979 to claim additional tax from the assessee. Show cause notice and order…

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