| Citation(s) |
|---|
| 2021 SLG 190 2021 SLD 190 2021 PTCL 227 2021 PTD 335 |
Sindh High Court
C.P. Nos. D-5025, 5126 to 5129, 5208 to 5212, 5218 & 5219, 5235, 5236, 5242, 5306, 5307, 5314, 5315, 5327, 5328, 5333, 5403, 5425, 5489, 5526, 5756, 5894, 5895, 5924 and 6216 of 2020, decided on 22nd December, 2020.
MR., JUSTICE AQEEL AHMED ABBASI, MRS., JUSTICE RASHIDA ASAD
Petitioners by: Mr. Anwar Kashif Mumtaz, Advocate, Mr. Abid H. Shaban, Advocate, Mr. Taimoor Ahmed Qureshi, Advocate, Mr. Muhammad Aleem, Advocate, Mrs. Nida Zafar Khokhar, Advocate, Mr. Ammar Athar Saeed, Advocate, Mr. Ahmed Saeed Siddiqui, Advocate, Mr.
C.P. Nos. D-5025, 5126 to 5129, 5208 to 5212, 5218 & 5219, 5235, 5236, 5242, 5306, 5307, 5314, 5315, 5327, 5328, 5333, 5403, 5425, 5489, 5526, 5756, 5894, 5895, 5924 and 6216 of 2020, decided on 22nd December, 2020.
MR., JUSTICE AQEEL AHMED ABBASI, MRS., JUSTICE RASHIDA ASAD
Petitioners by: Mr. Anwar Kashif Mumtaz, Advocate, Mr. Abid H. Shaban, Advocate, Mr. Taimoor Ahmed Qureshi, Advocate, Mr. Muhammad Aleem, Advocate, Mrs. Nida Zafar Khokhar, Advocate, Mr. Ammar Athar Saeed, Advocate, Mr. Ahmed Saeed Siddiqui, Advocate, Mr.
AAMEER MUSTAALY KARACHIWALLA.
VS
DEPUTY COMMISSIONER I.R AND OTHERS.
Law: Constitution of Pakistan, 1973
Section: 199
Law: Income Tax Ordinance, 2001
Section: 114,116A,182,182(2)
CONSTITUTION OF THE ISLAMIC REPUBLIC OF PAKISTAN, 1973
Article 199
Constitutional jurisdiction of High Court can be invoked as the matter pertains to pure interpretation of law as well as application of Section 116A and 182 of the Income Tax Ordinance, 2001.--Exception can be drawn from settled legal position in such cases where a Show Cause Notice may not suffer from some jurisdictional defect, however, would lead to some patently illegal order based upon misinterpretation of legal provisions, which may effect the large number of taxpayers and may lead to multiplicity of litigation between the taxpayers and the revenue authorities before Appellate Forum(s) provided under the relevant Statute as well as before this Court in the shape of References etc. In the above petitions while raising substantial legal grounds, the very initiation of proceedings for imposition of penalty under Section 182 of the Income Tax Ordinance, 2001, through impugned Notice(s) has been challenged, whereas, the matter pertains to pure interpretation of law as well as application of Section 116A and 182 of the Income Tax Ordinance, 2001, on the facts of instant petitions. Therefore, we are of the opinion that the impugned Notice(s) issued under Section 182 of the Income Tax Ordinance, 2001, to the petitioners in these cases may not suffer from any jurisdictional defect, however, the petitioners have made out a case to invoke the constitutional jurisdiction of this Court under Article 199 of the Constitution to examine the legality of the impugned notices.
INCOME TAX ORDINANCE, 2001 (XLIX OF 2001)
Sections 116A 182
In the absence of prescribed format notified under Section 116A, where nothing has been concealed nor there is any consequence either on income or tax liability of taxpayers for non-filing of Foreign Income Assets Statement along with return, the penal provisions (penalty) of Section 182 could not be invoked, particularly when department have failed to establish willful default or mens rea on the part of taxpayers.” In the instant matters no prescribed format u/s 116A of the Ordinance has been notified so far so as to bring petitioners within the ambit of ˜offence as envisaged under section 182(1) of the Income Tax Ordinance, 2001.
It is settled positions that rules and regulations are framed for the enforcement of laws, however, in the absence of such Rules, the regulatory authorities would not be able to enforce the Laws. Absence of relevant rule and prescribed format under section 116A of the Income Tax Ordinance, 2001 does not support the applicability of centuries old concept of ˜due process, which is authenticated by the procedures by which laws are applied imperatively on visibly ˜evenhanded pattern. Jurisprudence always warrants codification of regulations so that parties are on notice regarding what is and is not lawful. While examined on the touchstone of above settled legal position, impugned Notices under Section 182(2) of the Income Tax Ordinance, 2001, have been issued without lawful authority to the petitioners by respondents, hence of no legal effect.
In the case of petitioners, there is no effect either on the income of petitioners, their tax liability or any other financial implications for non-filing of Statement under Section 116A, nor it is a case of concealment of income or non-disclosure of foreign income and assets from all source by the petitioners. The cases of petitioners otherwise, do not attract any proceedings for making assessment or additional assessment in respect of any escaped income or concealed income, which may result in creating any additional tax liability upon the petitioners. If this would have been the case where petitioners would have not disclosed their foreign assets and income in the Wealth Statement filed under Section 116 along with returns of income for the Tax Year 2019, than the burden would have been upon the petitioners to explain the reason for such non-disclosure, and in case of any dis-satisfactory response by the petitioners, proceedings for imposition of penalty under Section 182 of the Income Tax Ordinance, 2001, could have been justified, however, subject to fulfillment of other legal requirements. Therefore, in the above circumstances of the case, mere non-filing of Statement under Section 116A, would not attract imposition of penalty under Section 182 of the Income Tax Ordinance, 2001 in an automatic manner, without establishing wilful default or mense rea on the part of the petitioners. It is settled legal position that unless there is clear intention of the legislature to impose additional liability or burden of tax in the shape of penalty or surcharge in case of any default or non-compliance of legal obligations, the imposition of such penalty should be subject to fulfillment of legal and procedural requirements, whereas, Tax Authorities have to establish willful default and/or mens rea on the part of taxpayer before invoking the penal provisions.
We are of considered opinion that in the absence of prescribed format notified under Section 116A of the Income Tax Ordinance, 2001, whereas, nothing has been concealed by petitioners, nor there is any consequence either on income or tax liability of petitioners for non-filing of Foreign Income Assets Statement along with return of income for Tax Year 2019, the penal provisions of Section 182 of the Income Tax Ordinance, 2001, could not be invoked. Particularly, when respondents have failed to establish willful default or mens rea on the part of petitioners.
Jurisprudence always warrants codification of regulations so that parties are on notice regarding what is and what is not lawful.
Notice issued without lawful authority have no legal effect.
Rules and regulations are framed for the enforcement of laws, however, in the absence of such Rules, the regulatory authorities would not be able to enforce the Laws.
Invoking penal provisions.”Unless there is clear intention of the legislature to impose additional liability or burden of tax in the shape of penalty or surcharge in case of any default or non- compliance of legal obligations, the imposition of penalty should be subject to fulfillment of legal and procedural requirements, whereas a tax authorities have to establish willful default and/or mens rea on the part of taxpayer before invoking the penal provisions.
Article 199
Constitutional jurisdiction of High Court can be invoked as the matter pertains to pure interpretation of law as well as application of Section 116A and 182 of the Income Tax Ordinance, 2001.--Exception can be drawn from settled legal position in such cases where a Show Cause Notice may not suffer from some jurisdictional defect, however, would lead to some patently illegal order based upon misinterpretation of legal provisions, which may effect the large number of taxpayers and may lead to multiplicity of litigation between the taxpayers and the revenue authorities before Appellate Forum(s) provided under the relevant Statute as well as before this Court in the shape of References etc. In the above petitions while raising substantial legal grounds, the very initiation of proceedings for imposition of penalty under Section 182 of the Income Tax Ordinance, 2001, through impugned Notice(s) has been challenged, whereas, the matter pertains to pure interpretation of law as well as application of Section 116A and 182 of the Income Tax Ordinance, 2001, on the facts of instant petitions. Therefore, we are of the opinion that the impugned Notice(s) issued under Section 182 of the Income Tax Ordinance, 2001, to the petitioners in these cases may not suffer from any jurisdictional defect, however, the petitioners have made out a case to invoke the constitutional jurisdiction of this Court under Article 199 of the Constitution to examine the legality of the impugned notices.
INCOME TAX ORDINANCE, 2001 (XLIX OF 2001)
Sections 116A 182
In the absence of prescribed format notified under Section 116A, where nothing has been concealed nor there is any consequence either on income or tax liability of taxpayers for non-filing of Foreign Income Assets Statement along with return, the penal provisions (penalty) of Section 182 could not be invoked, particularly when department have failed to establish willful default or mens rea on the part of taxpayers.” In the instant matters no prescribed format u/s 116A of the Ordinance has been notified so far so as to bring petitioners within the ambit of ˜offence as envisaged under section 182(1) of the Income Tax Ordinance, 2001.
It is settled positions that rules and regulations are framed for the enforcement of laws, however, in the absence of such Rules, the regulatory authorities would not be able to enforce the Laws. Absence of relevant rule and prescribed format under section 116A of the Income Tax Ordinance, 2001 does not support the applicability of centuries old concept of ˜due process, which is authenticated by the procedures by which laws are applied imperatively on visibly ˜evenhanded pattern. Jurisprudence always warrants codification of regulations so that parties are on notice regarding what is and is not lawful. While examined on the touchstone of above settled legal position, impugned Notices under Section 182(2) of the Income Tax Ordinance, 2001, have been issued without lawful authority to the petitioners by respondents, hence of no legal effect.
In the case of petitioners, there is no effect either on the income of petitioners, their tax liability or any other financial implications for non-filing of Statement under Section 116A, nor it is a case of concealment of income or non-disclosure of foreign income and assets from all source by the petitioners. The cases of petitioners otherwise, do not attract any proceedings for making assessment or additional assessment in respect of any escaped income or concealed income, which may result in creating any additional tax liability upon the petitioners. If this would have been the case where petitioners would have not disclosed their foreign assets and income in the Wealth Statement filed under Section 116 along with returns of income for the Tax Year 2019, than the burden would have been upon the petitioners to explain the reason for such non-disclosure, and in case of any dis-satisfactory response by the petitioners, proceedings for imposition of penalty under Section 182 of the Income Tax Ordinance, 2001, could have been justified, however, subject to fulfillment of other legal requirements. Therefore, in the above circumstances of the case, mere non-filing of Statement under Section 116A, would not attract imposition of penalty under Section 182 of the Income Tax Ordinance, 2001 in an automatic manner, without establishing wilful default or mense rea on the part of the petitioners. It is settled legal position that unless there is clear intention of the legislature to impose additional liability or burden of tax in the shape of penalty or surcharge in case of any default or non-compliance of legal obligations, the imposition of such penalty should be subject to fulfillment of legal and procedural requirements, whereas, Tax Authorities have to establish willful default and/or mens rea on the part of taxpayer before invoking the penal provisions.
We are of considered opinion that in the absence of prescribed format notified under Section 116A of the Income Tax Ordinance, 2001, whereas, nothing has been concealed by petitioners, nor there is any consequence either on income or tax liability of petitioners for non-filing of Foreign Income Assets Statement along with return of income for Tax Year 2019, the penal provisions of Section 182 of the Income Tax Ordinance, 2001, could not be invoked. Particularly, when respondents have failed to establish willful default or mens rea on the part of petitioners.
Jurisprudence always warrants codification of regulations so that parties are on notice regarding what is and what is not lawful.
Notice issued without lawful authority have no legal effect.
Rules and regulations are framed for the enforcement of laws, however, in the absence of such Rules, the regulatory authorities would not be able to enforce the Laws.
Invoking penal provisions.”Unless there is clear intention of the legislature to impose additional liability or burden of tax in the shape of penalty or surcharge in case of any default or non- compliance of legal obligations, the imposition of penalty should be subject to fulfillment of legal and procedural requirements, whereas a tax authorities have to establish willful default and/or mens rea on the part of taxpayer before invoking the penal provisions.
CONSTITUTION OF THE ISLAMIC REPUBLIC OF PAKISTAN, 1973
Article 199
Constitutional jurisdiction of High Court can be invoked as the matter pertains to pure interpretation of law as well as application of Section 116A and 182 of the Income Tax Ordinance, 2001.--Exception can be drawn from settled legal position in such cases where a Show Cause Notice may not suffer from some jurisdictional defect, however, would lead to some patently illegal order based upon misinterpretation of legal provisions, which may effect the large number of taxpayers and may lead to multiplicity of litigation between the taxpayers and the revenue authorities before Appellate Forum(s) provided under the relevant Statute as well as before this Court in the shape of References etc. In the above petitions while raising substantial legal grounds, the very initiation of proceedings for imposition of penalty under Section 182 of the Income Tax Ordinance, 2001, through impugned Notice(s) has been challenged, whereas, the matter pertains to pure interpretation of law as well as application of Section 116A and 182 of the Income Tax Ordinance, 2001, on the facts of instant petitions. Therefore, we are of the opinion that the impugned Notice(s) issued under Section 182 of the Income Tax Ordinance, 2001, to the petitioners in these cases may not suffer from any jurisdictional defect, however, the petitioners have made out a case to invoke the constitutional jurisdiction of this Court under Article 199 of the Constitution to examine the legality of the impugned notices.
INCOME TAX ORDINANCE, 2001 (XLIX OF 2001)
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