Law: Income Tax Ordinance, 2001

Section: 114,182,182(1),182(1)(i),120

[Income Tax Ordinance (XLIX of 2001)]......Sections 182, 114 & 120---Offences and penalties---Late filing of return---Declaration of loss and claim of refund---Levy of penalty---Validity---Penalty had been imposed as a result of non-compliance of provisions of S.114 of the Income Tax Ordinance, 2001 i.e. not filing of return within the prescribed time; such was a default in view of provisions of S.114 of the Income Tax Ordinance, 2001, which situation was covered under S.182(1) of the Income Tax Ordinance, 2001---Penalty for such default had been prescribed in Sub-Cl. (i) of S.182(1) of the Income Tax Ordinance, 2001 which clause had specified that the penalty should be imposed on the basis of the tax payable, whereas no tax had become payable even on assessment---Restriction imposed on calculation of penalty was one tenth of one per cent, of tax payable and maximum limit was 25% of the tax payable---Inevitability, the base point was the tax payable, resultantly second part of clause (i) came into operation only when initial calculation of penalty had been made on the basis of tax payable---For imposing the penalty for default under S.114 of the Income Tax Ordinance, 2001, the pre-requisite was the tax payable by such assessee---Fulfilment of basic ingredient of "tax payable" was a condition precedent for levying the penalty---Tax statutes were not to be interpreted strictly and were to be followed as per its language without stretching the meanings of the same---Had the intent of statute to impose the penalty in a situation like the present case, its linkage with tax payable would not have been expressed---Such interpretation was further strengthened from the provisions of S.182(1) of the Income Tax Ordinance, 2001 wherein for imposition, of penalty, linkage had been expressed with the tax payable---In the matter of taxation, literal approach had to be followed provided that it did not lead to manifest absurdity---Penalty for default of S. 114 of the Income Tax Ordinance, 2001 only became leviable when there was a "tax payable" but when no tax had been imposed on the Taxpayer, levy of penalty was not justified---No error or infirmity having been found in…

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