Law: Income Tax Ordinance, 1979

Section: 2,52,86,2(6)(43)

Income Tax Ordinance (XXXI of 1979)---Ss. 52, 86 & 2(6)(43)---Liability of persons failing to deduct or pay tax---Additional tax---Refund---Adjustment of---Tax payable under S.52 of the Income Tax Ordinance, 1979 was allowable adjustment against the refund due to the assessee. THIS ORDER PASSED BY : INAM ELLAHI SHEIKH (CHAIRMAN). ---This departmental appeal is directed against an order, dated 15-5-2000 recorded by the learned CIT(A), Zone-1, Karachi on the following ground: "That the learned CIT(A) is not justified to set aside the order under section 86 of the Income Tax Ordinance, 1979 with direction. The additional tax under section 86 of the Income Tax Ordinance is consequently chargeable on the default under section 52." 2. The relevant facts in brief are that the assessee was found to have defaulted 'in the deduction of tax under section 50 of the Income Tax Ordinance, 1979. (hereinafter called the Ordinance). Action was taken under section 86 of the Ordinance to impose additional tax at Rs. 1,26,48,180. Such levy was set aside, as per the impugned order, with the same direction as given in the preceding year. In the second round the penalty was imposed at Rs. 6,977,221. The learned CIT(A) set aside the order of the Assessing Officer with the following observation: "After due consideration of the arguments of the learned counsel of the appellant and the learned D.C.I.T and perusal of case records, I find that the arguments of the learned counsel of the appellant carry 'substantial force. Under the circumstances of the case, therefore, I deem it fair to set aside the impugned order and direct the D.C.I.T. to verify from his record the amount of refund due to the appellant at the time when it was required to pay tax under section 52 and, if the appellant's contention that demand under section 52 was less than the refunds due to it, is found to be correct, the proceedings may be dropped as no default could be said to have occurred." 3. The matter of-the fact is that the assessee had a huge amount of refund due to hit and for that reason the assessee claimed that no additional tax could be levied. The learned D.R. has…