KARACHI: Inland Revenue Appellate Tribunal comprising Muhammad Javed Zakarya has set aside the penalties imposed on M/s Resilience Xpert Pvt Ltd by Commissioner Inland Revenue for non-filing of withholding tax statement.
The counsel of M/s Resilience Xpert Pvt Ltd submitted before the tribunal that the order of the Commissioner Appeal-II, Karachi is bad in law and contrary to the facts and circumstances of the case, as the taxpayer was neither tax collecting authority/tax deducting authority nor prescribed person.
He contended that the Commissioner Appeal-II, Karachi erred in imposing penalty under section 182(1) of the Income Tax Ordinance, 2001 for non-filling of statement under section 149/165 of the Ordinance.
Counsel for the taxpayer further pleaded that the Commissioner appeal has ignored this fact that during the said year business of the appellant was non-operative and no deduction were made.
Member Judicial after due deliberation of the case observed that M/s Resilience Xpert was neither tax collecting authority/tax deducting authority nor prescribed person and struck down the penalties imposed.
Member Judicial observed the major prerequisite for imposition of penalty has always been a default committed “commits any offence” the onus to prove lies on department. All Officers Inland Revenue are directed to be judicious and cautious while initiating penal proceedings.
In penalty proceedings authorities must act fairly and honestly. Section 182 of Income Tax Ordinance, 2001 by no means is charging provisions and the legislature intention was not to generate tax or revenue income and the purpose and intention of the penal provisions, is not the source of resources mobilization.
It was only mode of ensuring collection of taxes and compliance thereof. The revenue department cannot be allowed to use provisions to section 182 as substitute of normal assessment or new source of revenue/tax originating provisions.