COMMISSIONER (LEGAL DIVISION) vs PAKISTAN SERVICES LIMITED S — 2023 PTD 773 KARACHI-HIGH-COURT-SINDH

Fields are extracted from the reported citation and judgment text. Where a detail is not stated in the record, it is not shown.

COMMISSIONER (LEGAL DIVISION) VS PAKISTAN SERVICES LIMITED S.111---Penalty for concealment of income---Scope---Mens rea---Scope---Existence of mens rea is a mandatory condition for levying any penalty under S.111 of the Income Tax Ordinance, 1979---Burden to prove such act of an assessee is also on the department---Mere failure to determine correct income and pay tax accordingly, until it is a result of fraud or willful gross neglect, will not ipso facto warrant imposition of penalty---Falsity of an explanation by the taxpayer is not in and of itself a cause to mandatorily impose penalty under the Ordinance---Assessee is not called upon to prove his innocence; it is for the department to establish his guilt---Penalty can be imposed only when the revenue officer establishes a case indicating dishonest motive of an assessee in filing a return---For the purposes of imposition of penalty, the assessee must be conscious of having concealed the particulars of his income---For imposition of penalty it is not sufficient that the assessee's explanation was not satisfactory or was even false; an evidence independent of assessee's explanation should be on record before penalty could be imposed---Even if an assessee agrees to a higher assessment than the returned income, it is not sufficient to levy penalty, whereas, the position may be different if the assessee admits that the addition may be treated as its concealed income, in which case the department need not establish anything more to levy penalty---Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. Citation Name: 2023 PTD 773 KARACHI-HIGH-COURT-SINDHBookmark this Case COMMISSIONER (LEGAL DIVISION) VS PAKISTAN SERVICES LIMITED Ss. 62 & 111---assessment on production of accounts, evidence, etc---Penalty for concealment of income---Scope---During the assessment proceedings, the taxation officer alleged that certain expenses claimed by the respondent were false and inaccurate and were added to the total income as concealed income---However, the original order was subsequently amended and part of the alleged addition was deleted while some of it was set aside---No record of the original proceedings was presented to rebut the factual determination made by the lower forums against the department---Taxation officer failed to determine the actual guilt warranting a penal action and did not consider the exception created by subsection 2(a) of S.111 of the Ordinance, which stated that a mere disallowance of an expenditure would not constitute concealment of income or furnishing of inaccurate particulars of income unless it was proven that the assessee deliberately claimed a deduction for an expenditure not actually incurred---Deletion of the penalty was fully justified, therefore, the Reference application was dismissed in limine.

COMMISSIONER (LEGAL DIVISION) vs PAKISTAN SERVICES LIMITED S — 2023 PTD 773 KARACHI-HIGH-COURT-SINDH

Case information

Judgment text as reported

Other judgments reported in 2023 PTD