The Commissioner Of Income Tax And Another vs Dawood Hercules Chemicals, Ltd
This matter concerns a petition for leave to appeal against a judgment of the Lahore High Court, which had set aside a notice issued by the Commissioner of Income Tax demanding additional tax from the respondent-company. The core legal question was whether the respondent-company was liable for additional tax due to an alleged delay in filing tax estimates under the Income Tax Ordinance, 1979, despite the subsequent filing of a revised estimate and full payment of tax liabilities. The Supreme Court held that the respondent-company had acted in accordance with the law, specifically noting that the final revised estimate was filed before the statutory deadline and that all tax liabilities were fully discharged. The Court affirmed the High Court's decision, ruling that any minor delay in the initial filing became irrelevant given the subsequent compliance and the specific provisions of the Ordinance. The key principle laid down is that where a taxpayer has fully discharged their tax liability based on a timely revised estimate, minor procedural delays in earlier estimates do not justify the imposition of additional tax penalties.
- Does a minor delay in filing an initial tax estimate justify the imposition of additional tax when a revised estimate is filed and all liabilities are subsequently paid?
- Is a tax estimate filed on the day following a closed holiday (Sunday) considered to be filed within time under the Income Tax Ordinance 1979?
- Section 87, Income Tax Ordinance 1979
- Section 53, Income Tax Ordinance 1979
- Section 53(2), Income Tax Ordinance 1979
ORDER
MR. JUSTICE KARAMAT NAZIR BHANDARI.--(l). Respondent-Company was issued a notice under section 87 of the Income Tax Ordinance, 1979 in respect of assessment year 1991, calling upon the Company to pay additional tax in the sum of Rs. 12,40,015/-. The Assessing Officer was of the view that:- "(i) The alleged estimate filed on 17.9.1989 was out of time;
(ii) The alleged estimate filed on 19.3.1990 for the third installment was also out of time; and
(iii) The Company has willfully and deliberately with-held the funds of the Government and used the same for its business activities. Therefore, the company should pay additional tax on so much of the Government funds used by it".
2. The notice was questioned by the company in the Lahore High Court, through Writ Petition No. 2985/96. The High Court allowed the petition on the ground that the respondent-company had filed revised estimate on 9.6.1990 and paid all the dues/tax on the basis of that estimate and that earlier default of two days in the filing of the estimate for the quarter ending 15-9-1989, was of no consequence. The plea of laches raised by the petitioner herein was also not accepted by the Lahore High Court.
3. In support of this petition for leave to appeal from the judgment of the Lahore High Court dated 6.7.2001, Mr. Ilyas Khan, learned ASC after taking us through section 53 of the Income Tax Ordinance, 1979 has emphasized that Undisputedly the estimate filed on 17.9.1989 was delayed by two days and as such the impugned notice for payment was justified in law. In reply it has been argued by the learned counsel for the respondent- company that 16th of September, 1989 was Sunday and therefore a closed day as such estimate filed on 17th September, 1989 was within time.
4. It is, established from record and it has not been disputed before us that final and revised estimate was in fact filed by the company on 9.6.1990, six days before the target day i.e. 15.6.1990. It also not disputed that the company had paid all its liability on the basis of the revised estimate.
The course adopted by the respondent, in the facts and circumstances of the case, has the backing of section 53(2) of the Income Tax Ordinance, 1979. The High Court, therefore, correctly allowed the Constitutional Petition filed by the company. The earlier default of one or two days becomes irrelevant in the facts and circumstances of the case.
5. No ground for leave is made out which is refused and this petition is dismissed.