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Many taxpayers could not submit their tax returns in time and now FBR has issued notices to them. This is a guide what to do now?



Late filing of return for 2020 on IRIS

According to the news report, the FBR has issued penalty notices to almost 832000 non-filers of annual income tax returns. The minimum penalty of late filing of non-filing income tax return is Rs.40,000. The late/non-filers have been issued notices through FBR portal commonly known as IRIS. The link of the said website is well known for the tax filers.

After issuance of notices online, the FBR has also send emails and SMS to the taxpayers requiring them to make compliance of notices u/s 182(penalty) and 114(4) of the Ordinance.

Now, the taxpayers are worried that they are now have to pay a penalty of Rs.40,000 for late filing. In this context, it would be apt to note that the higher courts have held in number of cases that:

  1. Penalty is not mandatory. This means that it is not essential that in case a default has been committed, the penalty must be imposed. If a taxpayer files a satisfactory reply/justification for non/late filing of return, the penalty notice should be withdrawn.
  2. In case there is no loss of revenue, no penalty should be imposed. Suppose a taxpayer has filed return late, but he has paid the taxes in time, no penalty should be imposed. Salary cases is an example for this.
  3. it is incorrect impression that the penalty has to be universally imposed, without any exception whatsoever, if there is a default. This is not correct interpretation.
  4. It is an immutable principle of law that imposition of penalty is deterrent to tax evasion and when there is no evasion of tax penalty cannot be imposed.
  5. 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.
  6. 6. The default should be willful and not due to inevitable circumstances.

What to do if your income tax return is late.

  1. Just login to your IRIS
  2. Check your inbox
  3. You will find two notices; one is notice u/s 114(4) and the second notice will be u/s 182.
  4. Select notice u/s 114(4) and select “Reply”. The system will require you to select one of the options:
    1. Statement u/s 115
    2. Income Tax return u/s 114

If you have a income tax return in “Drafts” please delete it first.

Select return u/s 114 and income tax return form will appear. You should fill in the same properly and submit it.

The next procedure is to submit the reply to second notice u/s 182 of the Income Tax Ordinance.

In the above, circumstances, it would be fair enough to file a reply to notice u/s 182 mentioning that the default of late filing of tax return was not intentional rather it was due to some inevitable circumstances. The reason of COVID 19 pandemic is a good reason for furnishing of reply to penalty notice u/s 182 of the Income Tax Ordinance. I have prepared a reply to notice, which may be modified as per requirement of each case. A taxpayer may also contact us for further queries regarding his tax matters.

Penalty notices reply



Specimen of notice of penalty for late filing of income tax return

Subject: REPLY TO NOTICE U/S 182(2) –

Dear Sir,

Kindly refer to your office notice on the above subject. In this context it is submitted annual income tax return has duly been filed in compliance with notice u/s 114(4) of the Ordinance. Delay in submission of annual income tax return for tax year 2020 was not intentional but was due to inevitable circumstances faced dye to COVID 19 Pandemic. It is, therefore, requested that delay may very gracious be condoned.

It is submitted that your goodself has shown the intention to impose penalty. It is added that honorable higher courts have held in number of cases that purpose of penalty provisions is to enforce compliance and not to generate revenue. In its recent judgment, the Honorable Appellate Inland Revenue Tribunal, Islamabad has held that:

I.T.A. No. 117/IB/2018 (Tax Year 2016), I.T.A. No. 118/IB/2018 (Tax Year 2017), Order & hearing date: 31-07-2019



Appellant(s) by: Mr. Atif Mehmood, Advocate Respondent(s) by: Mr. Faheem Sikander, DR



4- We have heard both the parties to the case and perused the record keeping in view the judgments relied upon by the appellant. The submissions made by the learned AR of the appellant have substance. It is an admitted fact that the appellant filed the monthly statements within the stipulated time and due tax was paid. The appellant filed annual statements after due date but no loss of revenue incurred to the Government Exchequer. It is an immutable principle of law that imposition of penalty is deterrent to tax evasion and when there is no evasion of tax penalty cannot be imposed. This Tribunal in numerous cases has deleted the penalty in such like circumstances, reliance may be placed on the judgments reported as 2016 SLD 1193, 2017 PTD 770 and 2017 PTD 1080. In the case of M/s Resilience Expert (Pvt.) Ltd. Vs Commissioner Inland Revenue, Range-B, WHT, RTO, Karachi (2017 PTD 1080) this Tribunal has held that:-

“7. Before parting with this judgment, I may observe that it is incorrect impression of revenue department that the penalty has to be universally imposed, without any exception whatsoever, if there is a default. This is not correct interpretation. The major prerequisite for imposition of penalty has always been a default committed “commits any offence” the onus to prove lies on department. All Officer Inland Revenue is directed to be judicious in imposition of penalty. 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 mobilisation. 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.”

“Further we have noticed that neither in the above show cause notice nor in the penalty order it has been alleged or established by the Assessing Officer that the appellant has wilfully and deliberately did not comply with the provisions of section 165 of the Ordinance. For the purposes of levy of penalty an exercise has to be carried out by the department wherein they have no determine whether or not the non-filing was deliberate and whether it was done with mala fide intent. For the purpose of levy of penalty mens-rea is an essential ingredient, which has to be established in terms of the judgment of the August Supreme Court of Pakistan rendered in a case cited at “D.G. Khan Cement Company Ltd and others v. Federation of Pakistan and others” (2004 SCMR 456). The Apex Court in numerous cases has observed that there are various ingredients to invoke penal provisions which are;-

Penalty proceedings being criminal or quasi-criminal establishment of mens-rea is an essential ingredient and as such the statutory obligation is on the revenue to prove that the assesse has acted deliberately in defiance of law or was guilty to conduct contumacious or dishonest or acted in conscious disregard of his obligation.

In the case reported as PLD 1967 SC 1, it was held that even in the case of statutory offence the presumption is that mens-rea is an essential ingredient”.

In the case reported as PLD 1991 SC 963, it was held that where it could be demonstrated that the assesse did not wilfully evade the sales tax it would perhaps be permissible to spare him of the penalty

Reliance in this context is also placed on the following judgments:

i) In its landmark judgment in the case Cheek versus United States [Cheek 498, US at 201] the United States Supreme Court interpreted ‘willfully’ as the taxpayer’s actual knowledge that his action violates the law. In the said judgment it is held that ignorance of law in tax cases is an excusable defense.

ii) The Supreme Court of Pakistan in the case reported as PLD 1967 (S.C) 1 has held that “even in the case of statutory offence the presumption is that mens rea is an essential ingredient”.

iii) In the case of Kamran Steel Rolling Mills Vs Commissioner of Income Tax, Lahore Zone, Lahore reported as 60 Tax 13, the Lahore High Court had held that penal proceedings are criminal in nature and, therefore, have to be established independently on the basis of cogent evidence as is required in criminal proceedings. For the imposition of penalty, it is not sufficient that the assessee’s explanation was not satisfactory or even false and that evidence independent of assessee’s explanation should be recorded before penalty could be imposed.

iv) In the case of Mohammad Muslim v CIT Karachi (1980) 42 Tax 129, the Sind High Court, Karachi held that penalty could be imposed only when revenue established a case indicating dishonest motive of an assessee.

v) Penalty cannot be levied where default is unintentional and not willful as held by Peshawar High Court in case reported as (2001) 83 Tax 38 = 2000 PTD 3410.

vi) Existence of mens rea is mandatory condition for levy of penalty as held by High Court Karachi in case reported as 2007 PTR 204 (H.C. Kar) = 2007 PTD 901.

vii) The Karachi Bench of Tribunal in Appeal no. 1650/99 dated October 27, 2000 held as under:

“However, in the matter of additional tax and penalty, we find that there is no mens rea in this case, and the appellant has not willfully tried to evade the tax liability, therefore, remit the additional tax and penalty imposed on the appellant. Reliance is placed in PLD 1967 SC 1, PLD 1991 SC 963, 1980 42 Tax 129 Karachi and 60 Tax 13 Lahore”.

  1. 1.

viii) In the case law reported as 2004 PTD 1179 the Apex Court has held that:

“In the case reported as PLD 1991 SC 1963, this court held that imposition of penalty was illegal where the evasion of the duty was not willful. The Lahore High Court in the case reported as PTCL 1995 CL 415 held that where the petitioner did not act mala fide with the intention to evade the tax, the imposition of penalty of additional tax and surcharge was not justified. It was held by the Sales Tax Tribunal in the case of 2002 PTD (Trib) 300 that where the controversy between department and the appellants related to interpretation of different legal provision, the imposition of additional tax and penalty has not justification. In other case, the appellate Tribunal held that additional tax punitive in nature as such unless default willful or mala fide, the recovery of the same was unwarranted”.

In view of above, it is requested that penalty proceedings may please be dropped.


Yours faithfully,

For further assistance please call: 0337-1417699



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