Income Tax Ordinance, 2001 — Section 191: Prosecution for non-compliance with certain statutory obligations

191. Prosecution for non-compliance with certain statutory obligations.

(1)Any person who, without reasonable excuse, fails to the person shall be liable for a penalty equal to –

(i)where the statement or omission was made knowingly or recklessly, two hundred per cent of the tax shortfall; or

(ii)in any other case (other than where sub-section (2) applies), twenty-five per cent of the tax shortfall.

(2)In the case of an assessment order under section 120, no penalty shall be imposed under sub-section (1) to the extent to which the tax shortfall arose as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayer’s position.

(3)A reference in this section to a statement made to an income tax authority is a reference to a statement made in writing or orally to that authority acting in the performance of the authority’s duties under this Ordinance, and shall include a statement made

(a)in an application, certificate, declaration, notification, return, objection or other document made, prepared, given, filed or furnished under this Ordinance;

(b)in information required to be furnished under this Ordinance;

(c)in a document furnished to an income tax authority otherwise than pursuant to this Ordinance;

(d)in answer to a question asked of a person by an income tax authority; or

(e)to another person with the knowledge or reasonable expectation that the statement would be conveyed to an income tax authority.” 1 Section 188 omitted by the Finance Act, 2010. The omitted section 188 read as follows: “188. Penalty for failure to give notice.- (1) Where a person fails to give notice of the discontinuance of the person’s business as required under section 117, the Commissioner may impose a penalty on the person not exceeding the amount of tax payable by the person for the tax year in which the business was discontinued.

(2)Where a person fails to give notice of the person’s appointment as liquidator as required under section 141, the Commissioner may impose a penalty on the person not exceeding ten thousand rupees.” 2 Section 189 omitted by the Finance Act, 2010. The omitted section 189 read as follows: “189. Penalty for obstruction.- Where any person obstructs the Commissioner or a taxation officer in discharge of the Commissioner or officer’s functions under this Ordinance, the Commissioner may impose a penalty on the person not exceeding ten thousand rupees.” 3 Section 190 omitted by the Finance Act, 2010. The omitted section 190 read as follows: “190. Imposition of penalty.- (1) No penalty may be imposed under this Part on any person unless the person is given a reasonable opportunity of being heard.

(2)Subject to sub-section (3), the imposition of a penalty under this Part shall be without prejudice to any other liability incurred by the person under this Ordinance.

(3)The imposition of a penalty in relation to an act or omission shall be an alternative to prosecution under Part XI of this Chapter.

(4)If a penalty has been paid under this Part and the Commissioner institutes a prosecution proceeding under Part XI of this Chapter in respect of the same act or omission, the Commissioner shall refund the amount of penalty paid, and the penalty shall not be payable unless the prosecution is withdrawn.

(5)A penalty under sections 182, 183, 185, 186 and 187 shall be imposed by the Commissioner.

(6)The provisions of Parts III and IV of this Chapter shall apply to an assessment of penalty as if it were an assessment of tax.” 398 Chapter X – Procedure 1[(a) comply with a notice under sub-section (3)2[and sub-section (4)] of section 114 3[, sub-section (3) of section 117] or sub-section (1) of section 116;]

(b)pay advance tax as required under section 147;

(c)comply with the obligation under Part V of this Chapter 4[or chapter XII] to collect or deduct tax and pay the tax to the Commissioner; 5[(ca) furnish particulars or complete or accurate particulars of persons mentioned in sub-section (1) of section 165;]

(d)comply with a notice served under section 140 or 176;

(e)comply with the requirements of 6[sub-section (3) or sub-section (4) of] section 141; 7[ ] (f ) provide reasonable facilities and assistance as required under sub section (3) of section 175 8[; 9[ ]

(g)declare business bank account(s) in the registration form or updated registration form or return of income or wealth statement] 10[;

(h)integrate his business with Board’s computerized system; or

(i)generate tax invoice verifiable by the Board’s system;”; shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.

(2)If a person convicted of an offence under clause (a) of sub-section (1) fails, without reasonable excuse, to furnish the return of income or wealth statement to which the offence relates within the period specified by the Court, the person shall commit a further offence punishable on conviction with a fine 11[not exceeding fifty thousand rupees] or imprisonment for a term not exceeding two years, or both. 1 Substituted by the Finance Act, 2003. The substituted clause (a) read as follows: “(a) furnish a return of income as required under section 114 or a wealth statement as required under section 116;” 2 Inserted by the Finance Act, 2017 3 Inserted by the Finance Act, 2024. 4 Inserted by the Finance Act, 2017 5 New clause (ca) inserted through Finance Act, 2019. 6 Inserted by the Finance Act, 2003. 7 The word “or” omitted by the Finance Act, 2021. 8 Comma substituted, the word “and” inserted and clause (g) added by the Finance Act, 2021. 9 The word “and” omitted by the Finance Act, 2022. 10 Comma substituted and clauses (h) and (i) added by the Finance Act, 2022. 11 Inserted by the Finance Act, 2009. 399 Chapter X – Procedure