20/02/2026
The Income Tax Appellate Tribunal (ITAT) decided two appeals filed by Raja Abdullah Mukhtar regarding penalties imposed for the late submission of Withholding Tax (WHT) statements for Tax Year 2024.
The taxpayer accepted that the statements were filed late, but contended that the penalty of Rs. 2,467,500 was excessive and unjust, as the actual tax default was only Rs. 13,315, which had already been paid. The Tribunal agreed, observing that the penalties were imposed mechanically and were clearly disproportionate. It further clarified that the purpose of penalties is to secure compliance, not to generate revenue. Accordingly, the ITAT reduced the penalty to the minimum of Rs. 5,000 per quarter and set aside the separate penalty for non-deposit of tax, since the outstanding amount had already been cleared.
