(a) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.55(2)(3), 54 & 59‑‑‑C.B.R. Circular C.No.7(7)S.Asst./2001, dated 8‑2‑2001‑‑‑ Self‑Assessment Scheme for the year 2000‑2001‑‑‑Due date of filing the return‑‑‑Self‑Assessment Scheme framed and promulgated under S.59, Income Tax Ordinance, 1979 is subject to the provisions of the Income Tax Ordinance, 1979 for filing return and assessment‑‑‑Return filed under Self‑Assessment Scheme during the extended period granted by the D.C.I.T. could not be excluded from the Self‑Assessment Scheme‑‑‑Such extended date shall be the "due date" for filing the return and such return was eligible and qualified for acceptance under the Self‑Assessment Scheme‑‑ Instructions issued by the C.B.R. vide No. C.No.7(7)S.Asst./2001, dated 8‑2‑2001 to the effect that returns filed during the extended period granted by the D.C.I.T. were not eligible for Self‑Assessment Scheme being in conflict with the provisions of the Income Tax Ordinance, 1979, curtailing the exercise of judicial and quasi‑judicial discretion, were neither just nor legal and thus were not binding and enforceable‑‑‑Principles‑‑‑Federal Tax Ombudsman directed that the Central Board of Revenue should with‑draw the Circular/Instruction Letter bearing No. C. No.7(7)S.Asst./2001, dated 8‑2‑2001; that all actions taken in pursuance of said Circular/Letter, dated 8‑2‑2001 be withdrawn and where necessary rectification order be passed; that all returns filed during the extended period granted by D.C.I.T. which otherwise were eligible under the Self‑Assessment Scheme, be considered and assessed under the Self‑Assessment Scheme and that compliance to be reported within thirty days of the receipt of the order.

The Self‑Assessment Scheme for the assessment year 2000‑2001 was made on 11th September, 2000 under section 59 of the Income Tax Ordinance, 1979. According to clause 1 of the Self‑Assessment Scheme, it applies to returns of income filed under section 55 of the Ordinance for the assessment year 2000‑2001. Clause 2 specifies the conditions under which returns shall qualify for acceptance under the Scheme. Clause 4 specifies returns which are not eligible under Self‑Assessment Scheme. Under clause 2 one of the conditions for applicability of the Scheme is that return is filed by the due date and tax payable with the return under section 54 of the Ordinance has been fully paid and proof of such payment is attached with the return. The due date has not been defined in the Scheme. Section 55, subsection (2) prescribes date for furnishing the return. In the present case, according to section 55(2), the due date for furnishing return has been fixed as on or before the thirty‑first day of December next following the income year. Subsection (3) of section 55 provides that the D.C.I.T. may, on sufficient cause being shown, extend the date for the delivery of the return and that no extension of time for a period or periods amounting in all to more than fifteen days from the dates specified in subsection (2) shall be allowed except with the approval of the Inspecting Additional Commissioner (I.A.C.). This provision, therefore, empowers the D.C.I.T. with the approval of I.A.C. to extend the date for filing the return not more than fifteen days. Such extended date shall be the due date for filing the return. In the present case, the return was filed within the extended period and was eligible and qualified for acceptance under the Self‑Assessment Scheme.

The Self‑Assessment Scheme is issued and framed under section 59 of the Ordinance. It provides that the assessee not being a Public Company or a Company engaged in the business of banking, leasing, Modaraba which files return under section 55 of the Ordinance, qualifies for acceptance. Under the provisions of the Self‑Assessment Scheme made by the C.B.R. or under any instructions or orders issued thereunder, the Deputy Commissioner, Income‑tax shall assess the income on the basis of such return. Therefore, the returns filed under section 55 of the Ordinance which are eligible for Self‑Assessment Scheme qualify for assessment according to the said Scheme. According to subsection (3) of section 59 in assessing the total income and determining the tax payable under subsection (1), the D.C.I.T. may make such adjustments as may be necessary including any adjustment under sections 34, 35, 36, 37, 38, 50, 53 or 54, the rules made under section 165, the First Schedule and the Third Schedule. These provisions have been referred to illustrate that Self‑Assessment Scheme framed and promulgated under section 59 of the Ordinance is subject to the provisions of the Ordinance applicable for fling of return and assessment. The due date for filing return has been provided under section 55 of the Ordinance, therefore, the provisions governing the determination of due date shall be applicable. Under subsection (3) of section 55 of the Ordinance, due date for filing return can be extended for fifteen days. Therefore, the due date shall be up to the period so extended. However, the C.B.R. has issued instruction on 8‑2‑2001 to the effect that returns filed during the extended period granted by the D.C.I.T. are not eligible for Self‑Assessment Scheme. This instruction is in conflict with the provision of the Ordinance. The C.B.R. is empowered to issue order and instructions but they should not be in conflict with the provisions of the Ordinance. The exercise of discretion to extend the date is quasi‑judicial in nature, as the Deputy Commissioner, Income‑tax has to grant extension by determining whether sufficient cause has been shown. The instructions dated 8‑2‑2001 curtail the exercise of judicial discretion and are in conflict with section 55 of the Ordinance. Therefore, they are not binding and enforceable.

If the language of a statute is clear and unambiguous, the Court is bound to construe and give effect without taking into consideration anything extraneous to the same.

The Scheme did not fix any due date for filing the return which was left to be determined according to the provisions of the Ordinance. Moreover, there is no provision in the Scheme that any return filed within the extended date granted by the Deputy Commissioner, Income‑tax shall not be eligible under the Self‑Assessment Scheme. In the face of such clear provisions by mere issuing instructions, C.B.R. cannot restrict the provisions of law for curtail the right of an assessee. The determination of right to avail the benefit of Self‑Assessment Scheme is not an administrative decision because the authority has to apply his mind and decide the issue objectively. Any instruction which interferes with the judicial or quasi‑judicial exercise of discretion by the Income‑tax Authority, is not binding upon him.

The Circular, dated 8‑2‑2001 contradicts the earlier one viz. C.B.R Circular No.27 of 1999, dated 2‑10‑1999.

In view of the provisions of the Ordinance and the principles of interpretation there can hardly be any dispute that the instructions issued are neither just nor legal.

Federal Tax Ombudsman recommended:

(i) C.B.R. to withdraw impugned Circular/Instruction Letter bearing No.C.No.7 (7)S.Asst./2001, dated 8th February, 2001.

(ii) All actions taken in pursuance of the aforesaid impugned Circular/Letter, dated 8‑2‑2001 be withdrawn and where necessary rectification order be passed.

(iii) All returns filed during the extended period granted by D.C.I.T, which otherwise are eligible under the Self‑Assessment Scheme be considered and assessed under the Self‑Assessment Scheme.

(iv) Compliance to be reported within thirty days of the receipt of the order.

Messrs Mehran Associates v. C.I.T. 1993 SCMR.274 = 1993 PTD 69 and Messrs A & B Food Industries Ltd. v. C.I.T., Karachi 1992 SCMR 663 ref.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑. S.59‑‑‑Self‑Assessment Scheme framed and promulgated under S.59, Income Tax Ordinance, .1979 is subject to the provisions of the said Ordinance applicable for tiling return and assessment.

(c) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.55 & 59‑‑C.B.R. Instruction No.7(7)S.Asst/2001, dated 8‑2‑2001‑ Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 9(2)(b)‑‑‑Power, discretion and authority conferred on the Federal Tax Ombudsman‑‑‑Scope‑‑‑Term "mal‑administration" as defined in S.2(3) of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000‑‑‑Connotation‑‑‑C.B.R. Instructions as given in Letter No.7(7)S.Asst/2001, dated 8‑2‑2001 which excluded an assessee from availing the benefit of Self‑Assessment Scheme had no relation with the assessment of income or wealth or determination of tax liability‑‑‑Process or the action taken by the C.B.R. through the said Instructions was contrary to law, arbitrary, unreasonable, unjust and oppressive and thus a clear case of mal‑administration giving Federal Tax Ombudsman the jurisdiction in the matter‑‑‑Principles.

Considering the object of the legislation, the wide definition of the term mal‑administration and the power, discretion and authority conferred on the Federal Tax Ombudsman if any allegation of mal‑administration is made against a Tax employee or Revenue Division in a matter relating to assessment, determination of liability of tax or duty, classification or valuation of goods or interpretation of law, rules or regulations in respect of which appeal, review or revision is provided, then the allegation of mal administration which is not under consideration by any Court, Tribunal or Authority can be investigated by the Federal Tax Ombudsman completely independent of proceedings relating to assessment, valuation, classification or determination of liability of tax or duty. The instruction of C.B.R. excludes an assessee from availing the benefit of Self‑Assessment Scheme. It does not have any relation with the assessment of income or wealth or determination of liability of tax. Coming to the definition of mal administration it is clear that the process or the action taken by the C.B.R. is contrary to law. It is significant to note that the impugned instruction is given retrospective effect which has taken the assessee by surprise. The impugned instruction and action are arbitrary, unreasonable, unjust and oppressive. Therefore, a clear case of mal‑administration has been made out. The Federal Tax Ombudsman (FTO) has, therefore, jurisdiction in the matter.

Salim Ahmad Laliwala, C.A. for the Complainant.

Muhammad Ali Khan, D.C.I.T. for Respondent.

DECISION FINDINGS

The complainants are Private Limited Company. They were required to file return of income for the year ending 30th June, 2000 before 31st December, 2000. They applied for extension of time on 26‑12‑2000, which was granted by the D.C.I.T. up to 15‑1‑200'. The complainant filed a return of income before that date. By a letter, dated 21st February, 2001, the D.C.I.T., Circle 1,‑Companies, Zone‑II, Karachi infor6d*the complainant that in view of C.B.R's. Circular C. No. 7(7)S.Asst/2001, dated 8th February, 2001, their return of income filed during extended time will be processed under normal law being not qualified for Self‑Assessment Scheme. A notice under section 61 of the Income Tax Ordinance, 1979 was also enclosed for hearing on 26‑2‑2001. The complainant has challenged the order as illegal and unjust.

2. Notice was issued to the respondent, Secretary, C.B.R. and reply has been filed on behalf of the Department. The Department has objected to the jurisdiction of the Federal Tax Ombudsman (FTO) to take cognizance of the matter. It has been admitted that by letter, dated 21‑2‑2001, the complainants were informed regarding ineligibility of their case under Self -Assessment Scheme for assessment year 2000‑2001. This impugned action is based on C.B.R's. instructions, dated 8‑2‑2001. It is reiterated that a return filed after due date but within extended period granted under section 55(3) of the Income Tax Ordinance shall fall outside the scope of the said Scheme. It has been further stated that under section 8 of the Income Tax Ordinance, 1979 (hereinafter referred to as the Ordinance), all officers are bound to follow the orders and directions of the C.B.R. The Income Tax Department has merely communicated the instructions of the C.B.R. issued in exercise of powers under section 59 of the Ordinance.

3. The facts of the case are not disputed. The only question for consideration is whether the return filed during the extended period granted by the D.C.I.T. can be excluded from the Self‑Assessment Scheme. The Self‑Assessment Scheme for the assessment year 2000‑2001 was made on I 11th September, 2000 under section 59 of the Ordinance. According to clause 1 of the Self‑Assessment Scheme, it applies to returns of income filed under section 55 of the Ordinance for the assessment year 2000‑2001. Clause 2 specifies the conditions under which returns shall qualify for acceptance under they Scheme. Clause 4 specifies returns which are not eligible under Self‑Assessment Scheme. It is not the case of respondents that the complainant's return was not eligible under clause 4. Under clause 2 one of the conditions for applicability of the Scheme is that return is filed by the due date and tax payable with the return under section 54 of the Ordinance has been fully paid and proof of such payment is attached with the return. The due date has not been defined in the Scheme. Section 55, subsection (2) prescribes date for furnishing the return. In the present case, according to section 55(2), the due date for furnishing return has been fixed as on or before the thirty‑first day of December next following the income year subsection (3) of section 55 provides that the D.C.I.T. may, on sufficient cause being shown, extend the date for the delivery of the return and that no extension of time for a period or periods amounting in all to more than fifteen days from the dates specified in subsection (2) shall be

allowed except with the approval of the Inspecting Additional Commissioner (I.A.C.). This provision, therefore, empowers the D.C.I.T. with the approval of I.A.C. to extend the date for filing the return not more than fifteen days. Such extended date shall be the due date for filing the return. In the present case, the return was filed within the extended period and was eligible and qualified for acceptance under the Self‑Assessment Scheme.

4. The Self‑Assessment Scheme is issued and framed under section 59 of the Ordinance. It provides that the assessee not being a Public Company or a Company engaged in the business of banking, leasing, Modaraba which files return under section 55 of the Ordinance, qualifies for acceptance. Under the provisions of the Self‑Assessment Scheme made by the C.B.R. or under any instructions or orders issued thereunder, the Deputy Commissioner, Income‑tax shall assess the income on the basis of such return. Therefore, the returns filed under section 55 of the Ordinance which are eligible for Self‑Assessment Scheme qualify for assessment according to the said Scheme. According to subsection (3) of section 59 in assessing the total income and determining the tax payable under subsection (1), the D.C.I.T. may make such adjustments as may be necessary including any adjustment under sections 34, 35, 36, 37, 38, 50, 53 or 54, the rules made; under section 165, the First Schedule and the Third Schedule. These provisions have been referred to illustrate that Self‑Assessment Scheme framed and promulgated under section 59 of the Ordinance is subject to the provisions of the Ordinance applicable for filing of return and assessment. As stated earlier, the due date for filing return has been provided under section 55 of the Ordinance, therefore, the provisions governing the ,determination of due date shall be applicable. Under subsection (3) of section 55 of the Ordinance, due date for tiling return can be extended for fifteen days. Therefore, the due date shall be up to the period so extended. However, the C.B.R has issued instruction on 8‑2‑2001 to the effect that returns filed during the extended period granted by the D.C.I.T. are not eligible for Self‑Assessment Scheme. This instruction is in conflict with the provision of the Ordinance. The C.B.R. is empowered to issue order and instructions but they should not be in conflict with the provisions of the Ordinance. The exercise of discretion to extend the date is quasi‑judicial in nature, as the Deputy Commissioner, Income‑tax has to grant extension by determining whether sufficient cause has been shown. The instructions dated 8‑2‑2001 curtail the exercise of judicial discretion and are in conflict with section 55 of the Ordinance. Therefore, they are not binding and enforceable.

5.Mr. Saleem Ahmad Laliwala, the learned representative of the complainant contended that the cardinal principle of interpretation of fiscal statute is that all the charges upon the subject are to be imposed by clear and unambiguous words and relied on Messrs Mehran Associates v. C.I.T. 1993 SCMR 274 = 1993 PTD 69. He has also referred to Messrs A&B Food Industries Ltd. v. C.I.T., Karachi (1992 SCMR 663) where it was observed that:

"If the language of a statute‑ is clear and unambiguous, the Court is bound to construe andgiven effect without taking into considerationanything extraneous to the same."

6. Applying aforestated principles to the present case, it is obvious that the Scheme did not fix any due date for filing the return which was left to be determined according to the provisions of the Ordinance. Moreover, there is no provision in, the Scheme that any return filed within the extended date granted by the Deputy Commissioner, Income Tax shall not be eligible under the Self‑Assessment Scheme. In the face of such clear provisions by mere issuing instructions, C.B.R. cannot restrict the provisions of law or curtail the right of an assessee. The determination of right to avail the benefit of Self‑Assessment Scheme is not an administrative decision because the authority has to apply his mind and decide the issue objectively. Any instruction which interferes with the judicial or quasi- judicial exercise of discretion by the Income‑tax Authority, is not binding upon him.

7. The learned representative of the complainant also referred to C.B.R's. Circular 7.S.Asstt/93 PL III, dated 26‑1‑1995, wherein interpretation of clause (a) of para. 1 of the Circular No.9 of 1994 has been given which reads as follows:

"The undersigned is directed to state that it has been decided by the C.B.R. that where extension for filing returns, of income was obtained from the D.C.I.T., I.T., for filing such returns shall also be eligible under the said Scheme (Self‑Assessment Scheme)."

To the same effect is C.B.R's. Circular No.27 of 1999, dated 2‑10‑1999. This shows that in the past returns filed within the extended period qualified for the benefit of Self‑Assessment Scheme. The Circular, dated b‑2‑2001 contradicts the earlier one. The learned representative of the Department has reiterated what has been stated in the reply and entirely relied upon the impugned Circular/Instruction. In view of the provisions of the Ordinance and the principles of interpretation discussed above, there can hardly be any‑ dispute that the instructions issued are neither just nor legal.

8. The learned representative of the Department has objected to the jurisdiction of the Federal Tax Ombudsman (F.T.O.) and has relied on section 9, subsection (2)(b) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 which reads as follows:

"9(2).‑‑‑The Federal Tax Ombudsman shall not have jurisdiction to investigate or inquire into matters which‑‑‑

(a)--------------------------------------

(b) relate to assessment of income or wealth, determination of liability of tax or duty,, classification or valuation of goods, interpretation of law, rules and regulations relating to such assessment, determination, classification or valuation in respect of Which legal remedies of appeal, review or revision are available under the relevant legislation."

9. Before considering this provision reference should be made to the definition of term "maladministration" as provided by subsection (3) of section 2 which inter alia includes:‑‑

"(i) a decision, process; recommendation, act of omission or commission which‑‑

(a) is contrary to law, rules or regulation or is a departure from established practice or procedure, unless it is bona fide and for valid reasons;

(b) is perverse, arbitrary, unreasonable, unjust, biased, oppressive or discriminatory.

(c)-------------------------------------

(d) -------------------------------------

10. According to Departmental Representative the jurisdiction is ousted in cases which relate to assessment of income or wealth, determination of liability of tax or duty, classification or valuation of goods, interpretation of law rules and regulations relating to assessment, determination or classification in respect of which legal remedies of appeal, review or revision are available under the relevant legislation. Considering the object of the legislation, the wide definition of the term maladntinistration and the power, discretion and authority conferred on the Federal Tax Ombudsman if arty allegation of maladministration is made against a tax employee or Revenue Division in a matter relating to assessment, determination of liability of tax or duty, classification or valuation of goods or interpretation of law, rules or regulations in respect of which appeal, review or revision is provided, then the allegation of maladministration which is not under consideration by any Court, Tribunal or Authority can be investigated by the Federal Tax Ombudsman completely independent of proceedings relating to assessment valuation, classification or determination of liability of tax or duty. The learned representative of the complainant pointed out that the impugned order does not relate to any of the categories of cases mentioned in subsection (2)(b) of section 9. The contention raised by the learned representative has force. The impugned instruction excludes an assessee from availing the benefit of Self‑Assessment Scheme. It does not have any relation with the assessment of income or wealth or determination of liability of tax, Coming to the definition of maladministration it is clear that the process or the action taken by the C. B. R. is contrary to law. It is significant to note that the impugned instruction is given retrospective effect which has taken the assessee by surprise. The impugned instruction and action are arbitrary, unreasonable, unjust and oppressive. Therefore, a clear case of maladministration has been made out. The Federal Tax Ombudsman (FTO) has, therefore, jurisdiction in the matter.

11. Keeping in view the above discussion, it is recommended that:

(i) C.B:R. to withdraw impugned Circular/Instruction Letter bearing No.C.N.7(7)S.Asstt./ 2000‑2001, dated 8th February, 2001.

(ii) All actions taken in pursuance of the aforesaid impugned Circular/Letter, dated 8‑2‑2001 be withdrawn and where necessary V rectification order be passed.

(iii) All returns filed during the extended period granted by D.C.I.T. which otherwise are eligible under the Self‑Assessment Scheme be considered and assessed under the Self‑Assessment Scheme.

(iv) Compliance to be reported within thirty days of the receipt of the order.

M.B.A./128/F(Tax)Order accordingly.