(a) Wealth Tax Act (XV of 1963)---

----Ss. 3, 25(1) & 35---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3)(i), 9(1) & 11 Assessee/complainant gave note on the first page of his return that all his assets were not taxable as the same had been attached by High Court in favour of a Bank---Assistant Commissioner Income Tax/Wealth Tax completed wealth tax assessments in disregard of the submissions made by complainant through various letters during the course of assessment proceedings---Rectification application filed under S.35 of Wealth Tax Act, 1963 was rejected--Complainant's contention was that Authority did not bother to consider the decree of Court, which was conclusive proof regarding his submissions that his net wealth was nil as he owed huge liabilities---Validity---Record did not show that Assessing Authority had completed all legal requirements before completing such assessments---Legal requirements did not only constitute issuance and service of certain notices---Assessing Authority was legally bound to consider all the documents and evidence furnished by complainant---All the letters addressed to Assessing Authority before the completion of assessments were integral part of Wealth Tax Return---Assessing Officer had failed to take notice of the important note given on the first page of return and to consider/discuss in assessment orders the decrees /decisions of various Courts---It was essential to make it clear in assessment orders, whether the liabilities were allowable or not---Assessing Officer was duty bound to frame a judicious order by discussing all the relevant points and submissions of complainant---Such defects rendered the assessment orders unjust and unreasonable, thus, attracted the provisions of S.2(3)(i) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Assessing Officer had disposed of the rectification application in a very clumsy and careless manner, and the basis of its rejection appeared to be protection of the revenue and not decision obi merits, which also amounted to "mal-administration" ---Federal Tax Ombudsman recommended that Wealth Tax assessments for relevant periods be set aside under S.25(1) of Wealth Tax Act, 1963 with directions to Assessing Officer to reframe the assessments within specified period after providing reasonable opportunity to complainant to explain his case.

(b) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----S.9(1)(2)(b)---Object of S.9(1)(2)(b)---Wealth Tax Act (XV of 1963), Ss.3, 25 & 35---Federal Tax Ombudsman, jurisdiction of---Scope-- Complainant's grievance was that Assessing Authority had completed wealth tax assessments in utter disregard of his submissions and Court decree---Department's objection was that with regards to such assessments, legal remedies of appeal and revision were available to complainant under Wealth Tax Act, 1963, thus, jurisdiction of Federal Tax Ombudsman was barred---Validity---Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, was in the nature of welfare legislation intended to provide redress and relief to taxpayers against excess, illegality and arbitrary actions of tax employees---Acceptance of Department's view-point would not only be against the intention of Legislature, but would result in absurd result and confusion---Where mal-administration was established in respect of any process, proceedings, order or decision, investigation could be made and consequent results were bound to follow---Arbitrariness and illegality in the garb of quasi-judicial :proceedings had been fully established in the present case, which amounted to mal-administration committed by Tax employees, thus, complaint was competent.

Sh. Abdul Hakeem for the Complainant. Syed Mehboob Alam, A.C.I.T. for Respondent.

DECISION/FINDINGS

The complainant Mr. Abdul Hameed is an existing wealth tax assessee of Circle-05, Special Zone, Lahore on NTN: 30-5-0133497. He has alleged that the Assistant Commissioner of Income Tax/Wealth Tax, Circle-05, has completed wealth tax assessments for the assessment years 1998-99 to 2000-2001 in utter disregard of his submissions, contentions 'and arguments submitted through various letters during the course of assessment proceedings. The assessment orders are, therefore, unlawful, mala fide, without application of mind which tantamounts to serious ` mal-administration'.

2. The complainant has vehemently contended that a could not file appeals or engage a lawyer, or tax advisor due to financial constraints. It is stated that all his assets have been attached and are being auctioned under the orders of the various Judicial Authorities.

3. The case was fixed for hearing on 18-2-2002. The complainant as well as the Departmental Representative appeared and the case has been discussed with them. The assessment records produced by the ACIT have also been examined. The respondent has also furnished parawise comments on the complaint vide Letter No.3859, dated 21-1-2001.

4. The Department has raised objection regarding the jurisdiction of this petition. It is contended that since legal remedies are, available with the complainant under the Wealth Tax Act, 1963, therefore, the petition is not maintainable as provided under section 9(2)(b) of the Establishment of the Office Federal Tax Ombudsman Ordinance, 2000 It is further stated by the Department that the applicant has failed to establish any 'mal-administration' as defined in the aforesaid Ordinance.

5. The contents of the parawise comments inter alia include the objection on complainant's submission regarding prescribed fees for appeal. It; is also stated that the assessments under consideration have been-finalized after meeting the legal requirements and nothing mala fide on the part of the Assessing Officer was involved.

6. The respondent' has further stated in para. 5 of the aforesaid comments that returns filed by the assessee for and from the assessment year 1992-93 onwards do not show any liability in the relevant column and the assessments have been made strictly on the basis of the, history of the case.

7. The complainant has also filed rejoinder on the parawise comments of the respondent. It is stated that his rectification application which was pending till filing of the present petition has now been rejected by the Assessing Officer vide his Order No. 217/05, dated 24-12-2001. He has disposed of the rectification application without considering his submissions and the errors pointed out in the application. It is further contended by the complainant that the respondent has given an evasive reply regarding his objections/submissions. It is stated that on the very first page of the return it was clearly recorded "All assets attached in favour of NDFC by Lahore High Court, Multan Bench and on other pages also it was stated not taxable".

8. The perusal of assessment records and the relevant document shows that the only immovable property considered in the assessment orders is the residential house situated in Mumtazabad, Multan and this has been treated as exempt. The assessments resulted in creation of demand on account of four assets detailed as under:--- .

(1) 1700 shares of Rehman Sons (Pvt.) Ltd.

(2) 50500 shares in Quality Weaving Mills Ltd.

(3) 22 Tolas Jewellery.

(4) Prize Bonds of Rs. 50,000.

The above details show that the demand of wealth tax was created mainly count of shares of the abovementioned two, companies.

9. The complainant's grievance is that the valuation of the shares of the above concerns had become nil due to the fact that the business of the companies had failed and the liabilities were much more than the value of the assets. He has reiterated that the ACIT did not bother to consider the Court decree which was the conclusive evidence regarding his submission that his net wealth was nil as he owed huge liabilities of Rs. 22,82,369.

10. The complainant has vehemently contended that the wealth tax returns were filed on 24-4-2001 and all the details of liabilities, explanations, evidence in respect of liabilities were submitted to the Assessing Officer through various letters which became integral art of the return.

11. The observations of the respondent that all legal requirements were completed before completing the wealth tax assessments are not borne out from records. The legal requirements do not only constitute issuance and service of certain notices. The Assessing Officer is also legally bound to consider all the documents and evidence furnished by the complainant. The complainant's assertion that all his letters addressed to the ACIT before the completion of assessments were integral part of the wealth tax returns is very well-founded.

12. The Assessing Officer has failed to mention the very important note given on the first page of the return. "All assets attached in favour of NDFC by Lahore High Court Multan Bench". Similarly, he has failed to consider and discuss the decrees/decisions of various Courts in the body of the assessment orders.

13. It was imperative on the part of the ACIT to frame a judicious order by discussing all the relevant points and submissions of the complainant. It was also essential to make it clear 'in the assessment orders whether the liabilities are allowable or not. The orders passed by the ACIT are sketchy and not speaking orders. These defects render the assessment orders unjust and unreasonable and, therefore, attract the A provisions of section 2(3)(i) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000.

14. The complainant's application for rectification under section 35 of the Wealth Tax Act, 1963 has also been disposed of by the ACIT in a very clumsy and careless manner which is apparent from the following observation of the ACIT:

"Your request has been considered carefully and found without merit. Not apparent from record and thus -no action under section 35 of the Wealth Tax Act, 1963 is called for.

Need of the hour, demands collection of each and every penny of the Government dues. Therefore, you are requested to pay wealth tax dues in question earlier."

15. The order passed under section 35 gives an impression that the application for rectification has been rejected summarily without B discussing the merits of the case. The basis of rejection appears to be protection of the revenue and not decision on merit. This also amounts to mal-administration".

16. The Department has raised objection to the jurisdiction that as legal remedies are available to the complainant under the Wealth Tax Act, 1963, the complaint is not maintainable under section 9(2)(b) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. The main ground seems to be that as the matter relates to assessment of wealth in respect of which-legal remedies of appeal and revision are available jurisdiction is barred. The Ordinance is in the nature of welfare legislation intended to provide redress and relief to the taxpayers against excess, illegality and arbitrary actions of the tax C employees. If the Departments view-point is accepted it will not only be against the intention of the Legislature but will result in absurd result and confusion. Where mal-administration is established in respect of any process, proceeding, order or decision investigation can be made and consequent results are, bound to follow. In the present case arbitrariness and illegality in the garb of quasi-judicial proceeding are fully established which amounts to mal-administration committed by tax employees. Therefore, complaint is competent.

17. In view of the above facts, it is recommended:

(i) The Wealth Tax assessment orders for the years 1998-99 to 2000-2001 be set aside under subsection (1) of section 25 of the Wealth Tax Act with the directions to the Assessing Officer to reframe the assessments after providing reasonable opportunity to the complainant to explain his case.

(ii) Compliance be made within 30 days of the receipt of this order) and reported within a week thereafter.

S.A.K./232/FTO

Order accordingly.