Income Tax Ordinance (XXXI of 1979)---

----Ss. 62, 138 & 63---Assessment---Arbitiary assessment--Net income was estimated on the basis of past history of the case and normal progressive increase to the business---Validity---Neither there was any past history nor anything in the assessment order to show that any enquiry was conducted to find out expansion in the quantum of business- -Income assessed thus had no basis---Order passed by the Assessing Officer, was arbitrary and estimate of income was highly excessive-- Assessment order was to be passed judiciously even where it was passed ex parte under S. 63 of the Income Tax Ordinance, 1979---Federal Tax Ombudsman recommended that the Commissioner of Income Tax should recall the order of Assessing Officer by invoking his jurisdiction under S.138 of the Income Tax Ordinance, 1979 and allow the due relief.

Dealing Officer: Muhammad Shahid Shafique, (Director Complainant, in person.

Haji Muhammad, I.A.C and Mazhar Iqbal, Special Officer

DECISION/FINDING

It is alleged in the complaint that mal-administration is committed by Assessing officer by finalizing assessment for the charge year 2000-2001 without giving any notice of hearing and imposed tax arbitrarily and ex parte at Rs.5,050 although the assessment order allegedly passed on 22-2-2001 was served on 29-6-2001.

2. Regional Commissioner Northern Region submitted in response to the notice that assessment proceedings were initiated against the complainant on the basis of survey and returns were filed for assessment years 1997-98 and 1998-99 in response to notice under section 56 of the Income Tax Ordinance, 1979. Subsequently assessments were completed under section 62 of the Income Tax Ordinance, 1979. An unsigned return for assessment year 1999-2000 was filed by the complainant under Self-Assessment Scheme which was treated invalid and after issuance of several notices his income was assessed under normal law under section 63 of the Ordinance resulting in demand of tax amounting to Rs. 6,050.

3. The complainant did not appear on the date of hearing Mr. Haji Muhammad IAC, Jehiam stated during argument that for assessment year 1999-2000 when the assessee had declared his net income at Rs. 50,000 and paid voluntary tax alongwith the return at Rs.1,250 it was assessed at Rs.1,00,000. It was maintained in appeal by the C.I.T. (Appeals) and thereafter the assessee had not filed second appeal. Mr. Haji Muhammad further stated that for assessment year 2000-2001 the complainant declared total income at Rs.35,000. His case was finalized, according to I.A.C., in accordance with the past history and the net income was assessed at Rs. 1,25,000, which is an increase of Rs.25,000 over the income assessed last year.

4. Regarding the allegation that the Assessing Officer had finalized assessment without issuing any notice it transpires that there are acknowledgments of three entices on record.

5. The complainant admitted that his advocate had received the notices but he neither complied nor intimated his client.

6. The Assessing Officer in his order, dated 22-2-2001 stated that, in view of past history of the case and normal progressive increase in business, net income is estimated at Rs. 1,25,000. However, there is neither any such past history in the present case nor there is anything in the assessment order to show that any enquiry was conducted to find any expansion in the quantum of business.

7. The income assessed at Rs.1,25,000 therefore, has no basis. It could be assessed on the basis of history at the most in proportion to the ratio of declared and assessed income in assessment year 1999-2000. The order passed by the Assessing Officer, therefore, is arbitrary and the estimate of income is highly exclusive. Assessment order is to be passed) judiciously even where it is passed ex parte under section 63 of the Ordinance, it is now recommended that:

(i) The Commissioner of Income-tax to recall the order of Assessing Officer by invoking his jurisdiction under section 138 and allow the due relief.

(ii) Compliance be reported within 60 days from the date of receipt of this order.

C.M.A./226/FTO

Order accordingly.