Malik MUHAMMAD SHANNAF, OFFICER OF
MUSLIM COMMERCIAL BANK LTD., SIALKOT
VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2002 P T D 1810
[Federal Tax Ombudsman]
Before Justice (R) Saleem Akhtar, Federal Tax Ombudsman
Malik MUHAMMAD SHANNAF, OFFICER OF
MUSLIM COMMERCIAL BANK LTD., SIALKOT
versus
SECRETARY, REVENUE DIVISION, ISLAMABAD.
Complaint No.715 of 2001, decided on 21/03/2002.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.93(3)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000),,S.9---Recovery of tax---Modes---Arrest and detention of assessee is the harshest of all the three modes provided under S.93 of Income Tax Ordinance, 1979---Such mode should be resorted to as a last resort in cases, where assessee does not own any property or there is likelihood of his running away or disposing of the property with intention to delay or defeat the recovery.
(b) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S-9 Income Tax Ordinance (XXXi of 1979), Ss.50(1); 54, 85 & 93---Government Servants (Efficiency and Discipline) Rules, 1973, Rr.3 & 4--..Maladministration--- Grievance of complainant/Bank employee against Income-tax Inspector, Assessing Officer and Recovery Officer was about demand of illegal gratification for finalizing the assessment in cases, wherein deduction of tax had fallen short of actual tax-- Complainant did not pay the bribe, over which recovery proceedings were initiated against him and other- Bank employees, and he was arrested---Complainant protested against said behaviour of. respondents, but in vain---Validity---Respondents could attach salary and Bank account of the complainant if any, and above all recovery could be made from the Bank, which had short deducted the tax---Such harsh action of arrest and. detention of complainant was not justified---Complainant in support of his allegations filed 44 affidavits of other Bank employees, but respondents could not rebut or contradict their testimony in spite of. cross-examination---Income Tax Inspector did not produce any witness in his defence in spite of affording him an opportunity to produce the same---Allegations of demanding and charging of bribe and harassment against Income-tax. Inspector and that of frequent visits to Bank by other tax employees demanding money for finalizing and completing assessment was clearly established from evidence on record Entire action taken against complainant seemed to be a revenge against him by the respondents---Respondents had been contacting the assessee for bargaining as neither the assessment order of their circle was finalized nor was delivered to assessees---Such reprehensible practice seemed to persist though having been deprecated in another similar complaint filed by an employee of company, whereupon staff member of Income-tax Department was demoted and transferred---Federal Tax Ombudsman recommended to the Revenue to take disciplinary action against Income-tax Inspector under Government Servants (Efficiency and Discipline) Rules, 1973, to transfer the respondents to different Zone and to submit compliance report within specified time.
Complainant in person.
Behzad Saqlain, Income Tax Inspector, Sialkot.
DECISION/FINDINGS
In the years 1998 and 1999 number of Bank employees complained to the complainant that few employees of Income-tax Department, Sialkot demand bribe and in case of non-payment issue threat for attachment of their salaries. On 12-11-1999 all the staff members of Dara Arian Branch, Sialkot presented an affidavit to the complainant stating therein that Income-tax Inspector Behzad Saqlain and Molvi Rana have taken bribe from Tasnimuddin amounting to Rs.3,000. In the light of the affidavit of the Bank-employees the complainant asked the inspector Behzad Saqlain to desist from demanding bribe from the Bank employees and harassing them. The complainant also stopped the Bank employees from fulfilling the illegal demands of Income Tax from employees. Thereafter the complainant approached Income Tax Officer Muhammad Sarwar Qadri about the attitude of -the Inspector.
2. The complainant further alleged that on 18-11-1999 during banking hours Income-tax Inspector Behzad Saqlain alongwith 4/5 armed guards entered into the Bank and arrested him. They brought the complainant in the office of the Recovery Officer and served three notices of the same date i.e. 27-10-1999. According to the complainant the Inspector had stated that action has been taken to teach him a lesson.
3. The complainant filed a writ petition in Lahore High Court which was disposed of with the observation that the petitioner shall appear before the officer concerned and explain his grievance, which the official concerned will attend in accordance with law and on its own merit within one month and if the petitioner is not satisfied with the final order he can avail the remedy in the hierarchy of jurisdiction under the Income Tax Ordinance, 1979. The complainant then approached the IAC, Sialkot and thereafter filed a representation before the Commissioner of Income Tax which was rejected. The complainant then filed a civil suit against the Inspector and Assessing Officer claiming damages which is yet pending.
4. The respondent submitted reply pleading that income-tax is deducted under section 50(1) of the Ordinance by the employer at the time of payment of salary to the employees. Thereafter, return of income-tax is filed by the assessee and if tax deducted under section 50(1) of the Income Tax Ordinance is found short the assessee is required to make payment of tax under section 54 of the Ordinance alongwith return of total income. Later on when the assessment is finalized by the department if further demand is created, the same is communicated to the assessee through demand notice under section 85 of the Ordinance.
5. It was further submitted that as arrear demand was outstanding against certain Bank employees, Behzad Saqlain the then Income Tax Inspector of the circle was deputed to recover the lawful outstanding demand against employees of MCB, Sialkot. Best efforts were made for recovery of outstanding demand of Rs.42,488 from the complainant but he flatly refused to pay. Therefore, he was arrested on 18-11-1999 and on the assurance of Regional Chief MCB, released on the same date. Instead of making payment of tax demand, the complainant filed a suit in the Civil Court against the Inspector 'and Assessing Officer claiming damages.
6. The complainant subsequently filed affidavits of 44 Bank employees. Most of them stated that the tax employees of Sialkot Zone usually demand illegal gratification for finalization of the assessment order. They named the Income-tax Inspector Behzad Saqlain and Special Recovery Officer Muhammad Sarwar Qadri who were directly involved in demanding bribe from the Bank employees and harassing them.
7. The complainant after receiving copy of the comments submitted by the Department filed further clarification and stated that the complaint is not in respect of the tax liabilities or for directions to the Department to make reassessment order but it is a complaint against those Income Tax Officials who have demanded bribe and harassed the Bank employees.
8. After perusal of the contents of the complaint, it seems that the main allegation is about demand of illegal gratification for finalizing the assessment particularly in cases where the deduction of tax had fallen short of the actual tax. As the complainant did not pay, recovery proceedings were initiated against him and other Bank employees. In view of sections 50(1), 52, 52-A and 86 it is clear that the unpaid tax can' be recovered from the deducting authority or the assessee himself. Here the dispute is about the modus operandi of the officers and staff of the Department in recovering the tax. There is sufficient evidence that the complainant had been complaining against Behzad Saqlain and Muhammad Sarwar Qadri for demanding bribe and harassing the staff members. The complainant had protested against such behaviour and demands. There was an atmosphere, of animosity and hostility. In this background it is to be considered whether the recovery action taken by the said officers was proper or suffered from mala fide intended to harass the complainant. The complainant was an employee of the Bank. The Recovery Officer could have adopted the procedure as provided under section 93 viz. (i) attachment and sale of movable or immovable property of the assessee; (ii) appointment of receiver and (iii) arrest and detention in prison. The arrest and detention is the harshest of all the three modes which should be resorted to as a last resort in cases where the assessee does not own any property and there is likelihood of running away or disposing of the property with intention to delay or defeat the recovery. There is nothing on record to justify such harsh action of arrest and detention. It was open to attach his salary, Bank account if any and above all in any case recovery could be made from the Bank which had short deducted the tax. There was hardly any justification to arrest the complainant. The entire action seems to be a revenge action against him by Behzad Saqlain and Muhammad Sarwar Qadri as allegations and complaints were made by the complainant who is the President of the Muslim Commercial Bank Officers Association and was vocal and in the forefront in the campaign against them.
9. The second issue in the complaint is that the Income Tax Inspector and other tax employees of the Sialkot Zone from time to time approached the complainant and other Bank employees for recovery of tax demand by showing tax demand notices and asking for illegal gratification to finalize it favourably. In this regard seven witnesses were examined on oath.
10. The Income-tax Inspector Behzad Saqlain was directed to file his reply to the complaint. He submitted that he remained posted in Circle-3 from 1-10-1999 to 15-2-2000 and during his posting period on the direction of higher' officer he made efforts for recovery of outstanding tax demand from the complainant. On refusal to pay the outstanding tax the complainant was arrested but released on the same day. He denied all the allegations, regarding demand of illegal gratification. He further submitted that the Bank employees who have filed affidavits against him had filed their return of income under sections 59(i) and '59(A) of the Ordinance and the declared version was accepted, therefore, question of alleged demand does not arise. He filed the copies of order sheets of 15 Bank employees which show that their assessment has been finalized. Most of these assessments were finalized after the controversial issues were raised and the complainant had been arrested. These assessments can hardly support the contention of Behzad Saqlain.
11. Now reverting to the evidence of the witnesses it can be seen that the officers concerned could not rebut or contradict their testimony in spite of cross-examination. P.W. Tasnimuddin was examined on oath. He deposed that Income-tax Inspector Behzad Saqlain had demanded. Rs.10,000 from him as bribe. Due to threat he paid Rs.3,000 through cheque. P.W. Inayat Khan deposed in his statement that:---
"In my presence the people from the Department had demanded bribe for quashing up the entire matter. Sqlain an Inspector had taken bribe through a cheque from one Tasnimuddin who was working in Dara Aain Branch."
12. P.W. Muhammad Saleem Butt in his affidavit stated that in his presence Income-tax- Inspector Behzad Saqlain received Rs.3,000 through a cheque. Both Mr. Abdul Rasheed, DCIT, Sialkot who was representing the Department and Behzad Saqlain cross-examined the witness but no contradiction or infirmity could be brought out who supported the statement of Tasnimuddin. P.W. Muhammad Saleem during cross-examination stated that:
"Tasnimuddin prepared a cheque of Rs.3,000 and delivered it to Behzad who was sitting before me. Tasnimuddin had signed on the back side of the cheque."
13. P.W. Muhammad Razzak Ahmed in his affidavit alleged that Income Tax Inspector and other income-tax employees used to take bribe from him: During cross-examination in reply to a question by Behzad Saqlain he stated that:
"You had visited my Branch and demanded bribe. I paid Rs.2,000 for settlement of my tax demand."
14. There are number of other witnesses who 'have filed their affidavits stating therein that Inspector Behzad Saqlain and other tax employees of Sialkot demanded bribe. In spite of opportunity afforded to produce evidence in defence Behzad Saqlain did not produce any witness for examination. He only filed written arguments. From the overwhelming evidence on record the allegations of demanding and charging of bribe, harassment and illegal gratification are established against Behzad Saqlain. During evidence of P.Ws. the name of Molvi Siddiq was mentioned alleging that he also demanded bribe for finalizing the assessment favourably. It is also established that the Tax Employee of the Income Tax Department frequently visited the office of the Bank demanding money for finalizing and completing the assessment. In another case similar complaint was made by an employee of a Company and the staff member was demoted and transferred. It seems that assessment order of the employees Circle is not finalized nor it is delivered to the assessee arid tax employee contact the assessees for bargaining. This reprehensible practice has been deprecated in another complaint-but it seems to persist.
15. It is recommended that:
(i) Disciplinary action against Behzad Saqlain be taken under the Government Servants (Efficiency and Disciplinary) Rules, 1973.
(ii) Behzad Saqlain, Molvi Siddiq and Muhammad Sarwar Qadri be transferred to different Zone.
(iii) Compliance re (i) be reported within 45 days. Compliance re (ii) be reported within 30 days. '
S.A.K./243/FTOOrder accordingly