Messrs S.M. ABDULLAH & SONS, RAWALPINDI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2002 P T D 1828
[Federal Tax Ombudsman]
Before Justice (R) Saleem Akhtar, Federal Tax Ombudsman
Messrs S.M. ABDULLAH & SONS, RAWALPINDI
versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 1292 of 2001, decided on 17/11/2001.
(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)‑‑‑
‑‑‑‑S.2(3)(i)(b)‑‑‑Maladministration‑‑‑Where arbitrariness of the officers was evident from their decisions, the same would fall under the term "Maladministration" as defined in S.2a(3)(i)(b) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000.
(b) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss.129 & 134‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Federal Tax Ombudsman‑‑ Jurisdiction‑‑‑Complaint by assessee against excessive assessment of his income by Assessing Authority and grant of inadequate relief by First Appellate Authority‑‑‑Department objected to maintainability 'of complaint on the ground that its second appeal against order of First Appellate Authority was pending before Appellate Tribunal‑‑‑Validity‑‑‑Fact of filing appeal by Department before Appellate Tribunal would be inconsequential to present complaint, which had been received in the office of Federal Tax Ombudsman on 24‑8‑2001, whereas the Department had filed appeal before Tribunal on 30‑8‑2001.
(c) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss.49, 129 & 138(1)(5)(e)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 2(3)(i)(b)‑‑‑Mal administration‑‑‑Complainant under Self‑Assessment Scheme filed his return for income derived from sale of cloth on wholesale basis, but Assessing Officer finalized the same under normal law‑‑‑Complainant being dissatisfied with the relief granted by First Appellate Authority, filed complaint alleging that both orders of Assessing Officer and Appellate Authority were perverse, arbitrary, unjust and oppressive, because neither any basis of exorbitant estimates was recorded nor the history of case had been followed nor the assessment of Survey Team regarding the sales had been taken, into account‑‑‑Validity‑‑‑Assessing Officer had estimated the sales on the ground that shop was located in the famous market, but had ignored the complainant's plea that market was known for lack of business on account of lying therein vacant large number of shops‑‑‑Assessing Officer had overlooked the assessment of sales made by Survey Team‑‑‑Complainant was an old man aged 72 years suffering from cardiac disorder‑‑‑Complainant had been availing immunity from audit under Self‑Assessment Scheme by declaring income higher by the required percentage, but due to loss of business due to strikes in relevant year, availing immunity from audit had not been possible for him any more‑‑‑Relief allowed by First Appellate Authority by reducing estimates of sales and total income was in sheer disregard of said facts‑‑‑Arbitrariness of the officers was evident from their decisions, which fall under the term of "maladministration" as defined in S.2(3)(i)(b) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000‑‑‑Federal Tax Ombudsman recommended to Regional Commissioner of Income‑tax to call for the records of assessment and appeal proceedings and consider, whether said facts warrant withdrawal of appeal instituted before Tribunal, and if he concludes that Department's appeal warrants withdrawal, then he may by invoking his jurisdiction under S.138(1)(5)(e) of Income Tax Ordinance, 1979, also consider to allow further relief as may be found due to complainant.
DECISION/FINDINGS
The complainant, an individual, deriving income from the sale of cloth on wholesale basis, has alleged excessive assessment of his income by ‑the Deputy Commissioner of Income‑tax and inadequate relief granted by the A.A.C.
2. The Regional Commissioner of Income, Northern Region, Islamabad, in his written reply to the allegations, has submitted "that the assessee, an individual, deriving income from sale of cloth on wholesale basis, filed return for the assessment year 2000‑2001 declaring sales at Rs.1,760,000 and net income at Rs.70,000 under Self‑Assessment Scheme. As the case did not qualify for acceptance under S.A.S., therefore, assessment was finalized under normal law by estimating sales at Rs.3,000,000 and net income at Rs.150,000. Being aggrieved with assessment order, assessee went in first appeal and the learned A.A.C. reduced sales to Rs.2,600,000 and net income to Rs.125,000, resulting tax demand of Rc.6,400. The Department has proposed second appeal before the Honourable Income‑tax Appellate Tribunal which is still pending. Therefore, it is requested that the complaint may be rejected".
3. The fact of filing of appeal 'by the Department before the Income‑tax Appellate Tribunal is inconsequential to the instant complaint because it has been filed on 30‑8‑2001 while the complaint has been received in this office on 24‑8‑2001. The allegation in the complaint, therefore, is being investigated.
4. Notice under section 10(5) of Establishment of the Office of Federal Tax Ordinance, 2000 is responded by Mr. Karamatullah, complainant and Mr. Qurban Hussain, D.C.I.T. alongwith Special Officer, Circle 23, Rawalpindi on behalf of Revenue Division. .
5. It is alleged by the complainant that both the orders of the Assessing Officer as well as the A.A.C. are perverse, arbitrary, unreasonable, unjust and oppressive because neither any basis of the exorbitant estimates is recorded nor the history of the case has been followed nor the assessment of the survey team regarding the sales has been taken into account.
6. The Assessing Officer has estimated sales on the ground that the shop is located at the famous Azad Cloth Market. However, he has ignored the plea of the complaint that the market is known for lack of business because a large number of shops are still vacant. Further, he has overlooked the fact that even the survey team has assessed the gross sales at Rs.2,000,000. The complainant‑is an old man aged 72 years and suffers from cardiac disorder. He has been availing immunity from audit under Self‑Assessment Scheme by declaring income higher by the required percentage. However, due to loss of business for about two 'months due to strikes during the year, availing immunity from audit has not been possible for 'the complainant any more. The relief allowed by the A.A.C. by reducing estimates of sales to Rs.2,600,000 and total income to Rs.125,000 is in sheer disregard of the foregoing facts of the case.
7.Since the arbitrariness of the officers is evident from their decisions, these fall under the term ‑‑"maladministration" as defined in sub‑clause (b) of clause (i) of subsection (3) of section 2 of the Ordinance.
8. It is now recommended that the Regional Commissioner of Income‑tax, Northern Region, Islamabad may, on his own motion, call for the records of assessment and appeal proceedings and consider whether foregoing facts warrant withdrawal of appeal instituted before the Tribunal. In case, he concludes that Department's appeal warrants withdrawal, he may also consider to allow further relief as may be found due by him, by invoking his jurisdiction under clause (e) of sub section (5) read with subsection (1) of section 138 of the Income Tax Ordinance, 1979.
9. Compliance report may be submitted by 30‑11‑2001.
S.A.K./247/FTO Order accordingly.