Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.13(1)(aa), 62, 134(3), 138 & 156‑‑‑Establishment of office of Federal Tax Ombusman Ordinance (XXXV of 2000), S.9‑‑‑Addition was made in the hands of members of the A.O.P. in violation of the directions of the First Appellate Authority and Tribunal's order and it was categorically stated that the order of Tribunal had not been received by the Department whereas it was actually received as borne out by the receipt and Dispatch Register‑‑‑Validity‑‑‑Fact remained that the order of the Tribunal was received by the Commissioner and yet in flagrant violation of law, the Assessing Officer passed order .under S.62 in the case of five members of the A. O. P. ‑‑‑Department submitted before the office of the Federal Tax Ombudsman that the order of the Tribunal was not received which made the matter even worse‑‑‑Federal Tax Ombudsman recommended that Chairman, Central Board of Revenue should order an inquiry under Efficiency and Discipline Rules, 1973 against the person responsible, who passed the order under S.62 without complying with the directions given by the Tribunal; the Director General Inspection (Direct Taxes), Central Board of Revenue, to hold an inquiry as to whether the Commissioner Income‑tax at the relevant time failed to have the order of the Tribunal forwarded to the circle concerned, and if it was duly forwarded and received by the Assessing Officer, in addition to the copy of the order given to him by. the complainant by hand as‑deposed in the affidavit that only compounded the gravity of the maladministration, those found responsible may be proceeded against under the Efficiency and Discipline Rules, 1973 and the Zonal Commissioner, in exercise of revisional powers under S.138 of the Income Tax Ordinance, 1979 to suo motu cancel the order passed by the Assessing Officer in the case of the members of the A.O.P. and direct the Assessing Officer to complete assessments in the light of the orders given by the Income‑tax Appellate Tribunal after affording a reasonable opportunity of being heard to the assessees.

Muhammad Ashraf Hashmi for the Complainant.

Muhammad Saleem, D.C.I.T. Circle 14‑Faisalabad.

DECISION/FINDINGS

The petitioners in this complaint are members of the A.O.P. being the owners of Messrs City Heart Plaza. It has been alleged that the Assessing Officer made an assessment under section 62 of the Income Tax Ordinance, 1979 (hereinafter called "the Ordinance"), for the assessment year 1997‑98 on 25‑2‑1998. While doing so, an addition of Rs.13,80,000 was made under section 13(1)(aa) of the Ordinance and taxed Messrs City Heart Plaza, instead of making the addition in the hands of the members of the A.O.P. according to their respective shares.

2. It has further been submitted that the CIT (Appeals), Faisalabad, while, deleting the addition of Rs.13,80,000 directed the Assessing Officer to re‑assess the case after considering the relevant facts. The department preferred an appeal before the Tribunal but lost its case, as the order of the first Appellate Authority was upheld. Instead of reassessing Messrs City Heart Plaza, in accordance with the verdict of the Appellate Authorities, the Assessing Officer issued notices to the members of the A.O.P. on the basis of impugned order, dated 25‑2‑1998, which was non‑existent, as it had merged with the order of the Tribunal. An application under section 156 of the Ordinance was moved before the Assessing Officer requesting him that assessments framed under section 62 by the DCIT on 30‑6‑2000 be rectified as directions given in the Tribunal's order, dated 8‑4‑2000 had not been complied with, but no heed was paid.

3. The Department in its reply has conceded that the assessment order was passed under section 62 by the DCIT. The CIT (Appeals) did not order for reassessment in the case of Messrs City Heart Plaza, but directed that the addition be considered in the hands of the members of the A.O.P. The Income‑tax Tribunal also endorsed the findings of the CIT (Appeals) regarding chargeability to tax of the unexplained investment in the hands of the members of the A.O. P. The Assessing Officer followed the direction of the Appellate fora.

4. As regards the application under section 156 it was rejected on merit. The complainant has cast aspersions on the Assessing Officer without any evidence.

5. Mr. Ashraf Hashmi, Advocate appearing on behalf of the complainant submitted that the Assessing Officer had clearly flouted the direction of the CIT(Appeals) and learned ITAT, as the Tribunal's order, dated 8‑4‑2000 setting aside the addition to the tune of Rs.13,80,000 made by the Assessing Officer was disregarded although a copy of ‑the order was supplied to the department at the time of hearing. Since the D.R. Mr. Muhammad Azam, DCIT, Gujrat Circle 42, Faisalabad who represented the Department denied 'the receipt of the order of the Tribunal before 30‑6‑2000 when the Assessing Officer completed the assessments of the five members of the A.O.P, he was directed to produce the Receipt and Despatch Registers of the Judicial Branch of the Zonal Commissioner of Income‑tax, Faisalabad, as also that of the Circle concerned, the purpose being to verify facts on record.

6. Mr. Saleem, DCIT Circle 14 appeared on the next date of hearing and produced the required registers alongwith complete record of the case. Scrutiny of the register of the Zonal CIT showed that under .Sl. No.149/479 the order of the Tribunal passed on 8‑4‑2000 in the case of the complainant bearing I. T. A. No. 1432/LB of 1999‑was received on, 28‑4‑2000, Examination of Receipt and Despatch Register of Circle concerned indicated two entries against Sl. No.857, dated 29‑6‑2000. The first entry related to issuance of a refund voucher to some other assessee, whereas the next entry related to the complainant Messrs City Heart Plaza, it showed that it had been inserted later on.

7. After hearing the arguments advanced by both the contesting parties, and after examination of the record one reaches an irresistible conclusion that the functionaries concerned in Faisalabad Zone have indeed indulged in maladministration. It is a sad commentary on the state of affairs in the Department, right from the Assessing Officer to the Commissioner.

8. The Department in its reply, dated 5‑5‑2001 has attempted to distort facts. Not only that, but even at the time of hearing facts were misstated. As for instance it was categorically stated by Mr. Muhammad Azam, DCIT, who appeared on 20‑11‑2001 that the order of Tribunal had not been received by the Department, whereas it was actually received on 28‑4‑2000 as borne out by the Receipt and Despatch Register of the Zonal CIT against Entry No. 149 upon 479. In terms of section 134(3) of the Ordinance the material date is the date of the receipt of the Tribunal's order by Commissioner and not by the Assessing Officer. If the Commissioner's Office failed to forward the order of the Tribunal to the Assessing ,Officer concerned it is the inefficiency or 'mismanagement of the office of the Commissioner for which the complainant cannot be made to suffer. The fact remains that the order of the Tribunal was received by the Commissioner on 28‑4‑2001 and yet in flagrant violation of law, the Assessing Officer passed order under section 62 on 30‑6‑2000 in the case of five members of the A.O.P. And then submitted before this office that the order of the Tribunal was not received by the Department which makes the matter even worse.

9. It is recommended that:

(i) Chairman, C.B.R. should order an inquiry under Efficiency and Discipline Rules, 1973 against Mr. Muhammad Azhar, who passed the order on 30‑6‑2000 without complying with the direction given by the Tribunal.

(ii) The Director‑General Inspection (Direct Taxes), C.B.R, to hold an inquiry as to whether the Commissioner Income‑tax at the time failed to have order of the Tribunal forwarded to the Circle concerned, and if it was duly forwarded and received by the Assessing Officer, in addition to the copy of the order given to him by the complainant Mr. Ejaz Ahmad Khan by hand as deposed in the affidavit that only compounds the gravity of the maladministration. Those found responsible may be proceeded against under the E&D Rules, 1973.

(iii) The Zonal Commissioner in exercise of revisional power under A section 138 of the Ordinance .suo motu cancel the orders passed by the Assessing Officer in the case of the members of the A.O.P. on 30‑6‑2000 and direct him to complete assessments in the light of the orders given by the Income Tax Appellate Tribunal, dated 8‑4‑2000 in I.T.A: No.1432/LB of 1999 after affording a reasonable opportunity to the assesses of being heard.

10. The recommendations to be complied with, within 60 days.

C.M.A./M.A.K./323/FTOOrder accordingly