MUHAMMAD AMJAD SALEEM VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2617 (2002)

(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)‑‑‑

‑‑‑‑S.2(3)‑‑‑Maladministration‑‑‑Non‑service or unreasonable delay in service of order‑‑‑Any order passed without notice to the affected party rendered the same illegal‑‑‑Unreasonable delay in sending copy of the order or not serving same at all on the assessee was a serious lapse and amounted to maladministration.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.66A‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Detailed order‑‑‑No mala fides‑‑‑Delay in sending the order passed under S.66A of the Income Tax Ordinance, 1979 to the complainant after hearing the complainant's Authorized Representative and also considering the written arguments submitted by him‑‑‑Such detailed order apparently did not suffer from mala fides.

(c) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.96 & 102‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Admitted refund‑‑‑Non‑issuance of‑‑‑Federal Tax Ombudsman recommended that the refund admittedly due to the complainant be issued alongwith compensation as provided by S.102 of the Income Tax Ordinance, 1979 and that warning be issued to the officers /officials for reporting incorrect facts and figures to the Regional Commissioner of Income‑tax, who may also be advised to be careful in submitting report to the Federal Tax Ombudsman.

Tahir Warraich, ITP for the Complainant.

Ghulam Rasul Malik, DCIT for Respondent.

DECISION/FINDINGS

Complaint is directed against IAC Range‑I, Zone‑B, Lahore, and the CIT, Zone‑B, Lahore for non‑payment of refund of Rs.1,400,000 and issuance of notice under section 66A of the Income Tax Ordinance, 1979 for the assessment years 1995‑96 and 1996‑97 which, it is alleged, is based on mala fide intention to intimidate the complainant.

2. The respondent's report contained in Letter No.RCIT J/85/FTO/I/3300 dated 24‑12‑2001 admits the position of the refund as under:

"The assessee applied for the issuance of refund. However, in view of the above position the demand payable by the assessee at Rs.843,147 being more than refund due at Rs.654,140 no refund is available that could be issued to the assessee"

3. The complainant and his. AR pointed out that the report submitted by the respondent is factually incorrect. They produced photocopy of Letter No.144/29 dated 26‑9‑2000 addressed by the. A‑CIT, Circle‑29, Zone‑B, Lahore to .IAC, Range‑I, Zone‑B, which mentions the position of refund as per record as under:‑

The comparison of respondent's report with the above -referred letter reveals discrepancies in the figures of refund for the year 1993‑94. In Letter No.144/29 (ibid) the refund is mentioned at Rs.433,669 but in the respondent's reply it appears as Rs.25,559. Respondent's representative could not satisfactorily explain the reason for this discrepancy. The assessment records, as presented, do not support the stand taken by the Department inasmuch as the refund of Rs.433,669 created for the year 1993‑94 was never adjusted against any demand as no adjustment memo. under section 104 of the Ordinance is obtaining on record. Letter No.144/29 (ibid) further states that arrears of Rs.218,888 for the year 1990‑91 were outstanding against Messrs Saleem Sons, a registered firm, in which the complainant is a partner. Noticing the contradictory position to the effect that in one breath letter dated 26‑9‑2000 admits refund at Rs.126,741 is due to the assessee for the year 1990‑91, on the other arrears of Rs.218,888 are said to be outstanding for the same year, representative of the department was called upon to explain the correct position. After perusal of record he conceded that no such figure of arrears is available anywhere on the file. The credibility of arrears of Rs.218,888 thus stands eroded.

4. Perusal of the record and the discussion brought to light that the report submitted vide Letter No.144/29 dated 26‑9‑2000 by the A‑CIT to the I.A.C. was correct but for the figure of outstanding demand shown at Rs.218,888. This misreporting if eliminated, the refund claim of the complainant would jump up to Rs. 1,240,332 = (Rs.1,021,444 + Rs.218,888). The representative of the department stated that out of this total refund of Rs.1,240,332, an amount of Rs.572.019 only could be paid to the complainant because the balance Rs.668,313 relating to the assessment years 1995‑96 and 1996‑97 has been wiped off by cancellation of assessment through an 'order passed by the IAC under section 66A of the Ordinance. No plausible argument could be advanced for the non‑issuance of the admitted refund of Rs.572,019 relating to the assessment years 1990‑91, 1993‑94 and 1994‑95.

5. Turning to the issue of proceedings under section 66A, it was submitted by the respondent that the order under section 66A was passed on 28‑5‑2001 but the complainant countered that the same had not been served upon him as yet. The respondent then pointed out that the order was "served by affixture" on 5‑1‑2002 by the Inspector of Circle 29, Zone‑B. Photostat copy of the Inspector's report (ibid) was presented by the respondent's representative which mentions that with a view to effect service, he contacted Mr. Amjad Saleem (the complainant) who refused "to receive notice under section 66A . The report is evidently haphazard because what the Inspector meant to say was the order under section 66A and not the "notice under section 66A" which was taken by him for service. To the query as to Why order under section 66A was served so late i.e. after more than seven months of the passing of the order, it was asserted that the IAC.'s Inspector tried to serve the order but he reported on 11‑2‑2001 (photo copy provided) that the assessee's AR had expressed his inability to receive the order as he had ceased to have any contact with the assessee. Even this report was made after about 2‑1/2 months of the passing of the order under section 66A for which no satisfactory explanation could be offered.

6. These irregularities reflect on the working of department where due importance is not given to the service of notice and order. Any order passed without notice to the affected party renders it illegal. However, unreasonable delay in sending copy of the order or not serving it at all on the assessee is a serious lapse and amounts to maladministration. In the present case there is delay in sending the order under section 66‑A to the complainant but it was passed after hearing the complainant's authorised representative and also considering the written arguments submitted by him. A detailed order has been passed which apparently, does not suffer from mala fides.

7. It is therefore recommended:‑‑

(i) The refund of Rs.572,019 admittedly due to the complainant be issued alongwith compensation as provided by section 102 of the Income Tax Ordinance.

(ii) Warning be issued to the officers/officials for reporting incorrect facts and figures to the R‑CIT, who may also be advised to be careful in submitting report to the Federal Tax Ombudsman.

(iii) A compliance report be submitted within 30 days of the receipt of this Order.

C.M.A./M.A.K/396/FTO

Order accordingly