Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 59‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑C.B.R. Circular No. 21 of 2000, dated 11‑9‑2000, para. 2 (vi)‑‑‑Self‑Assessment Scheme 2000‑2001, para. 2(vi) ‑Assessment year 2000‑2001‑‑‑New taxpayer‑‑‑Refusal to accept return under Self‑Assessment Scheme for the reason that declared income was less than 1/3rd of the declared capital‑‑‑Complainant/asses see contended that para. 2(vi) of the Self‑Assessment Scheme, 2000‑2001 was contrary to law and rules, departure from establishment practice, perverse, arbitrary, unreasonable, unjust, oppressive, discriminatory and also did not exist in the previous Self‑Assessment Schemes‑‑‑Central Board of Revenue had also agreed to waive such condition ‑‑‑Complainant/assessee was quite wrong in stating that the provision contained in para. 2(vi) of Self‑Assessment Scheme 2000‑2001 did not exist in any of the earlier Self‑Assessment Schemes‑‑‑According to para. 6 of Universal Self Assessment Scheme for assessment year 1999‑2000, the Scheme applied to only such new taxpayers who declared the income at least 30% of the investment or capital employed in the business‑‑‑Para. 2(vi) of Self- Assessment Scheme 2000‑2001 could by no means be considered as perverse or arbitrary‑‑‑Federal Tax Ombudsman rejected the complaint being devoid of merit.

Siddique Ahmad Chaudhry for the Complainant.

Zulfiqar Ali, DCIT, Circle 20, Gujranwala for Respondent.

FINDINGS/DECISION

This is complaint by an association of persons against the refusal of the Deputy. Commissioner of Income Tax, Circle 20, Gujranwala to consider the applicant as eligible for the Self‑Assessment Scheme, 2000‑2001 for the reason that the complainant's declared income (as a new taxpayer) was less than 1/3rd of the declared capital and also against the failure of the Revenue Division to withdraw this condition relating to new taxpayers despite negotiations with office‑.bearers of All Pakistan Tax Bar Association in this regard. The main points in the complaint are as under:‑‑‑

(i) The complainant is an association of persons which is engaged in the manufacture of sanitary products. It filed its return of income for the assessment year 2000‑2001 under the Self Assessment Scheme as a new taxpayer.

(ii) The DCIT, Circle 20, Gujranwala vide his notice, dated 7‑5‑2001 intimated that the complainant's return fell outside the purview of the Self‑Assessment Scheme due to the reason that the income declared at Rs.68,000 was less than 1/3rd of the capital declared at Rs.2,424,70 which violated the requirement of para. 2(vi) of the Self‑Assessment Scheme, 2000‑2001 which read as under:‑‑‑

"All cases of new taxpayers other than those specified in para. 4 where income declared is less than 1/3rd of the capital declared."

(iii) It is contended that the sub‑para. (vi) of para. 2 of the relevant C.B.R. Circular No.21 of 2000, dated 11‑9‑1999 containing the Self‑Assessment Scheme was illegal and invalid because it was contrary to law and rules, departure from establishment practice and was also perverse, arbitrary, unreasonable, unjust, oppressive and discriminatory. It is also contended that this para. did not exist in the Self‑Assessment Schemes from 1988‑89 to 1999‑2000.

(iv) In response to DCIT's notice, dated 17‑5‑2001 an explanation was filed by the complainant on 22‑5‑2001 stating that the C.B.R. had agreed with the All Pakistan Tax Bar Association (APTBA) to waive the condition contained in para. 2(vi) of SAS and a copy of circular, dated 8‑11‑2000 issued in this regard by the Secretary‑General, All Pakistan Tax Bar Association was also furnished but the DCIT did not accept this evidence on the ground that no clarification had been issued by the C.B.R: in this regard. It is stated that the DCIT then again issued a notice under section 61 of the Income Tax Ordinance; dated 9‑6‑2001 instead of seeking a clarification from the C.B.R.

(v) It is stated that the office‑bearers of APTBA have confirmed that in their meeting held with the C.B.R. Authorities on 7‑11‑2000 with the assistance of the Principal Secretary to the Chief Executive, the C.B.R. had agreed that for availing benefit of SAS by the new taxpayers the condition to declare income of 1/3rd of the capital employed was illogical and was being modified.

(vi) It is contended that the C.B.R. has not issued the requisite notification which means that it is backing out of a promise and this amounts to a breach of trust:

The complainant has, therefore, prayed that:

(a) The DCIT, Circle 20, Gujranwala be directed to accept the return of the complainant under the Self‑Assessment Scheme 2000-2001; and

(b) The Secretary Revenue Division be directed to immediately issue a notification not the effect that the condition of declaring of income at 1/3rd of the capital by new assessees stands withdrawn as agreed with APTBA.

2. The respondent's reply has been received and the representatives of the complainant. and the respondent have attended. The reply forwarded by the Revenue Division is actually from the Regional Commissioner of Income Tax, Northern Region, Islamabad in which it is stated that no instructions have been issued by the C.B.R. regarding the withdrawal of the conditions contained in sub‑para. (vi) of para. 2 of C.B.E. Circular No.21 of 2000 and that the letter issued by the General Secretary, APTBA was in no way binding on the department. As regards the contention that an‑agreement has been reached between the C.B.R. and APTBA, the RCIT has pointed out that this can only be commented upon by the C.B.R. This reply has been forwarded without comment by the Revenue Division.

3. The factual position, however, is that has been no withdrawal or modification of sub‑para. (vi) of para. 2 of C.B.R: Circular 21 of 2000 and if there was any understanding between the C.B.R. and APTBA which has not been honoured by the former the best course for the APTBA would have been to again approach the C.B.R in this regard. The complainant's A.R. brought Mr. Muhammad Aslam Shaikh, Advocate who confirmed that he had attended the meeting, with the C.B.R. on 7‑11‑2000 in which it had been agreed that the condition of declaring 1/3rd of capital as income in the case of new assessees would be waived but Mr. Muhammad Aslam Shaikh further, explained that in the meeting several matters were agreed upon, some of which were later implemented while others were not implemented by the C.B.R. and that these matters (including para. 2(vi) of SAS) were not pursued further by the APTBA.

4. In view of the foregoing it is obvious that it was up to the APTBA or the complainant to take up the issue again with the C.B.R. and a complaint to this office requesting enforcement of a so‑called agreement is not valid. It is also seen that the complainant is quite wrong in stating that the provision contained in para. 2 (vi) of SAS, 2000‑2001 did not exist in any earlier Self‑Assessment Schemes. The fact actually is that according to para. 6 of the Universal Self‑Assessment Scheme for the assessment year 1999‑2000 circulated vide C.B.R. Circular No. 18 of 1999, the Scheme applied to only such new taxpayers who declared income of at least 30% of the investment or capital employed in the business. Thus para. 2(vi) of Circular No.21 of 2000 can by no means to be considered as perverse or arbitrary. In the light of the foregoing there is no merit in the complaint which is, therefore, rejected.

C.M.A./609/FTO. Complaint rejected.