NISAR ICE & COLD STORAGE (PVT.) LTD., ISLAMABAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 27 (2002)

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.138 & Second Sched., Cl. (118C)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑ Exemption ‑‑‑Failure to take suo motu notice of arbitrary refusal to allow exemption on recommendation of Federal Tax Ombudsman ‑‑‑Assessee claimed exemption from tax for its profits and gains under Cl. (118‑C) of the Income Tax Ordinance, 1979 for a period of 8 years‑‑‑Claim of exemption from tax was rejected by the Assessing Officer‑‑‑First Appellate Authority set aside the orders but the remanded issue was again decided against the assessee who tiled a complaint for arbitrary refusal of exemption‑‑‑Federal Tax Ombudsman recommended grant of exemption‑from tax by invoking provisions of S.138 of the Income Tax Ordinance, 1979 suo motu‑‑‑Commissioner of Income‑tax complied with the direction and allowed exemption from tax to profits and gains but failed to take suo motu notice of arbitrary refusal to allow exemption‑‑ Maladministration having been established, Federal 'Tax Ombudsman recommended that Commissioner of Income Tax rectified his order passed under S.138 of the Income Tax Ordinance, 1979 dismissing assessee's petition on point of limitation while the issue warranted suo motu notice to grant the relief arbitrarily denied to the assessee/petitioner.

Muhammad Shafqat for the Complainant.

Taj Hamid, D.C.I.T., Company, Circle‑12, Peshawar for Respondent.

FINDINGS/DECISION

Maladministration is alleged in the instant complaint for demanding income‑tax amounting to Rs.363,362 on income assessed at Rs.792,000 in an ex parte order for assessment year 1998‑99 by Mr. Taj Hamid, DCIT, Company Circle 12, Peshawar on 18‑1‑2001 and for dismissal of revision petition filed under section 138 with the CIT, Companies Zone, Peshawar, Mr. Khawas Khan Niazi vide his order dated 14‑1‑2002.

2. Facts emerging from the written reply submitted by the RCIT, Northern Region, Islamabad in response to notice under section 10(4) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 hereinafter called "Ordinance XXXV of 2000" and submissions made on behalf of the two parties at the time of hearing are that the complainant a Private Limited Company derives profits and gains from an industrial undertaking that fulfils the requirement of clause (118C) of Part I of the Second Schedule to the Income Tax Ordinance, 1979.

3. First return of income for assessment year 1995‑96 was filed claiming exemption from tax for its profits and gains under clause (118C) (supra) for a period of 8 years. The claim of exemption from tax was rejected by the DCIT. The CIT (Appeals) set aside the orders but the remanded issue was again decided against the assessee who filed a complaint for arbitrary refusal of exemption in assessment years 1995‑96 to 1997‑98 with this office. It was registered as C‑836/2001 and decided on 25‑9‑2001 recommending grant of exemption from tax by invoking provisions of section 138 suo motu. The CIT, Companies Zone, Peshawar complied and allowed exemption from tax to profits and gains for assessment years 1995‑96 to 1997‑98. However, he failed to take suo motu notice or arbitrary refusal to allow exemption that had already been granted for a period of eight years from assessment year 1995‑96. The maladministration is established.

4. It is recommended that CIT, Companies Zone, Peshawar rectifies his order passed under section 138 on 14‑1‑2002 dismissing assessee's petition on point of limitation while the issue warranted suo motu notice to grant the relief arbitrarily denied to the petitioner.

5. Compliance be reported by June 30, 2002.

C.M.A./473/FTO Petition dismissed.