Messrs MUHAMMAD ZAFAR, PROPRIETOR SUPERIOR BATTERY VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2003 P T D 2761
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Messrs MUHAMMAD ZAFAR, PROPRIETOR SUPERIOR BATTERY
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD and another
Complaint No.‑C‑1112‑K of 2002, decided on 13/11/2002.
(a) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 132(5) & (6)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑‑Decision in appeal‑‑‑Service by the appellant personally‑‑‑Mandatory‑‑‑Service by the appellant personally a provided by S.132(6) of the Income Tax Ordinance, 1979 was‑mandatory otherwise a letter sent by post or through courier service specifically addressed to the Commissioner (Appeals) by name with endorsement a personal may fall within the category of, service on the Commissioner (Appeals) personally.
(b) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 132(5) & (6)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑‑Decision in appeal‑‑‑Service by the appellant personally‑‑‑Appellant should serve the notice personally on the Commissioner (Appeals) in person and not otherwise.
(c) Income Tax Ordinance (XXXI of 1979)‑‑‑-
‑‑‑‑S. 132(5) & (6)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑‑Decision in appeal‑‑‑Service by the appellant personally‑‑‑Where the assessee is a firm, Corporation. Pardanashin lady or an invalid person, any duly authorized person may personally serve the notice on the Commissioner (Appeals) in person.
(d) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 132(5) & (6)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑‑Decision in appeal‑‑ Service by the appellant personally‑Specific mode of service o1 notice provided by the income Tax Ordinance, 1979 excludes other types of service, which may otherwise be legal and proper under the relevant statutes‑‑‑Whenever any act is to be done personally a physical contact of the person required to do is necessary.
(e) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 132(5) & (6)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000) S.2(3)‑‑‑Decision in appeal‑‑‑Service by the appellant personally ‑‑‑Notice required by S.132(5) of the Income Tax Ordinance, 1979 should have been personally served by the appellant on the Commissioner (Appeals)‑‑‑Section 132(6) of the Income Tax Ordinance, 1979 excludes notice by registered post A/D or in any other manner.
(f) Interpretation of statutes‑‑‑
‑‑‑‑ If the law requires a thing to be done in particular manner same should be performed in the same manner otherwise will be illegal.
(g) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 132(5) & (6)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑‑Decision in appeal‑‑‑Service by the appellant personally‑‑‑Notice by registered post‑‑‑No decision by the Appellate Authority within the prescribed three months‑‑Relief demanded whether to be deemed to be allowed‑‑‑Notice by registered post was served in the office of Commissioner (Appeals) which in the normal course should be presumed to be within the knowledge of commissioner (Appeals) but as the law requires notice to be served personally by the appellant on the Commissioner (Appeals) the consequences as envisaged by S.132(5) of the Income Tax Ordinance, 1979 will follow only on strict compliance of S.132(6) of the Income Tax Ordinance, 1979‑‑‑Service of notice was defective and not according to law‑‑‑Section 132(5) of the Income Tax Ordinance, 1979 shall not apply unless a notice by the appellant stating that no order under S.132(1) of the Income Tax Ordinance, 1979 was personally served by the appellant on the Appellate (Additional Commissioner) in person not less than thirty days before the expiration of the period of three months‑‑‑Service of notice being defective no interference was required however, facts revealed inaction, inaptitude and negligence in performance of duty even when it was pointed out of the Authorities by the taxpayer‑‑‑Such apathy on the part of the tax administrators was not condonable nor excusable‑‑ Such act was a maladministration, which perverts the entire system and requires immediate attention of Central Board of RevenueResponsibility of Central Board of Revenue was to manage and supervise in, such a manner that proper tax administration was carried out according to law‑‑‑Federal Tax Ombudsman recommended the Central Board of Revenue to institute an inquiry into the delay in delivering decision in the appeal and take suitable action and issue proper instructions regarding disposal of appeal and to ensure its implementation.
Black's Law Dictionary ref.
Messrs Aasmi Package (Pvt.) Ltd. v. Commissioner of Income tax (Appeals) 2000 PTD 39 and Ch. Irshad Ahmad v. CIT 1996 PTD 279 rel.
FINDINGS/DECISION
On 21‑6‑2002 the complainant filed an appeal against the assessment for the year 2000‑2001 before the Commissioner of Income Tax (Appeals) No. VI Karachi. On 28‑8‑2001 the complainant served a notice under section 132(6) of the Income 'Tax Ordinance, 1979 requesting the Commissioner (Appeals) for early decision. By a notice, dated 10‑9‑2001 the Commissioner fixed the hearing of appeal on 20th September 2001. It is alleged that the complainant appeared and argued that case and hearing was completed on 20th September, 2001. As no order was received from respondent No.2 till 11th January, 2002 the complainant addressed a communication in the form of application before the Commissioner of Income Tax (Appeals) VI Karachi complaining of non‑receipt of any order and requested to look into the matter and supply a copy of the order. It has further been pleaded that instead of receiving any appellate order or any reply to the his communications a fresh notice under section 131 of the Ordinance, dated 17‑4‑2002 was received fixing date of hearing of the appeal on 29‑4‑2002 which according to the complainant is contrary to the provision of section 132(5) of the Ordinance. The complainant accordingly appeared on the date of hearing and pointed out that the hearing was completed on 20th September, 2001. These facts were also placed on record through a communication in the form of application on the date of hearing. Respondent No.2 passed order, dated 20th July, 2002, which was duly received by the complainant in July, 2002. The complainant has pleaded that. the appellant order is contrary to the provision of section 8 of the Ordinance and is in violation of section 132(5) totally ignoring the complainants letter, dated 29‑4‑2002. It has been prayed that order, dated 20th July, 2002 be cancelled and order in terms of section 132(5) of the Income Tax Ordinance, 1979 be passed.
2. In reply the respondent has submitted that the letter/notice tinder section 132(6), dated 28‑8‑2001 was received from the complainant for early decision of his appeal. However, the said letter/notice does not appear to have been served personally on the then Commissioner of Income Tax (Appeals) as required by subsection 6 of the section 132 of the Ordinance. It has admitted that the complainant attended the hearing on 20th September, 2001 but no order was passed by the then Commissioner of Income Tax (Appeals). It has further been submitted that the letter, dated 11‑1‑2002 allegedly sent by the Appellant is not available on record however, it is admitted that fresh notice for re hearing was issued on 17‑4‑2002 and also that the case was finally heard on 29‑4‑2002. It has been admitted that letter, dated 29‑4‑2002 alongwith annexures is available on record .as mentioned in the order sheet, dated 29‑4‑2002. It has further been submitted that as notice under section 132(6) was not served personally on the Commissioner no relief can be granted.
3. From the facts stated above it is clear that the complainant had filed appeal on 21‑6‑2001 thereafter he served a notice under section 132(6) on 28‑8‑2001 the hearing was fixed on 20th September, 2001 when the case was heard. As no order was passed on 11th January, 2002, the complainant sent an application by registered post addressed to the Commissioner complaining of non‑receipt of the order.
Thereafter again hearing was fixed on 29-4‑2002 on which date the complainant again submitted an application stating all the facts till that date. Finally the order was passed on 20th‑July, 2002.
4. There can be no denial of the fact that the application, dated 28‑8‑2001 was delivered in the office of the Commissioner through registered post one month before the expiry of time limitation provided under subsection (6) of section 132 stating that the appeal was still pending. This clearly shows that the appeal had been heard on 20th September, 2001 but no decision was rendered by the Commissioner (Appeals). In these circumstances the question arises whether the case falls within the ambit of section 132 of the Income Tax Ordinance 1979 relevant provision of which are reproduced below:‑‑
Section 132(5):
Where no order under subsection (1) is made before the expiration of three months from the end of the month in which the appeal is presented, the relief sought through the said appeal shall be deemed to have been given and all the provisions of this Ordinance shall have effect accordingly. Provided that, where the hearing of appeal is adjourned for any period on the request of the appellant, the said period shall be excluded while computing the aforesaid period of three months Provided further that nothing contained in this subsection shall apply to any appeal presented before the first day of January, 1992.
Subsection (6):
The provisions of subsection (5) shall not apply unless a notice by the appellant stating that no order under subsection (1) has been made is personally served by the appellant on the Appellate Additional Commissioner not less than thirty days before the expiration of the period of three months.
It may be noted here that subsections (5), (6) and (7) of section 129 of the Income Tax Ordinance, 2001 are identical to the above provisions.
5. The complainant has contended that after service of application, dated 28‑8‑2001 as the appeal was not decided before the expiration of three months from the end of the month‑ it was presented, the relief sought shall be deemed to have been given and the respondent No.2 had no authority to hear and pass order on 20th July, 2002. On the other hand the representative for the Department has contended that sub section (5) of section 132 can be pressed in service only where the notice required by it is served personally on the Commissioner (Appeals). In other words the contention is that the notice under subsection (5) of section 132 should have been served on the Commissioner personally. Accordingly to subsection (6) relief under subsection (5) can be granted only when the notice by the appellant that no order under subsection (1) has been made is, "personally served by the appellant on the Appellate Additional Commissioner". The key words in the entire controversy are "personally served' by the appellant on the Appellate Additional Commissioner". The use of words '‑personally served by the appellant' is very significant. According to Blacks Law Dictionary 'personal service' means actual delivery of the notice or process to the person to whom directed, an act done personally by an individual. It therefore, can be concluded that service has to be effected in person by the appellant himself. There are various recognized mode of service, which include through registered post, Courier Service, by affixing the notice at the outer door of the office or place of residence, through some authorized agent and also by publication in a newspaper. Now with the advancement of media and information technology notices can also be issued and served by fax, and through telegram. In certain situation mode of service of notice through announcement from Radio and Television has also been recognized. The question arises why the statute has provided for a specified mode of service on the Commissioner. The presented mode being that the notice by the appellant is personally served by the appellant on the Appellate Additional Commissioner. The next question arises whether such notice should be served on the Commissioner personally or its delivery in his office would constitute proper service. The consequence of default after service of notice is serious and far‑reaching. The relief will automatically flow from the default. Therefore, the statute deemed it proper that there should a personal contact between Commissioner (Appeals) and the assessee so that gravity of situation may be realized by the Commissioner (Appeals) and he may be personally responsible for the default. This will exclude excuses like misplacement of the document, failure of lower staff to bring to the notice and similar other lapses, negligence and above all chances of collusion and corruption. Therefore, the legislature intended the service of notice by the appellant personally on the Commissioner (Appeals) in person. Our office research has brought to notice judgments of the Lahore High Court in Messrs Aasmi Package (Pvt.) Ltd. v. Commissioner of Income Tax (Appeals) 2000 PTD 39 and Ch. Irshad Ahmad v. CIT 1996 PTD 279 where the Hon'ble Judges have observed that notice should be served on the Commissioner personally. There can be no cavil with this observation. However, with due respect it may be observed that "service by the appellant personally" as provided by subsection (6) of section 132 is also mandatory otherwise a letter sent by A post or through Courier Service specifically addressed to the Commissioner (Appeals) by name with endorsement as personal may fall within the category of service on the Commissioner (Appeals) personally. For these reasons my humble view is that the appellant should serve the notice personally on the Commissioner (Appeals) in person and not otherwise. Difficulty may arise where the assessee is a firm, Corporation, or Paradanshin lady or an invalid person. In such cases any duly authorized person may personally serve the notice on the Commissioner (Appeals) in person. This specific mode of service of notice provided by the Ordinance excludes other types of service, which may otherwise be legal and proper under other statutes. Whenever any act is to be done personally a physical contact of the person required to do is necessary. On this analysis the notice required by subsection (5) should have been personally served by the appellant on the Commissioner (Appeals). Subsection (6) excludes notice by registered post A/D or in any other manner. It is true that notice by registered post was served in the office of the respondent which in the normal course should be presumed to be within the knowledge of the Commissioner (Appeals) but as the law requires notice is to be served personally by the appellant on the Commissioner (Appeals) the consequences as envisaged by subsection (5) will follow only on strict compliance of subsection (6). The service of notice is defective and not according to law. It is a well -settled principle that if law requires a thing to be done in a particular manner it should be performed in the same manner otherwise it wall be illegal. There seems to be wisdom in insisting on service by the appellant personally on the Commissioner because there is every likelihood that the application sent by registered post which normally may be received in‑the office is not presented to the Commissioner or not brought to his notice. There is every likelihood that by collusion and malpractices which may develop as a consequence of delivering the notice in the office instead of service on the Commissioner may lead to automatic grant of relief by lapse of time. Whenever anyone personally serves a notice on the Commissioner (Appeals) in person it is bound to create an impact on him and be is bound to take notice of the case particularly as serious consequences may follow under the la due to inaction on his part.
6. The provisions of subsection (5) shall not apply unless a notice by the appellant stating that no order under subsection (1) has been made is personally served by the appellant on the Appellate (Additional Commissioner) in person not less than thirty days before the expiration of the period of three months. As service of notice was defective no interference is required.
7. However, this is not the end of the matter. The facts reveal inaction, inaptitude and negligence in performance of duty even when it was pointed out to Authorities by the taxpayers. This apathy on the part of the tax administrators is not condonable nor excusable. This is a maladministration, which perverts, the entire system and requires immediate attention of the C.B.R. It is the entire responsibility of C.B.R. to manage and supervise in such a manner that proper tax administration is carried out according to law.
8. It is recommended that;
(i)C.B.R. to institute a inquiry into the delay in delivering decision in the appeal and take suitable action.
(ii)Issue proper instruction regarding disposal of appeal and to ensure its implementation.
(iii)Compliance be reported within 60 days
C.M.A./860/FTOOrder accordingly