Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑Ss. 63 & 132‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 9‑‑‑Best judgment assessment‑‑ Maladministration‑‑‑Transgression of jurisdiction and outrageously ill-- arranging of assessment record‑‑‑First Appellate Authority directed to frame revised assessment "as per history of the case"‑‑‑Assessing Officer repeated the original assessment‑‑‑Assessee contended, that against gross receipts declared at Rs.27,600 in the assessment year 1994‑95 income was assessed at Rs.31,000 but in the assessment year 1997‑98 despite the declared gross receipts being exactly the same at Rs.27,600, income was arbitrarily assessed under S.63 of the Income Tax Ordinance, 1979 at a net amount of Rs.1,20,000 for which no basis whatsoever was mentioned and the same figure was repeated with impunity in the revised assessment framed under Ss.62/132 of the Income Tax Ordinance, 1979‑‑‑Validity‑‑ Assessing Officer could not controvert any of the insinuations‑‑‑Federal Tax Ombudsman concluded that the dispensation was arbitrary, unjust, oppressive, unlawful in addition to total disregard of the limited scope of the authority given by the First Appellate Authority and defiance of the instructions by his own Zonal Commissioner of Income‑tax‑‑‑Such transgression of jurisdiction clearly amounted to "maladministration" as defined in S.2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000‑‑ Assessment record was also outrageously ill‑arranged‑‑‑Situation appeared still more grave when viewed in the context that none of the concerned officers/officials bothered to bring it into a presentable shape even when summoned by the Federal Tax Ombudsman Secretariat at least some efforts should have been made to arrange the record before its submission to a higher investigation forum‑ Was not difficult to diagnose the cause of this malady and the persistent indifference on the part of the functionaries manning the income‑tax circles which was due to the lack of supervision by the Inspecting Additional Commissioner whose job description required him to monitor the working of the officers in his range‑‑‑Unless the higher echelon of the Revenue Division realize the importance of effective supervision and strict monitoring of field officers, it may not be possible to pass on the benefits of arty proclaimed reforms or restructuring to the taxpayers and the public at large‑‑‑Federal Tax Ombudsman recommended that the Commissioner of Income‑tax, concerned may call for record of the case for suo motu action under S.138(1) of the Income Tax Ordinance, 1979, that stringent warning and the appropriate guidelines be issued to the Special Officer for the present dereliction of duty and for corrective action in future; and that task force be nominated to go through the entire record of the Circle to ensure that not only file but registers also are brought in conformity with the requirement of Office Procedure for maintenance of record in the offices.

Muhammad Aslam Tabassum, F.C.A., A.R. for the Complainant.

Mrs. Laila Ghafoor, D‑C.I.T., and Aamir Bashir, Special Officer for Respondent.

DECISION/FINDING

The complainant in this case is Mr. Javed Akhtar Gohar, a member of the A.O.P. (=Haram Recruiting Agency) which bears NTN 05‑14‑2022511. He alleges: "the Assessing Officer's action was oppressive, against the accepted practice, unlawful and violative of the instructions of learned Commissioner of Income Tax (Appeals)".

Copy of the complaint was sent to the Secretary Revenue Division and the Special Officer of Circle 14, Zone‑A, Lahore calling upon them to submit their reply to the allegations levelled in the complaint. On receipt of respondent's reply vide Special Officer letter dated 22‑7‑2001 both complainant and the officers of the Revenue Division were summoned for hearing on 31‑8‑2001. The precise allegations are:

That the assessment order for the assessment year 1997‑98 was set aside by the learned Commissioner of Income‑tax (Appeals) Zone‑IV, Lahore.

That the learned Commissioner of Income‑tax (Appeals) has directed the Assessing Officer in her order under section 132 that "the same may be decided as per history of the case".

That the Department did not go into appeal against the order of the learned Commissioner of Income Tax (Appeals) thereby accepting these orders.

The Assessing Officer, however, re‑assessed the case under sections 62/132 ignoring the directions of the learned Income Tax Commissioner of Appeals at the same income on which original assessment had been made by adopting‑ different basis and thus did not adhere to the instructions of the learned Commissioner of Income‑tax (Appeals), whereas the circumstances of the case were the same as in the year 1994‑95 and complete information thereof had been submitted.

The income and assessment record a till now is as follows:‑‑‑

The Assessing Officer's action was oppressive, against accepted practice, unlawful and was in violation of the instructions of the learned Commissioner of Income Tax (Appeals).

The assessment record produced by the Special Officer was examined with a view to investigate 'the value and worth of the allegations in the complaint and the reply submitted by the defendant/respondent.

It was canvassed for the Complainant/Assessee that the CIT(A) had issued clear directions to frame

revised assessment "as per history of' the case" a verdict which was concurred by the Commissioner of Income Tax, Zone‑A, Lahore who specifically directed the Special Officer, vide letter, dated 24‑3‑2001, to follow the instructions of the CIT (Appeals) while framing the revised assessment. Despite these unequivocal observations, the Special Officer repeated the originally assessed income of Rs. 120,000 and added insult to the injury by omitting to specify any basis or process through which the income was expected to be computed. As respect the history of the case, the learned counsel explained, it is discernible that against gross receipts declared at Rs. 27,600 in the assessment year 1994‑95 income was assessed at Rs. 31,000 but in the assessment year 1997‑98 (i.e. the year in dispute) despite declared gross receipts being exactly the same at Rs. 27,600, income was arbitrarily assessed under section 63 at a net amount of Rs.120,000 for which no basis whatsoever was mentioned. The same figure was repeated with impunity in the revised assessment framed under sections 62/132 of the Income Tax Ordinance, 1979.

The Special Officer could not controvert any of the above mentioned insinuations. There is, therefore, no escape from the conclusion that the impugned dispensation was arbitrary, unjust, oppressive, unlawful in addition to total disregard to the limited scope of authority given by the learned Commissioner (Appeals) and defiance of the instructions by his own Zonal Commissioner of Income‑tax, Zone‑A, Lahore. This transgression of the jurisdiction clearly amounts to "maladministration" as defined in the Federal Tax Ombudsman Ordinance, 2000 in sub section (3) of section 2.

The assessment record, as presented for perusal was in a schockingly deplorable state: It is surprising that none of the‑Officers who happened to deal with the case, right from very beginning, ever cared (hopefully through omission only) to keep the record in the manner and method prescribed by the Office Procedure in the Income Tax Department. The unflattering aspects which the record reveals are:

‑‑ Returns for the assessment years 1994‑95 to 1996‑97 declared `nil' income. The copies of the IT‑30s, obtaining on the file, mention that assessments were framed under section 62 but surprisingly all assessment orders are missing from the record,

‑‑ All the three assessments were framed on the same date i.e. 18-12‑1996 as per entry to this effect recorded on the order sheet,

‑‑ Even the order sheet does not mention the assessed figure of income which is‑ obtaining only on IT‑30s indicating that income was assessed at net amounts of Rs.31,000, Rs.41,000 and Rs.42,000 respectively in 1994‑95, 1995‑96 and 1996‑97,

‑‑‑ for the assessment year 1997‑98, the disputed year, original assessment was framed under section 63 at a net income of Rs.120,000 but no copy of the assessment order finds place on record. It passes imagination how the assessee/complainant came to have a copy of the assessment order, a photocopy of which has been submitted alongwith the complaint,

‑‑ For assessment year 1998‑99 (subsequent to the year under complaint), the declared income was `nil' yet the assessment was framed under section 62 at a net amount of Rs.120,000 of which no basis or computation is given. [It does not emerge from record whether any appeal was filed against this order],

‑‑ For assessment years 1999‑2000 and 2000‑2001 no, returns of income are available but no proceedings under section 56 etc. appear to have been initiated,

‑‑ A return of income for the assessment year 1999‑2000 filed by Mr. Javed Akhtar Gohar, (member of the A.O.P.) together with a salary certificate from the employer is placed on record of the AOP although this gentleman is an existing assessee at NTN 06‑24‑0193994 of an altogether different Zone. [The return should have been immediately transferred to the concerned Circle and its existence on A.O.P's. record demonstrates indifference, incompetence and carelessness].

In short, the assessment record is outrageously ill‑arranged, a situation which appears still more grave when viewed in the context that none of the concerned officers/officials bothered to bring it into a presentable shape even when summoned by the Federal Tax Ombudsman Secretariat. At least some efforts should have been made to arrange the record before its submission to a higher investigating forum. It should not be difficult to diagnose the cause of this malady and the persistent indifference on the part of the functionaries manning the income‑tax circles. To be precise, it is the lack of supervision by the I.A.C. whose job description requires him to monitor the working of the officers in his Range. Unless the higher echelon of the Revenue Division realize the importance of effective supervision and strict monitoring of field officers, it may not be possible to pass on the benefits of any proclaimed reforms or restructuring to the taxpayers and he public at large.

Coming to the present complaint it is recommended

(1) The C.I.T., Zone‑A, Lahore may call for record of the case for suo motu action under section 138(1) of the Income Tax Ordinance.

(2) Stringent warning and the appropriate guidelines be issued to the Special Officer for the present dereliction of duty and for corrective action in future,

(3) A task force be nominated to go through the entire record of the Circle to ensure that not only file but registers also are brought in conformity with the requirement of Office Procedure for maintenance of record in the Offices.

(4) A compliance receipt be sent to the F.T.O. Secretariat within 30 days of the receipt of this order.

C.M.A./569/FTO Order accordingly.