(a) Income Tax Rules, 1982‑‑‑

‑‑‑‑Rr.158 & 159‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Appointment of Receiver for business and immovable property‑‑‑Duties and liabilities of Receiver‑‑‑Under R.158 of the Income Tax Rules, 1982 where the property of a defaulter consists of a business the Tax Recovery Officer might attach the business and appoint a person as "Receiver" to manage the business while under R.159 of the Income Tax Rules, 1982 where immovable property was attached the Tax Recovery Officer instead of directing a sale of the property, appoint a person to manage such property‑‑‑Rule 158 of the Income Tax Rules, 1982 provides for appointment of a "Receiver" of business whereas under R.159 of the Income Tax. Rules, 1982 "Receiver" could be appointed for immovable property which had been attached for its management‑‑‑Contention of the assessee that management could be of business and not of immovable property did not hold sound‑‑‑Immovable property once attached would come under the control of the attaching Authority‑‑‑Duty of a "Receiver" was to preserve the property and save it from damage, destruction or transfer to any party‑‑‑Such duty of the "Receiver" fell under the category of managing the property‑‑‑Receiver, in performance of his duty can look after the residential house, preserve and protect it and appointment of the Receiver on such ground could not be challenged.  

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

‑‑‑‑S.93(2)‑‑‑Income Tax Rules, 1982, R.159‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑ Appointment of Receiver‑‑‑Conduct of Receiver‑‑‑Realization of dues from the lady members of the assessee in his absence by harassment‑‑ Subsequently appeal of the assessee was allowed and order of Assessing Officer was vacated with the direction to accept nil income as declared‑‑ Validity‑‑‑Important and relevant contention of the assessee was about the behaviour of the "Receiver" in realizing the dues from the lady members of the assessee in his absence‑‑‑Department had not controverted the allegation made against the "Receiver" and admitted recovery of Rs.20,000 by him‑‑‑"Receiver" was considered to be an officer of the Court and he should not exceed the normal limits of courtesy and respect which demands from such office‑‑‑"Receiver" should not have realized the dues from the family members particularly as the property had been under his control as there was no apprehension of its being transferred or damaged‑‑‑At best he' could have demanded from the assessee himself and not to realize from his family members‑‑ Conduct of the "Receiver" in this regard was beyond his authority and was depreciated‑‑‑Federal Tax Ombudsman recommended that (i) the amount recovered as tax if not refunded be refunded to the complainant within 30 days; (ii) the Central Board of Revenue to issue instructions to Commissioner of Income‑tax to maintain a list of persons of integrity for appointment of "Receivers" according to serial number.

Bashir Ahmad with Shakil Ahmad‑ for the Complainant.

Sajjad Haider Khan, I.A.C. for Respondent.

FINDINGS/DECISION

The complainant is an existing assessee deriving income from property. His Property bearing No. 109, Double Road, F‑10/1, Islamabad was rented out but due to certain disputes with the tenant the complainant filed ejectment case in the Court of Civil Judge 1st Class, Islamabad. The said house was got vacated from the tenant on 8‑3‑1997 while suit for recovery of rent from 1‑12‑1995 to 8‑3‑1997 was pending at the time of filing of this complaint. During the course of assessment proceedings for assessment years 1997‑98 and 1998‑99 it was pointed out that the house property was vacated on 8‑3‑1997 and subsequently sold out in December, 1998. However, the Assessing Officer did not take notice of this aspect and assessed the rental income creating demand for both the assessment years 1997‑98 and 1998‑99. It is alleged that the assessment order was never served upon the complainant instead a recovery notice dated 2‑9‑2001 was received by post making a demand of Rs.83,488 for the assessment year 1997‑98. The complainant obtained a copy on 16‑10‑2001 for both the assessment years and filed appeal before the Commissioner of Income Tax (Appeals) on 8‑‑11‑2001. It has now been reported that the appeal has been allowed and the impugned order of the Assessing Officer was vacated with the direction to accept nil income as declared by the complainant.

2. The complainant has alleged that during the pendency of the first appeal the Assessing Officer issued notice under section 93(2) dated 17‑4‑2002 for recovery and at the same time appointed Mr. Zahid Mahmood Chatha as "Receiver". While the complainant was out of the country and the appeal was pending the "Receiver" frequently visited the residence of the complainant, harassed the lady members of the family and collected cash amount of Rs.20,000 from them on 29‑4‑2002. Out of this amount he deposited Rs.15,000 as income tax while Rs.5,000 was retained as his fee. The request for stay of recovery proceedings was not accepted by the Inspecting Additional Commissioner of Income Tax Range‑II, Islamabad. It has been alleged that the appointment of "Receiver" in the circumstances of the case was illegal and that disciplinary action be taken.

3. The department in his reply stated that consolidated assessments for assessment years 1997‑98 to 1999‑2000 were framed on 20‑5‑2000 on merits as well as on the basis of material available on record. It has been further stated that the recovery' proceedings were according to the rules and no stay order had been issued by the Commissioner of Income Tax (Appeals). It is admitted that recovery has been made and that the Advocate for the complainant during the meeting was advised to make payment of portion of outstanding demand. As the assessee was given opportunity to deposit the tax but he failed to comply, notice under section 93(2) of the Income Tax Ordinance was issued and later on "Receiver" was appointed under rule 159 of the Income Tax Rules, 1982.

4. The complainant has challenged action appointing "Receiver" and also the manner in which he behaved with the lady members of his family during his absence and collected Rs.20,000 from them on 29‑4‑2002. So far merits of the case is concerned appellate authority has already granted the relief. The only question is regarding appointment of the "Receiver" and his behaviour during the recovery proceedings.

5. Under rule 158 where the property of a defaulter consists of a business the tax recovery officer tray attach the business and appoint a person as "Receiver" to manage the business. Under rule 159 where immovable property is attached the tax recovery officer instead of directing a sale of the property, appoint a person to manage such property. It is thus clear that rule 158 provides for appointment of a "Receiver" of business whereas under rule 159 "Receiver" can be appointed for immoveable property which has been attached for its management. The contention of the learned counsel that management can be of business and not of immoveable property does not hold sound. An immoveable property once attached comes under the control of the attaching authority. It is the duty of a "Receiver" to preserve the property and save it from damage, destruction or transfer to any party. This duty of the "Receiver" falls under the category of managing the property. In performance of his duty the "Receiver" can look after the residential house, preserve and protect it. Therefore, on this ground the appointment of the receiver cannot be challenged.

6. The important and relevant contention is about the behaviour of the "Receiver" in realizing the dues from the lady members of the complainant in his absence. The department has not controverted the allegation made against the "Receiver" and admits recovery of Rs.20,000 by him. The "Receiver" is considered as an officer of the Court and he should not exceed the normal limits of courtesy and respect which demands from such office. The "Receiver" should not have realized the dues from the family members particularly as the property had been under his control. There was no apprehension of its being transferred or damaged. At best he could have demanded from the assessee himself and not to realize from his family members. The conduct of the "Receiver" in this regard was beyond his authority and is depreciated. It is, therefore, recommended that:

(i) The amount recovered as tax if not refunded be refunded to the complainant within 30 days.

(ii) The C.B.R. to issue instructions to CIT to maintain a list of persons of integrity for appointment of "Receivers" according to serial number.

(iii) Compliance be reported within 45 days.

C.M.A./469/FTO Order accordingly.