Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----S. 2(3)---Maladministration---Illegal practice by the Staff of Income Tax Department---Selection of case for total audit ---Harassment-- Demand of illegal gratification/bribe---Complaint against staff of the Department---Investigation by Federal Tax Ombudsman ---Result-- Officers named in the complaint were serving for the past many years and had developed contacts with the assessee, offered and rendered services for preparing the return and charged money ---Assessee also sought favours willingly approached them in the hope to get benefit-- Such was a common complaint coming from everywhere that the tax employees who were mostly related to the process of assessment had remained in the same circle or zone throughout with the result that many of them thrived on corruption, bribe and blackmailing the assessee-- Maladministration was rampant and all was not well---Federal Tax Ombudsman recommended that functionaries serving in the same circle for a long time in the relevant area be transferred out of the Zone for a minimum period of three years and be kept under observation for a period of one year and half yearly report be submitted by the Commissioner to Central Board of Revenue with a copy to Secretariat of the Ombudsman.

Naeem Rao and Talat Mahmood for the Complainant.

Muhammad Asif, ACIT and Tahir Siddique Bhatti ACIT for Respondent.

FINDINGS/DECISION

The complainant has alleged that tie had complained against the staff of Circle 28 Jaranwala. The matter was referred to RCIT Multan who assigned it to IAC Range 4, Faisalabad. He fixed the enquiry on 13-1-2003. The complainant appeared before the IAC Range-4, Faisalabad and made statement against Aamir Clerk who had come to his shop for enquiry and Pervaiz Supervisor Circle-28 who used to take money from him and blackmail him. The IAC told the complainant that he has not paid full tax and thus put him under duress and fear. The complainant has alleged that due to such conduct of IAC, he has no faith in the enquiry to be conducted by him who is shielding tax employees. He has stated that justice be done to him and the enquiry report be furnished.

2. In reply the Regional Commissioner has stated that Pakistan Karyana Store, Adda Staiyanan, Jaranwala was an existing taxpayer Circle-28 Jaranwala. His return for the assessment year 2001-2002 was selected for total audit through random ballot. It has been further stated that during assessment proceeding assessee filed complaint against Mr. Pervaiz, Supervisor, Mr. Aamir Saeed, UDC and Mr. Muhammad Aslam, armed guard. The. Additional Commissioner conducted enquiry and by report, dated 23-11-2002 recommended that complaint may be filed being without any evidence. However, the case of complainant was transferred from Circle-28, Jaranwala to Circle-21, Faisalabad. From the report submitted by the Commissioner it seems that the complainant was not willing to come to produce documents and evidence in support of his allegation. Considering the facts and circumstances of the case and also the general perception and impression that the officers and staff members of the tax department indulge in revenge action against the complainants, it was thought proper to record the evidence of the witnesses.

3. Mr. Niaz Ali complainant appeared and was examined. According to him on receipt of a notice he visited the Income Tax Office and met Mr. Aamir Siddique Bhatti, Taxation Officer and showed it to him whereupon he told him that if he deposits Rs.50,000 instead of the tax amount of Rs.80,000 he would be free from all liability. The complainant told him that being a Karyana shopkeeper he cannot pay this amount. Thereupon he was asked to pay Rs.25,000 to settle the matter, which he refused. Thereafter a challan for depositing Rs.15,000 for wealth tax assessment year 2001-2002 was given although no assessment order had been served on him. A photocopy of this document has been filed which bears the seal-of department and has been signed for Income Tax and Wealth Tax Officer Circle-25, Faisalabad. The complainant stated that in November Mr. Aamir, Clerk came at his shop with a gunman and wanted his signature on a blank sheet of paper, which he refused. Mr. Aamir stated that Mr. Tahir Siddique Bhatti has sent them to make enquiry about the stock. The complainant asked the clerk first to prepare inventory and then he would sign it but they went away without preparing it. When the case was transferred from Faisalabad to Jaranwala Circle in 1993 Mr. Pervaiz, Supervisor told him that tax has been not deposited for the year 1992 and demanded Rs.15,000 as tax which according to him was not paid., He paid Rs.8000. It has been stated that Mr. Pervaiz used to prepare his return and charged Rs.20,000 as fee for this work. Thereafter five notices were served on him, which the complainant suspected and showed to Mr. Pervaiz who demanded Rs.15,000 which the complainant refused to pay. He told Pervaiz that in future he would not get the return prepared by him. In 1998 the return was prepared by Mr. Iqbal Niazi an employee of income-tax office. It has further been stated that on receipt of notice from Income Tax office he, went there and was told that he had not filed the return for the year 1998 and it was not available on the file. The complainant showed photocopies of the return. He stated that an enquiry was instituted and it was found that Mr. Pervaiz had removed the return from the file and he was transferred from the circle. Rana Ibrar had conducted the enquiry and on his transfer Mr. Perfaiz was again posted at Jaranwala where he resides. His entire service had been in this Circle. He has further stated that he had complained to Mr. Mohammad Ahmad, Additional Commissioner that Mr. Pervaiz and Mr. Tahir Siddique Bhatti are harassing him and have demanded bribe. He had requested that his case may be transferred to Faisalabad Circle. He has further stated in view of the agreement with the department he deposited 35 % tax for the assessment year 2001-2002. He has alleged that after the case was transferred to Faisalabad Mr. Tahir Siddique Bhatti personally visited Mr. Ghulam Nabi and told him that transfer of case from Jaranwala Circle was his insult and complainant should be taxed heavily. He has stated that after some days he had gone for Aasar prayer when his son came and told him that Income Tax people were calling him. He stated that 40-50 person from the market had gathered and five person from the tax department were also there who told him that they had come to make enquiry about business and assets. Inspector Muhammad Yaqoob alongwith driver and peon were there. Azmat Shah bailiff was also present. They prepared inventory and obtained his signature. He stated that he has no complaint against these five persons who prepared the inventory. In cross-examination by Mr. Muhammad Asif CIT he denied having received notices under sections 56 and 61. He also denied that he had authorized Mr. Muhammad Aslam, who had signed on the notice. He denied service of notice under section 61 allegedly served on his brother as the signature is in English and his brother does not know English. He had filed photocopy of the return which had been misplaced. In cross examination to Mr. Tahir Siddique Bhatti he denied the suggestion that bribe was not demanded. He further stated that in the complaint he has not mentioned name of Mr. Tahir Siddique Bhatti but has mentioned his name in the affidavit. In cross-examination to Mr. Muhammad Pervaiz, Supervisor, he stated that staff members of the Circle and Mr. Pervaiz used to blackmail him. In cross-examination to Mr. Amir he denied that he did not come to his shop. Mr. Rana Talat Mahmood was also examined who was the Advocate for the complainant and was aware of the facts. He stated that he had visited the office of Mr. Tahir Siddique Bhatti who told that complainant's agriculture property was also to be included in the total income and tax comes to Rs.50,000. He further stated that Mr. Tahir Siddique Bhatti asked him not to interfere and should withdraw as tax officials are already working and advising the complainant. Thereupon he replied that he has been professionally engaged and is not a tax employee. Mr. Bhatti stated that on deposit of Rs.50,000 he would pass assessment order. He stated that as the, complainant desired to talk to Mr. Bhatti he left the office and went to his Chamber which is nearby. After some time the complainant came with a challan of Rs.15,000 in respect of year 2000-2001 although no tax was leviable for this assessment year. He stated that the complainant paid tax in term of settlement between the Bar and ACIT. His statement was recorded by Mr. Muhammad Ahmad Additional Commissioner in respect of complainant's application for transfer of his case as he did not expect justice from Jaranwala Circle office. In cross-examination he has stated that Mr. Tahir Siddique Bhatti had come to Mr. Ghulam Nabi Tahir Taxation Officer Faisalabad and asked him to hold enquiry into the matter as transfer of case was an insult to him. This information was conveyed to him by an officer of the department. He has stated that challan was given by Tahir Siddique Bhatti in respect of wealth tax although it was no leviable for the assessment year 2001-2002. He has stated that under the instructions of the Board the agreement between the Bar and RCIT was cancelled after 15th March, 2003.

4. Mr. Tahir Siddique Bhatti, ACIT submitted a statement on oath pointing out discrepancies in the statement stating that when the complaint was lodged first to CIT Faisalabad Zone it was stated that challan of Rs.15,000 was given to him to deposit the tax and no allegation of mala fide intention was alleged against him, has annexed a copy of the complaint of Niaz Ali in support of his defence. A perusal of this complaint produced by Tahir Siddique Bhatti shows that the complainant had stated that after his case was selected by computer ballot he was called in the office and he submitted his counts through an Advocate. Mr. Tahir Siddique Bhatti prepared a challan of Rs.15,000 and directed that after depositing the tax he should come back. He had further alleged that Mr. Tahir Siddique Bhatti behaved rudely and stated that if Rs. 15,000 was not deposited then wore tax will be imposed. It was further alleged that on 16th November Aamir Clerk came with Aslam who has been suspended and stated that lie has been sent by AC for inquiring about and the decision will be eased on the report submitted by him. Mr. Aslant had suggested that if compromise is made with the Inspector then nothing will happen. In this complaint lie had complained against tax officials referring to particular incident.

5. Mr. Pervaiz Akhtar has also submitted his statement and stated that he has no concern with the assessment proceedings and in the first complaint no allegation was made against him but in the present complaint allegations have been made. He denied received illegal gratification or blackmailing the assessee Muhammad Aamir Saeed submitted that the allegation against him are baseless. He hall visited the business premises of the assessee. He is a Record-keeper prepares notices. As the case was selected for total audit I had prepared the notices.

6. On 8^th July, 2003 Mr. Tahir Siddique Bhatti again submitted a statement in the form of arguments signed by him in which he denied all the allegations: He stated that after the case was selected for audit Niaz Ali came to his office with Mr. Muzzaffar Ali, Assistant Professor, Government College, Jaranwala and stated that he cad wound up the business and would not deposit any tax. He further stated that he to led to get him understand that business was on extensive scale and minimum tax of Rs.15,000 might be deposited. He further stated that he had acted in a polite manner and did not threaten of dire consequences He further stated that as the case has been transferred from his jurisdiction to Faisalabad he has nothing to do. He denied having pressurize Mr. Ghulam Nabi Tahir for harsh assessment against the complainant. He has also produced an affidavit of Mr. Muzzaffar Ali Khan, Assistant Professor Government College. Jaranwala who has stated that we had attended the office of the Taxation Officer Circle-28 Jaranwala and remained present all the time during the course of proceeding. He further stated that behaviour of Mr. Tahir Siddique Bhatti was very kind and cooperative and complainant seems to have agreed to deposit income tax. No demand for illegal gratification was made by the officer during the hearing. The presence of Mr. Muzzaffar Ali was admitted by P. W.2. The complainant had brought him to influence Mr. Siddique Bhatti who seems to be known to him and on friendly term. This shows that Mr. Tahir Siddique Bhatti was on friendly and intimate terms with him that is why Mr. Muzzaffar Ali's help was sought for seeking favour. In such circumstances reliance can not be placed on his statement.

7. The allegations are of demanding bribe, rude behavour and ,the conduct of the tax employees who visited and called the complainant together with 'the allegation that the tax employees named therein used io prepare and submit return and if their demands were not met they blackmailed. So far the question of demanding bribe is concerned there is no strong evidence to support it because P.W.2 who had accompanied has stated that as Mr. Tahir Siddtque Bhatti's behaviour was not proper he left the room. Therefore, in his presence no demand had been made. Mr. Rana Talat Mehmood is an Advocate and is practising at Faisalabad. He was engaged by the complainant when the case was selected for total audit for the year 2001-2002. He had attended the office of ACIT Mr. Tahir Siddique Bhatti in connection with this case. His presence has not been denied. In fact from the statement of the complainant it seems that Mr. Tahir Siddique Bhatti and other ;ax employees did not approve the engagement of an Advocate to pleaded the case. This reveals the real story behind the scene. Why the tax officials pressurize the assessee not to engage the' Advocate or tax practitioner. This means that they want a direct contact with the assessee for their illegal benefits which ultimately causes loss to the Revenue. It, is established from the, evidence that Mr. Tahir Siddique Bhatti was suggesting the tax to he Rs.50,000 and further that he was not prepared to pass assessment order unless Rs.15,000 was deposited. This conduct was most objectionable causing harassment to the complainant. Mr. Tahir Siddique Bhatti cross-examined Mr. Rana Talat Mehmood but credibility of his statement could not be shaken. From all these statements it is clear that the complainant had been complaining against the tax officials and had made a complaint against Clerk Aamir and Aslam Fuji, in respect of which enquiry was held by Mr. Mohammad Ahrnad who gave a finding that Mr. Tahir Siddique Bhatti, Taxation Officer issued challan to ensure imniediate collection and Mr. Talat Mehmood, Advocate was. present at that time as, is evident form the order sheet entry, dated 14-10-2002 and that no mala fide intention was involved as far as Taxation Officer is concerned. However, it was found that Muhammad Aamir Saeed, UDC and Aslam armed guard had gone to the shop of the complainant without any authority and they tried to pressurize the taxpayer. He recommended for strict warning to them. This demonstrates that the statement of Niaz Ali was believed. It was further recommended that as the assessee has shown mistrust on taxation officer Circle-28 Jaranwala, Mr. Tahir Siddique Bhatti, the jurisdiction of this case may be assigned to Circle-21, Faisalabad. This enquiry report reflects upon the conduct and working of the tax department at Jaranwala. If the complainant had no complaint against Mr. Tahir Siddique Bhatti why should he show his mistrust against him. This seems to have impressed the Inquiry Officer who recommended for the transfer of the case. The case is not transferred unless there are valid and compelling reasons. Merely for the conduct of clerk and armed guard case is not transferred. This must have caused grievance and annoyance to the Taxation Officer. So far Mr. Tahir Siddique Bhatti is concerned the statement of the witnesses proved that his behaviour was rude and his approach to the assessee was of such a nature that even the Inquiry Officer Mr. Muhammad Ahmad thought it fit to recommend the transfer of case from his jurisdiction. During hearing I had to warn him several times not to interfere in the proceeding unnecessarily and aggressively. While the statement of the complainant was in progress he used to interfere with the proceedings. During cross examination of the complainant I had made observation and duly recorded that he used to interrupt unnecessarily and aggressively, which shows his conduct and behaviour. If an officer of his status can interfere in proceeding in an unbecoming manner it can be visualized what would be his behaviour with the assessee, Advocate and subordinates. The statement of the Advocate is more reliable in respect of the behaviour and the conduct of Mr. Tahir Siddique Bhatti. Whereas Muzzaffar Ali's statement is self-serving and his statement cannot be relied upon due to friendship which seems to be known to the public and assessee.

8. During hearing the learned Advocate for the complainant pointed out that the officers named in the complaint have been serving at Jaranwala for the past many years. The result is obvious, they develop contact with the assessees, offer and render services for preparing the return and charge money. The assessees also to seek favour willingly approach them in the hope to get benefit. This is a common complaint coming from every where that the tax employees who are mostly related to the process of assessment have remained in the same circle or zone throughout with the result that many of them thrive on corruption, bribe" and blackmailing the assessees. In this case also Mr. Tahir Siddique Bhatti, Pervaiz Supervisor and Muhammad Aamir Saeed who was UDC and has been now.promoted as a Supervisor have throughout remained in Faisalabad, Jaranwala or Tandlianwala. They reside there, develop contact with the assessees and thus brought bad name for the department. There exists maladministration. Considering all these facts and report of Mr. Muhammad Ahmad it seems that all is not well.

9. It is recommended that:--

(i)Mr. Tahir Siddique Bhatti, Mr. Pervaiz Akhtar, Supervisor, Mr. Muhammad Aarnir Saeed, Supervisor be transferred out or Zone for a minimum period of three years.

(ii)Mr. Tahir Siddique Bhatti, be kept under observation for a period of one year and half yearly report be submitted by the Commissioner to C.B.R. with a copy to this Secretariat.

(iii)Compliance report be submitted within 60 days.

C.M.A./1036/FTOOrder accordingly.