Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss. 56 & 5‑‑‑Notice for furnishing return of total income‑‑ Jurisdiction‑‑‑Assessee filed his return for the assessment year 2000‑2001 in a circle having the jurisdiction where head office of the assessee was located‑‑‑Notice under S.56 of the Income Tax Ordinance, 1979 for the assessment year 1999‑2000 was issued by the Assessing Officer having jurisdiction where factory of the assessee existed‑‑ Assessee contended that he was filing his returns in a circle of Faisalabad and was being assessed there--‑Assessing Officer assumed jurisdiction over the case and started enquiries/proceedings under the Income Tax Ordinance, 1979‑‑‑Validity‑‑‑Assessing Officer ignored the factual position that assessments for the years 2000‑2001 and 2001‑2002 had in fact been made at Faisalabad‑‑‑Even if the proper jurisdiction in the complainant's case was at Gojra no action could validly be taken by the Assessing Officer at Gojra without having the case formally transferred to his jurisdiction‑‑‑Notice under S.56 of the Income Tax Ordinance, 1979 issued by the Taxation Officer, Gojra and the enquiries conducted by the Inspector, of the circle were quite invalid although there was no reason to hold that proceedings could not otherwise be initiated by a Department on the basis of a complaint which contained definite information‑‑‑Federal Tax Ombudsman recommended that (i) the notice under section 56 of the Income Tax Ordinance, 1979 issued by the Taxation Officer, Gojra for the assessment year 1999‑2000 be withdrawn/cancelled and the enquiry report of the Inspector, Circle 20 Gojra be also treated as void (ii) No action under S.56 of the Income TaxOrdinance, 1979 or under any other provision of law be taken by the Taxation Office, Gojra unless the case was .formally transferred to his jurisdiction.

Muhammad Saleem Malik, A.R. for the Complainant.

Iftikhar Hussain Baloch, Taxation Officer for Respondent.

FINDINGS/DECISION

This is a complaint relating to assessment proceedings initiated by the Taxation Officer, Circle 20, Gojra in the complainant's case. The main points in the complaint are as under:‑‑

(i) The complainant (association of persons) filed its income tax returns in Circle 25, Faisalabad under National Tax Number Z 087232. The complainant's previous circle was Circle 8, Faisalabad.

(ii) The complainant received a notice under section 56 of the repealed Income Tax Ordinance, 1979 for the assessment year 1999‑2000 from the Assessing Officer, Gojra and in reply, dated 20‑10‑2001 it was explained that the complainant was an existing of assessee of Circle 08, Faisalabad.

(iii) Another, notice under section 56 (this time for the year 2000‑2001) was then received from the Taxation Officer, Gojra and again a reply was sent enclosing proof of filing of return at Faisalabad but again this letter was ignored and permission was granted by the IAC to the Inspector at Gojra to conduct enquiries in the complainant's case.

(iv) The complainant also received a show‑cause notice under section 62 which was quite illegal.

(v) The whole procedure was adopted by the Taxation Officer, Gojra on the basis of an anonymous/pseudonymous complaint which was against the instructions of C.B.R. and the relevant rules and regulations.

(vi) Certain documents required by the complainant were also not furnished by the Taxation Officer despite a proper application.

(vii) In the light of the above, the following questions are stated to arise:‑‑

(a) Whether the Taxation Officer can initiate proceedings on anonymous/pseudonymous complaints.

(b) Whether the authority given by the IAC under section 146 fell within the definition of maladministration.

It has been prayed that the procedure adopted by the Taxation Officer, Inspector, IAC and Commissioner may be declared as illegal and necessary action be taken under the Efficiency and Discipline Rules while damages be also allowed to the complainant.

2. In the respondent's reply it is stated that the complainant's factory is situated at Moongi Road, Gojra and proceedings were initiated by the Taxation Officer at Gojra on receipt of a complaint by issuing statutory notice under section 56 of the repealed income Tax Ordinance to the complainant for the year 1999‑2000. In response it was statedly contended by the complainant that no business had been done during the assessment year 1999‑2000, whereas return for the assessment year 2000‑2001 was statedly filed in Circle 8, Faisalabad. It is further stated' in the reply that the Assessing Officer Circle 8 Faisalabad was requested by the Taxation Officer, Gojra for transfer of records but ACIT Circle 8, Faisalabad confirmed in two separate letters that no such case existed in his circle. It is further stated that the complainant constructed a sizing factory at Gojra with an investment of Rs.1,666,461 (excluding the value of plot, which is not known). The investment statedly related to the assessment year 1999‑2000 for which no return of income had been filed and therefore, the complainant was further confronted through a notice under section 62 for the assessment year 1999‑2000 asking for an explanation regarding sources of investment. It is stated that no illegal action had thus been taken in the case. It is also stated that it is incorrect that copies of documents were not given to the complainant and that it is actually the complainant's AR who did not turn up to collect the copies. It has thus been stated in the respondent's reply that no maladministration is involved in the case.

3. At the time of hearing the representative of the respondent reiterated the contentions in the respondent's reply and also stated that according to C.B.R notification, dated 4‑8‑1979 all taxpayers except, public companies, are assessable with reference to their place of business and since the complainant's factory was located at Gojra the Taxation Officer, Gojra rightly, assumed jurisdiction in the case. The complainant's AR, on the other hand pointed out that the complainant's head office was situated in Faisalabad and that is why the return for the assessment year 2000‑2001 was filed in Circle 08, Faisalabad which was accepted under section 59(1) of the repealed Income Tax Ordinance, 1979. Attention was, in this connection, invited to the relevant assessment order, dated 30‑6‑2001 in the case. It was further pointed out that for the assessment year 2001‑2002 the complainant's case was selected for audit through computer ballot and all such audit cases were assigned to Circle 12, Faisalabad where assessment was made at income of Rs.300,000 in the complainant's case vide order, dated 25‑9‑2002. It was thus contended the Taxation Officer, Gojra was not justified in assuming jurisdiction in the case when the complainant was already being assessed at Faisalabad.

4. The contentions of the two sides regarding jurisdiction have been considered and while it was apparently correct that in view of the location of the complainant's business, its proper place of assessment would be Gojra, the fact remains that the complainant was actually being assessed at Faisalabad. The respondent's reply in this regard has been found to be quite inadequate because it ignores the factual position that assessments for the years 2000‑2001 and 2001‑2002 had in fact been made at Faisalabad. Thus even if the proper jurisdiction in the complainant's case was at Gojra no action could validly be taken by the Assessing Officer at Gojra without having the case formally transferred to his jurisdiction. The notice under section 56 issued by the Taxation Officer, Gojra and the enquiries conducted by the Inspector of the circle were therefore, quite invalid although there is no reason to hold that proceedings could not otherwise be initiated by the department on the basis of a complaint which contained definite information.

5. In the light of the above it is recommended that:‑‑

(i) The notice under section 56 of repealed Income Tax Ordinance, 1979 issued by the Taxation Officer, Gojra for the assessment year 1999‑2000 be withdrawn/cancelled and the enquiry report of the Inspector, Circle 20, Gojra be also treated as void.

(ii) No action under section 56 of the repealed Income Tax Ordinance or under any other provision of law be taken by the Taxation Officer, Gojra unless the case is formally transferred to his jurisdiction.

(iii) Compliance in respect of (i) above be reported within 30 days.

S. A. K./6/FTC Order accordingly??