Syed ATTA HUSSAIN BUKHARI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2004 P T D 1710
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Syed ATTA HUSSAIN BUKHARI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 876 of 2003, decided on /01/.
rd
September, 2003. Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑Ss. 63, 56, 61 & 13‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)‑‑‑Best judgment assessment‑‑‑Assessment was finalized on the basis of P.T.I. Form (Provincial Excise and Taxation Department) showing wrongly property in the name of complainant without proper service of notices on, the complainant‑‑‑Validity‑‑‑Notices under Ss.56; 61 and 13 of the Income Tax Ordinance, 1979 were not properly served‑‑‑Record showed, that notices were addressed to the building's name and not to complainant‑‑‑Failure to make proper service of notices on complainant was an act of maladministration because the department proceeded to create a huge liability against the complainant without giving him the opportunity to defend himself‑‑‑Ex parte assessment made without serving notice on the complainant was not sustainable‑‑‑Federal Tax Ombudsman recommended that Central Board of Revenue direct the, Commissioner to revise under S.122 of the Income Tax Ordinance, 2001 as to cancel the assessment order in respect of the assessment years 1993‑94 to 1997‑98 for de novo reassessment proceedings and take necessary action under, the Efficiency and Disciplinary Rules, 1973.
Syed Khalid Javed Bukhari for the Complainant.
Asif Rasool, DCIT for Respondents.
DECISION/FINDINGS
This is a complaint of maladministration alleging arbitrary demand of income‑tax amounting to Rs.1,087,690 and a penalty of Rs.27,193 for assessment years 1993‑94 to 1997‑98 despite the fact that the Property No. 368‑369 (Amina Plaza. Multan) does not belong to the complainant.
2. Brief facts of the complaint are that the complainant's name was wrongly shown in the P.T.I (Provincial Excise and Taxation Department Document) as owner of the above said property. When the income‑tax authorities took notice of it, he moved an application to the Provincial Taxation Authorities for correction of name because the property in question belonged not to the complainant but to one Syed Mureed Hussain Shah son of Pir Shah. The Provincial Taxation Department amended its record accordingly and the matter was brought to the notice of the Income Tax Authority. In the meantime assessment had been completed creating tax demand together with a penalty. This is the cause, of grievance. The tax demand together with recovery proceedings may be quashed.
3. In parawise comments, the respondents have stated that the tax demand was created as a result of ex parte assessment under section 63 of the Income Tax Ordinance, 1979 for .the period 1993 94 to 1997‑98. Since the complainant had failed to pay the demanded amount of income tax a penalty was also imposed. They had initiated proceedings after obtaining PTI form from the Excise and Taxation Department according to which Amina Plaza stood in the name of the complainant. Syed Atta Hussain Bukhari. Notices were issued in respect of the subject property. Service of notices remained uncomplied with. The assessment was completed ex parte on 30‑6‑2000 under section 63 of the Income Tax Ordinance, 1979 due to non‑cooperative attitude of the complainant. However demand notice was sent to the complainant through registered post as he had refused to receive the demand notice. Till completion of assessment the assessee never contacted the department. It was in response to the recovery notice that the complainant filed an application intimating that he had no concern with the property enclosing therewith PTI of the said property relating to the year 2002‑2003. The Assessing Officer had verified the PTI from ETO's office that clearly showed the complainant as the owner of the property in question up to 1999‑2000 and it was only after that the property was transferred to Syed Murid Hussain Shah. The assessment for the period of 1993‑94 to 1997‑98 was, therefore, correctly made in respect of the complainant because he was indeed the owner of the property till 1999‑2000. However, it is submitted that in the succeeding years after 1999‑2000 (as per record of the ETO) the ownership of the property vested with Mr. Murid Hussain Shah.
4. During the bearing the AR stated that in 1998 the complainant had learnt that notices under sections 56 and 61 of the repealed Ordinance were being issued but none of them was ever served on him. However, on learning that the Income Tax Department had initiated some proceedings the complainant approached the tax authority and came to know that in the PTI (documents of .Provincial Taxation Department) the property in question stood in the name of the complainant. As the property belonged to Syed Murid Hussain Shah he moved the Provincial Taxation Department for amending its record to correct the name. Rectification was made on 29‑12‑2002. The AR also placed on the file an affidavit of Syed Murid Hussain Shah's daughter stating that she was the owner of the property (after the death of her father). Although the assessment was made on 30‑6‑2000 but the complainant did not receive any assessment order. The complainant had been working in MCB, Multan yet the assessment order was not mailed to him at that address. The complainant has nothing to do with the tax demanded. The recovery may be made from the real owner PTI is a survey record and not a title of property. The respondents should have consulted other sources to establish the ownership of the property under section 144 of the repealed Ordinance.
5. The DR admitted that notices under sections 56 and 61 of the repealed Ordinance were not served on the complainant himself or any related person as provided in law. However, notices were issued in the name of Ainina Plaza, Chowk Khumharwala, Multan of which the P.T.I. confirmed the complainant was the owner. The complainant was to be assessed for the property in question but he did not co‑operate. Notice under section 13 of the repealed Ordinance was issued on 15‑6‑2002 for 22‑6‑2002, which was served on 20‑6‑2002 but admittedly it was again not properly served. There is nothing on record to show that the complainant had moved the Taxation Authority for amendment of the ownership of the property. The assessment order was sent through registered post at the proper address and was refused delivery by the complainant. The complainant should have availed the remedy of appeal.
6. The arguments of the parties and the record of the case have been considered and examined. The D.R. admitted that notices under sections 56, 61 and 13 were not properly served. The record also shows that the notices were addressed to Amina Plaza and not to the complainant and yet demand notices are being issued to the complainant. The failure to make proper service of notices on the complainant is an act of maladministration because the respondents proceeded to create a huge liability against the complainant without giving him the opportunity to defend himself. Thus the ex parte assessment (order not furnished by the respondents) made in the case without even so much as serving the notices on the complainant is not sustainable. Accordingly it is recommended that the C.B.R. direct the Commissioner to:
(i)Revise under section 122 of the Income Tax Ordinance, 2001 so as to cancel the assessment order, dated 30‑6‑2000 in respect of the assessment years 1993-1994 to 1997-1998 for de novo reassessment proceedings.
(ii)Take necessary action against the person responsible for unlawful assessment proceedings under the Efficiency and Discipline Rules 1973.
(iii)Compliance be reported within 30 days.
C.M.A./989/FTOOrder accordingly.