KHAIR DIN VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2004 P T D 2024
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
KHAIR DIN
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 1257‑L of 2003, decided on /01/.
th
October, 2003. Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss. 56, 58, 61, 62, 63 & 154‑‑‑Establishment of Office of Federal Tax Ombudsman ‑Ordinance (XXXV of 2000), S. 2(3)‑‑‑Notice for furnishing return of total income‑‑‑Notices under S.56 of the Income Tax Ordinance, 1979 followed by several statutory notices‑‑‑No return was submitted by assessee‑‑‑Assessment was finalized ex parte‑‑‑Assessments were set aside by the First Appellate Authority for improper service of notices resulting in lack of opportunity of hearing‑‑‑In second round, notices under Ss.61/58 and 62 of the Income Tax Ordinance, 1979 were issued, without first issuing notice under S.56 of the Income Tax Ordinance, 1979, which remained un complied and assessments were finalized‑‑‑Validity‑‑‑Fatal mistake apparent from record was that when Return was not filed, no notice under section 56 of the Income Tax Ordinance, 1979 calling for the return was ever issued after the set aside order by the First Appellate Authority‑‑‑Subsequent notices under Ss.56, 61 and 62 also suffered from the same deficiency‑‑‑Conclusion was irresistible that when framing the assessment the officer disregarded the law as also the rules thus committing "maladministration" Federal Tax Ombudsman recommended that the Commissioner invoke section 122A of the Income Tax Ordinance, 2001 to cancel the consolidated assessment order, dated 23‑5‑2003 for the assessment year 1996‑97 to 1998‑99 and that the Assessing Officer responsible for this neglect and arbitrary conduct be put to `Counseling' in the ACR.
Nemo for the Complainant.
Muzammil Hussain, DCIT for Respondent.
FINDINGS/DECISION
This complaint relates to the assessment year 1996‑97 to 1998‑99 and alleges arbitrariness in consolidated assessment, dated 23‑5‑2003.
2. Briefly the facts are that the Complainant‑Individual is a Dealer of Scrap. No books of account are maintained. Return of Income was not filed. The Assessing Officer issued notices under section 56 followed by several statutory notices and in the face of continued non‑compliance framed an ex parte assessment on 16‑12‑2000 determining Income at Rs.72,500 in 1998‑99, assessments were set aside by the CIT(A) for improper service of notices resulting in lack of opportunity of hearing. In A the second round, notices under sections 61 and 58 of the repealed Ordinance were issued as also notices under sections 61 and 62 which allegedly remain uncomplied‑hence the impugned consolidated assessment determining Income at the amount in each year as in originally assessed i.e. Rs.72,500, Rs.65,000 and Rs.60,000 respectively for the years 1998‑99, 1997‑98 and 1996‑97. This is the cause of grievance.
3. The Respondent have forwarded parawise comments by the RCIT, Eastern Region, Lahore which, in addition to questioning the competence of the complaint for admission in view of section 9(2) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance), deny "maladministration". The assessment has been justified by the R‑CIT because notices, remained uncomplied aid there exists no intimation from the Complainant about closure of the business. It is asserted that the assessments are in line with the determination to the preceding years of 1995‑96 and 1994‑95.
4. None was present for the Complainant when called out. However, Mr. Muzammil Hussain (DCIT) appeared for the Revenue. The discussion with the DR and the scrutiny of record revealed that the Complainant is not filing Returns since the year, 1996‑97 and the last Return was for the year 1995‑96 when Income was determined at Rs.49,200 under section 59(1) of the repealed Ordinance on Sales disclosed at Rs.405,300 with GP at 15%. It is surprising that the Assessing Officer when taking up proceeding in the year, 2000 did not care to study the record nor did he notice, when taking up reassessment that no Return was filed after the assessment year 1995‑96. Any conscientious officer would have instituted enquiry to discover whether the taxpayer was still carrying on business and what, was the extent and volume of activities. At no stage, even in the second round, when notices were defaulted spot enquiry was instituted and consolidated assessment was blindly framed. Fatal mistake apparent from record is that when Return was not filed no notice under section 56 of the repealed Ordinance calling for the Return was ever issued after the set‑aside order by the CIT(A). In the first round also when notices under section 56 of the repealed Ordinance were issued, the disregard of the provisions of section 154 of the repealed Ordinance eroded the legality of the proceedings. The subsequent notices under sections 58, 61 and 62 also suffer from the same deficiency. The conclusion is irresistible that when framing the assessment the officer disregarded the law as also the rules thus committing "maladministration" as defined in Clause (3) of section 2 of the FTO Ordinance. It is, therefore, recommended that:‑‑
(i)The Commissioner invoke section 122A of the Income Tax Ordinance, 2001 to cancel the consolidated assessment order, dated 23‑5‑2003 for the assessment years 1996‑97 to 1998‑99,
(ii)The Assessing Officer responsible for this neglect and arbitrary, conduct be put to `Counseling' in the ACR.
5. Compliance be reported within 30 days of the receipt of this Order.
C.M.A./122/FTOOrder accordingly.