Mian SHABBIR AHMAD FAROOQI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2004 P T D 2048
[Federal Tax Ombudsman]
Before Justice (Recd.) Saleem Akhtar, Federal Tax Ombudsman
Mian SHABBIR AHMAD FAROOQI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.766‑L of 2003, decided on /01/.
nd
September, 2003. Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑Ss. 72, 63 & 56‑‑‑Income Tax Ordinance (XLIX of 2001), S.119‑‑ Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)‑‑‑Assessment in the case of discontinued business or, profession‑‑‑Best judgment assessment ‑‑‑Assessee discontinued his business and left the country without intimation to the Department regarding closure of his business‑‑‑Ex parte assessment was made in spite of the fact that order sheet entries showed that "enquiry had been made which revealed that assessee had left the business"‑‑‑Validity‑‑ Document on record and report of the Inspector were enough to establish that Returns were not filed because the complainant/assessee had left the country and had not carried on the business‑‑‑Subsequent enquiry was manifestly "table enquiry" having no value or worth because official did not even consult the office record leave alone visiting the place of business‑‑‑Complainant/assessee had not yet returned from aboard and there was no business activity by him‑‑‑Assessments were a typical example of high‑handed and arbitrary dispensation where net profit for each year had been determined as Income divorced from ground realities‑‑‑,Such conduct clearly fell in the realm of "maladministration"‑ Federal Tax Ombudsman recommended that Commissioner by resort to section 122A of the Income Tax Ordinance, 2001 cancel the consolidated assessment framed on 10‑6‑2002 for the assessment year 1999‑2000, 2000‑2001 and 2001‑2002 that Assessing Officer and the Inspector who conducted the enquiry on 10‑6‑2002 be warned and their performance be kept under observation for a period of one year and six monthly report of observation be sent to Secretariat of the Ombudsman.
Rana Muneer Hussain for the Complainant.
Moazzam Bashir, DCIT for Respondent.
FINDINGS/DECISION
This complaint relates to the assessment years 1999‑2000 to 2001‑2002 where a consolidated ex parte assessment was framed on 10‑6‑2002.
2. Briefly the facts are that the Complainant‑individual was working as a Commission Agent for rice husking. No books of account are maintained. He claims to have left Pakistan with a view to explore opportunities of employment abroad. Since he left on 31‑3‑1998, no business was carried on‑hence no Returns were filed for the three years‑ under‑consideration. The Assessing Officer, however, issued statutory notices and finally completed the assessment ex parte under section 63 of the repealed Ordinance determining Income at Rs.75,000, Rs.80,000 and Rs.85,000 for the three years under consideration i.e. 1999‑2000, 2000‑2001 and 2001‑2002 respectively. With this the Complainant 'is aggrieved.
3. The Respondent have forwarded parawise comments by R‑CIT, Northern Region, Islamabad which contest the competence of the complaint for admission in view of the bar contained in section 9(2) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance) and deny "malad ministration" contending that intimation about discontinuing the business as per section 72 of the repealed Ordinance and section 119 .of the Income Tax Ordinance, 2001, were never sent to the Department. According to the R‑CIT, assessment was made ex parte after on‑the‑spot enquiry by the Circle Inspector and keeping in view other material facts on record.
4. The learned counsel for the Complainant brought on record the Passport No.G248235 of the Complainant showing departure for Iran on 31‑3‑1,998 (and to other countries) and return on22‑2‑2003. It was Admitted that no intimation, as required by law was sent but attention was drawn to an earlier Return for the assessment year 1998‑99 where Nil Income was declared though the assessment was framed at Rs.68,000 through ex parte order.
5. Mr. Moazzam Bashir (D‑CIT) appearing for the Revenue on his turn referred to the observations by the Assessing Officer' in the assessment order that Circle Inspector was deputed to report about the extent of business and the assessment was based thereon‑hence there was no "maladministration" as statutory notices were issued, enquiry conducted and Income determined adhering to the provisions of law.
6. After hearing arguments by the sides record was examined which reveals that:‑‑
(i)Order sheet entry, dated 30‑12‑1998 states that as per AR of the assessee "the assessee had left Pakistan and no business was conducted by the time during the period relevant to the assessment year 1999‑2000" .
(ii)The Inspector's report, dated 30‑6‑2001 states "as per your direction enquiry has been made which reveals that the assessee has left the business".
(iii)Another enquiry report, dated 10‑6‑2002 reports "the business is on middle scale and is earning taxable Income assessment may please be finalized as under for the assessment years under consideration:‑‑
1999‑2000Rs.75,000
2000‑2001Rs.80,000
2001‑2002Rs.85,000
(iv)The assessment as framed is exactly the same as proposed by the Inspector at net amount without any calculation or working.
7. The copies of above documents have been brought on record. The conclusion is irresistible that the Assessing Officer, as also the Inspector, did not carry out their duties in a professionally efficient manner. The document on record as per order sheet entry, dated 30‑12‑1998 and the first report of the Inspector, dated 30‑6‑2001 were enough to establish that Returns were not filed because the complainant had left the country and had not carried on the business. The subsequent enquiry report, dated 10‑6‑2002 is manifestly "table enquiry" having no value or worth because official did not even consult the office record leave alone visiting the place of business. The complainant had not yet returned from aboard and there were no business activity by him. The combined assessment for the three years is a typical example of high‑handed and arbitrary dispensation where net profit for each year has been determined as Income divorced from realities and facts obtaining on the ground. This conduct clearly falls in the realm of "maladministration" as defined in clause (3) of section 2 of the FTO Ordinance. It is, therefore, recommended that:‑‑
(i)Commissioner by resort of section 122A of the Income Tax Ordinance, 2001 cancel the consolidated assessment framed on 10‑6‑2002 for the assessment years 1999‑2000, 2000‑2001 and 2001‑2002.
(ii)The Assessing Officer (Mr. Tariq Saleem) and the Inspector who conducted the enquiry on 10‑6‑2002 be warned and their performance be kept under observation for a period of one year.
(iii)Six monthly report of observation be sent to this Secretariat.
(iv)Compliance be reported within 30 days of the receipt of this order.
C.M.A./120/FTOOrder accordingly.