ARTEX INTERNATIONAL (LAHORE) VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2005 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1915 (2004)

Income Tax Ordinance (XXXI of 1979)----

--Ss. 154 & 59(1)---General Clauses Act (X of 1897), S.57---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---Service of notice---Short document notice was sent through UPC---Notice was not received back undelivered to the department---Non compliance of---Assessment was finalized under normal law for non compliance of such short document notice on the presumption that notice was served on the assessee as the same had not been received back undelivered---Validity---Dispatch of short document notice through under postal certificate which did not require signature of the addressee for receipt of the post did not provide any evidence that short document notice was served on the complainant---Department failed to produce any valid evidence that case was excluded from Self Assessment Scheme by Taxation Officer by passing a speaking order--Maladministration of incompetence was evident from the invalid service of the mandatory notice and the arbitrary conduct was evident from paying no attention to the objection of the complainant to initiate assessment proceedings under S.61 of the Income Tax Ordinance, 1979 on the ground that it had no notice of exclusion of the return from Self-Assessment Scheme---Onus to prove that there was no maladministration was required to be discharged by the department which it had failed to discharge because no valid reason had been offered for the failure to serve the notice as required under the law---Action of Taxation Officer was contrary to law, arbitrary, unjust and involved exercise of power for administrative excess---Federal Tax Ombudsman recommended that the concerned Taxation Officer accepts the return of the complainant for the assessment year 2002-2003 under S.59A of the Income Tax Ordinance, 1979 after obtaining receipt and expenditure statement.

CTR No.11/2002, dated 19-12-2002 rel.

Tipu Sultan ITP for the Complainant.

Muzammal Hussain Butt, DCIT and Anwar Ali, DCIT for Respondent.

FINDINGS/DECISION

Maladministration is alleged in the instant complaint on the part of Taxation Officer Circle 11 Zone-C Lahore for illegally denying the benefit of Self-Assessment Scheme to the Complainant for the assessment year 2002-2003.

2. The complainant is an individual earning his income from sale of yarn. The complainant filed his Income Tax Return under Self-Assessment Scheme for the assessment year 2002-2003. The complainant received a notice under section 61 and section 58 of the repealed Ordinance, 1979 on 7-2-2003 from Taxation Officer Circle 11 Zone-C Lahore for completion of assessment under normal law. On the receipt of these notices the complainant came to know that his case was not accepted under Self-Assessment Scheme on the ground that a short documents notice was issued to the complainant on 25-10-2002 and that the complainant had not complied with the short document notice although the complainant never received notice of short document as alleged by the Taxation Officer Circle 11 Zone-C Lahore. Exclusion of the complainant's return from Self-Assessment Scheme was illegal and constitutes maladministration, which has caused grievance to the complainant.

3. In reply the RCIT has raised a preliminary objection that the complaint relates to assessment proceeding for which remedy of appeal has been provided hence this complaint does not fall in the jurisdiction of Federal Tax Ombudsman. On merits it has been submitted by the RCIT that the complainant had not furnished receipt and expenditure statement along with income tax return hence a short document notice was issued to the complainant on 25-11-2002 through UPC. This notice was not received back undelivered implying thereby that the said notice had been served on the Complainant but the complainant failed to comply with the A notice of short document hence assessment proceedings under normal law were initiated by the Taxation Officer Circle 11 Lahore. The RCIT has denied any maladministration.

4. Mr. Tipu Sultan ITP attended for the complainant. He has explained that the presumption that the said notice was served on the complainant because it was not received back, was not correct. He submitted that service of any notice had to be affected in the manner stipulated under section 154 of the repealed Ordinance and section 57 of the General Clauses Act, 1897. Dispatch of notice through UPC did not give rise to the presumption that notice was served on the complainant. The AR also relied on the case decided by Lahore High Court in CTR No.11 of 2002, dated 19-12-2002 wherein it was held that the purpose of issuing such certificate affixed with postal stamp of certain value was only to acknowledge receipt of an ordinary post and there could be no_, presumption under the law as to its delivery, nor the addressee was required to sign any document for receiving the post. The AR submitted that as such the dispatch of notice through UPC could not be considered good service of notice on the complainant. The complainant did not receive any short document notice hence the entire proceedings for completion of the assessment under normal law were illegal and constituted maladministration.

5. Mr. Muzammal Hussain Butt DCIT and Mr. Anwar Ali DCIT attended for the Revenue and defended the action of the Taxation Officer Circle 11 Zone-C Lahore by reiterating the submissions made by the RCIT. The learned DR submitted that the decision of the Honourable Lahore High Court on which the AR was relying was not a decision "in rem" hence it was not applicable automatically to the case of the complainant.

6. The complaint and Respondent's reply have been examined and arguments of the two sides have been considered. The decision of High Court ibid squarely applies to the facts and circumstances of complainant's case. The dispatch of short document notice through UPC which does not require signature of the addressee for receipt of the post does not provide any evidence that short document notice was served on the complainant. Further, the department has failed to produce any valid evidence that this case was excluded from Self-Assessment Scheme by the Taxation Officer by passing a speaking order as required under para. 8C of C.B.R. Circular No.7 of 2002 within the 15 days of the above prescribed time. The maladministration of incompetence is evident from the invalid service of the mandatory notice and the arbitrary conduct is evident from paying no attention to the objection of the complainant to initiate assessment proceedings under section 61 of the Repealed Ordinance on the ground that it had no notice of the exclusion of the return from SAS. The preliminary objection of respondent that the issue involved in this complaint relates to assessment proceedings hence this complaint does not fall in the jurisdiction of the Federal Tax Ombudsman is not correct because exclusion of a return from Self-Assessment Scheme is an administrative decision for which no appeal, revision or review is provided. The objection is over ruled. The onus to prove that there was no maladministration is required to be discharged by the Respondent which he has failed to discharge because no valid reason has been offered for the failure to serve the notice as required under the law. The action of the Taxation Officer is contrary to law arbitrary and unjust. It involves exercise of power for administrative excess. Maladministration within the provisions of section 2(3)(i)(a)(b)(d) and (ii) of the Ordinance No. XXXV of 2000 is proved.

It is therefore, recommended:---

(1)??????? That the concerned Taxation Officer accepts the return of the Complainant for the assessment year 2002-2003 under section 59A of the repealed Ordinance after obtaining receipt and expenditure statement.

(2)??????? Compliance report be submitted within 30 days of the receipt of these recommendations by the Revenue Division.

C.M.A./224/FTO???????????????????????????????????????????????????????????????????????????????? Order accordingly.