Messrs MADINA CLOTH HOUSE VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2006 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1787 (2004)

Income Tax Ordinance (XXXI of 1979)---

----Ss.13, 61, 62, 65 & 66-A---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9(2) & 2(3)---Unexplained investment---Notice for production of books of account---Best judgment assessment---Power of revision by Additional Commissioner---Jurisdiction---Maladministration---Complainant, an individual, had filed return under Self-Assessment Scheme---Same was picked up for Total Audit---Wealth Tax Statement had revealed that complainant had purchased a plot and rebuilt his house---Such spendings were not explained---Notices under Ss. 13, 61, 62 & 65 of the Income Tax Ordinance, 1979 were issued and consolidated assessment for relevant years was made---Feeling aggrieved the complaint was filed---Complainant had filed appeal against the assessment order and absented from the proceedings, however Federal Tax Ombudsman found that the record was deficient of order sheet and existing information was utilized which could lead to wrong conclusion hence action should have been taken under section 66-A of the Income Tax Ordinance, 1979 and the report of Income Tax Inspector was undated---Federal Tax Ombudsman termed it as maladministration and recommended Central Board of Revenue to issue instructions to the Additional Commissioners to undertake more vigorous inspection of record and the Taxation Officer to be more punctilious.

None for the Complainant.

Karamatullah, DCIT for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.---This complaint alleges discriminatory, arbitrary and unjust conduct in the framing of assessment under section 65 of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) for the assessment years 1997-98 and 1999-2000.

2. The facts leading to the complaint are that retail business of cloth was run as an Individual in Karkhana Bazar, Muridke and assessment framed under SAS on Return for the above years. When Return for the assessment year 2001-2002 was picked up for Total Audit, during the course of proceedings it emerged from the Wealth Statement that the Complainant was co-owner in an immoveable property measuring 6.3 Marlas purchased for a sum of Rs.217,000 on 20-8-1996. This fell in the assessment year 1997-1998. In addition, during the period relevant to the assessment year 1999-2000 he had demolished his old house on a 9.1 Marlas plot and reconstructed it. Additional assessment proceedings were, therefore, initiated for 1997-98 and 1999-2000 through issuance of notice under section 65 on 28-5-2002, followed by statutory notices under sections 61, 62 and 13 on 10-6-2002, 3-2-2003 and 28-5-2003. Finally a consolidated assessment order for the years 1997-98 and 1999-2000 was made as under:

With this Complainant is aggrieved.

3. The Respondent have forwarded parawise comments by RCIT, Eastern Region, Lahore which, in addition to questioning the competence of the complaint for admission in view of the bar as per section 9(2) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance), explain that assessments has been framed after providing proper opportunity and no appeal against assessments has been filed. It is conveyed that the matter was got investigated by the Circle Inspector and the Complainant duly confronted - hence the complaint is without merit and be rejected.

4. None was present for the Complainant when called out. For the Revenue Mr. Karamatuallh (DCIT) was present along with record. He repeated the same arguments as conveyed by the RCIT in the parawise comments.

5. The discussion with the representative of Revenue and scrutiny of record shows that the matter purely relates to the assessment of Income and perhaps this realization has prompted the Complainant to withdraw the complaint and to be absent today. However, scrutiny of record brought to notice following deficiencies which represent `maladministra-tion' as defined in Clause (3) of section 2 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000:

(i) Order sheet is not complete (copy obtained for record).

(ii) Although record shows that the fresh information in the shape of Wealth Statement had revealed the investment in the purchase of plot and construction of a house, yet the letter to the IAC as also the assessment order convey the impression that already existing information was utilized. This is so because of the expression used is: "the perusal of assessment record 'reveal that assessee has purchased....". This could lead to the wrong conclusion that already existing material was utilized - hence action should have been taken under section 66A and not under section 65 of the repealed Ordinance.

(iii) An earlier report by the ITI is undated and there is no supporting Order Sheet entry as to the reason for enquiry.

It was for these deficiencies that the DR had to labour hard to unearth letter, dated 11-5-2001 (obtained for record) which revealed that the Wealth Statement submitted with the Return for the assessment year 2000-2001 gave a queue to the Assessing Officer to probe the matter relating to . Complainant's investment in two immoveable properties.

It is, therefore, Recommended that:--

(a) C.B.R. issue instructions to IACs to undertake a more vigorous inspection of record so that the lapses by the Taxation Officers are discovered and record maintained as per prescribed rules.???????????

(b) The Taxation Officer who handled the present record should be apprised of lapses on his part and directed to be more punctilious.

6. Compliance report be submitted within 30 days of receipt of this order.

M.I./305/FTO????????????????????????????????????????????????????????????????????????????????????? Order accordingly.