Mrs. SAMINA SHAKIRULLAH DURRANI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2007 P T D 996
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Mrs. SAMINA SHAKIRULLAH DURRANI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complainant No.462-K of 2004, decided on /09/2004.
Wealth Tax Act (XV of 1963)---
----S.17-A(3)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Time limit for completion of assessment and re-assessment---Time-barred assessment---Complainant/assessee alleged maladministration on the ground that order passed was antedated as the service of order after a period of 3 years 10 months; printing of orders on inkjet/laser printer, which were not issued to the circle; orders were `crisp' and did not demonstrate aging of nearly 4 years; year, 2004 was written which was overwritten as 2000 on notices of demand and no reminder for payment of demands raised was issued since their alleged date of creation etc.---Department admitted that the order were served after a lapse of considerable time and Commissioner concerned was directed to fix the responsibility for late service of orders, however, delayed service of order did not render it time barred---Fact that demand crated against such order was not included in the recovery notice was also confirmed---Order allegedly could not be served due to transfer of staff members and retirement of the concerned officer who passed the orders---Validity---Facts conclusively proved the allegation that orders were not passed on 30-6-2000 and the date shown on the orders had been tampered with and manipulated---Assessing Officer indulged in manipulation and tampering with record---Assessing Officer was reported to have retired from service in 2001---Such was a glaring example of maladministration---Involvement of Assessing Officer after his retirement in such act could be due to the reason that he either succumbed to blackmailing of Inspector and Supervisor to cover up his incompetence, inefficiency and dereliction by not completing the re-assessments in consequence of appellate orders within the prescribed time or that he aided or abetted them in harassing the complainant/ assessee---Federal Tax Ombudsman recommended that the Regional Commissioner of Income Tax, ensures institution of an enquiry against Inspector and Supervisor for their role in the whole proceedings because a retired officer alone could not manipulate the record except from subscribing his signature to antedated orders and the Commissioner concerned to consider the Wealth Tax Orders antedated 30-6-2000 relating to the assessment years 1993-94 to 1996-97 under S.25 of the Wealth Tax Act, 1963 for passing appropriate orders in view of the provisions of S.17A(3) of the Wealth Tax Act, 1963.
Abid Shaban for the Complainant.
Seema Jabeen, IAC and M. Nawaz, Special Officer for Respondents.
FINDINGS/DECISION
The complainant an individual is an existing assessee of Circle-C.-08, Zone-C, Karachi on National Tax Number 11-8-0675680. Maladministration is alleged in the instant complaint against Assistant Commissioner of Wealth Tax, Circle C-8, Zone `C', Karachi for serving on 27-4-2004, the orders falsely, dated 30-6-2000 purportedly passed in respect of assessment years 1993-94 to 1996-97 in pursuance of the directions given in the orders in appeal passed by the Commissioner of Wealth Tax (Appeals) on February 3, 1999. It is alleged that there is overwhelming documentary as well as circumstantial evidence that no orders were passed in pursuance of following orders in appeal till the proceedings were barred by time on 30-6-2000 under section 17A(3) of the Wealth Tax Act, 1963:--
| S. No. | Appeal No. | Section of W.T. Act, 1963 | Assessment year |
| 1. | 67/A-VI | 31(B)(2) | 1993-94 |
| 2. | 68 & 69/A-VI | 31(B)/31 B(2) | 1994-95 |
| 3. | 70 & 71/A-VI | 31BBB/31 B(2) | 1995-96 |
| 4. | 72, 73 & 74/A-VI | 31B/31BBB/31 B(2) | 1996-97 |
Tax demand raised in orders allegedly passed on 30-6-2000 is as under:--
W.T. Act, 1963
| Asstt. Year | Section | D.C. R No. | Rs. |
| 1993-94 | 31(b) | 03/86 | 7786 |
| 1994-95 | 31(b) | 04/86 | 8236 |
| 1994-95 | 31(b) | 05/86 | Nil |
| 1995-96 | 31(b) | 06/86 | 3046 |
| 1995-96 | 31(b) | 07/86 | 64,886 |
| 1996-97 | 31(b) | 08/86 | 27,626 |
| 1996-97 | 31(b) | 09/86 | 51,049 |
2. The first documentary evidence enclosed with the complaint is the Recovery of Wealth Tax Dues notice, dated 11-1-2001 demanding payment of following liabilities of Wealth Tax:--
| D.C.R. No. | Assessment Year | Amount of Arrears |
| 196/35 | 1998-99 | 241,838 |
| 197/35 | 1999-2000 | 337,352 |
| 236/18 | 1993-94 | 73,433 |
| 237/18 | 1994-95 | 39,757 |
| | Total | 692,380 |
3. The complainant has averred in the complaint that the wealth tax recovery notice, dated 11-1-2001 was duly responded vide letter No.18/1, dated 13-1-2001 stating that:
(a) tax demand relating to assessment year 1993-94 (Rs.24,017) & 1994-95 (Rs.20,062) stands discharged as per letter, dated 18-5-1998 and the order of Commissioner of Income Tax (Appeals), dated 3-2-1999.
(b) In respect of demand relating to assessment year 1998-99 (Rs.241,838) and assessment year 1999-2000 (Rs.337,352) appeals had been filed before Commissioner of Wealth Tax (Appeals). Commissioner of Wealth Tax (Appeals) vide his order, dated 23-4-2001 had allowed relief.
The tax demands created as a result of the alleged orders passed on 30-6-2000 were never mentioned in the above tax recovery notice, dated 11-1-2001 as they did not exist on that date and the resent orders alleged to have been passed on 30-6-2000 were passed subsequent to 11-1-2001 when the cases had become time barred.
4. It is further alleged, supported by affidavit of Mr. Muhammad Latif staff member of Shaban and Company (Advocate), that in February, 2004 tax inspector Mr. Bachani accompanied by supervisor 'I the tax circle Mr. Usman came to the office of complainant's legal adviser on at least 3 occasions asking them to provide copies of all paid challans of wealth tax and assessment orders relating to above wealth-tax years as there was some `Audit objection'.
5. Further documentary and circumstantial evidence mentioned and enclosed with the complaint are as under:
(a) That no statutory notice as directed by the Commissioner of Wealth Tax (Appeal) was served by the Asstt. Commissioner of Wealth Tax, Circle C-8, Zone `C' Karachi (ACWT) and as such the assessment orders passed by the ACWT are violative of law as well as of principles of natural justice. The ACWT has made false statement that Mr. Osmanali, A.R. of the assessee attended as Mr. Osmanali had not attended before the ACIT in respect of these proceedings. (Affidavit of Mr. Osmanali is attached as Annexure `D').
(b) The orders have been printed on inkjet/laser printer, which were not issued to the above said circle by the Government in 2000. In fact other orders passed in and around June, 2000 in the said
circle were typed on manual typewriter on Government issued paper (these orders have been passed on high quality laser papers).
(c) The assessment orders are `crisp' and do not demonstrate aging of nearly 4 years, as it should be.
(d) The assessment orders do not even have perforation of filing clearly supporting prima facie belief that the orders under complaint were passed recently and most probably in April, 2004.
(e) Some of the assessment orders bear "-SD-, dated of 30-6-2,002" viz. Assessment years 1993-94, 1994-95; 1995-96, 1996-97.
(f) On the notices of demand for assessment year 1994-95 issued under section 30 of the Wealth Tax Act, 1963 the year, 2004 is written which has been over written as 2000.
(g) No reminder for payment of the demands raised as a result of impugned orders was issued since their alleged date of creation i.e. 30-6-2000 to May, 2004 i.e. date of complaint.
(h) The assessment orders alleged to be passed on 30-6-2000 have been served on 27-4-2004 (i.e. after 3 years 10 months). That the delay in service of the orders after a period of 3 years 10 months constitutes maladministration under section (2)(3)(ii) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. That evidently passing an assessment order by back dating it constitutes maladministration within the meaning of section 2 subsections (3)(i)(a)(b)(d) and section 2 subsection (ii) of Federal Tax Ombudsman Ordinance, 2000.
6. It is alleged that the delay in service of the orders after a period of 3 years and 10 months constituted maladministration under section 2(3)(ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. Passing the assessment order by back dating tantamount to an act contrary to law, perversion and administrative excess. It constituted maladministration within the meaning of sections 2(3)(i)(a)(b) and (d) of the aforesaid Ordinance.
7. The complainant has prayed to declare the aforesaid orders, dated 3-6-2000 as void, illegal and time bared. She has also prayed for action against the officers who committed maladministration.
8. The respondents have filed parawise comments reporting therein that on the basis of inspection and audit report the following additional taxes under sections 31-B (ii) and 31BBB of the Wealth Tax Act, 1963 were levied:
| Assessment year | Amount Rs. | Section |
| 1993-94 | 8,813 | 31B(2) |
| 1994-95 | 58,988 | 31B |
| 1994-95 | 2,319 | 31B(2) |
| 1995-96 | 64,886 | 31BBB |
| 1995-96 | 3,046 | 31B(2) |
| 1996-97 | 9,230 | 31B |
| 1996-97 | 51,048 | 31BBB |
| 1996-97 | 30,617 | 31(B)(2) |
9. It is averred that the aforesaid action was set aside by the Commissioner of Wealth Tax (Appeal) for de novo decision and for charging the additional tax on delayed payments. The taxation officer Circle C-08 Zone-C, Karachi after providing an opportunity to the complainant levied additional taxes for the assessment years 1993-94 to 1996-97 by reassessments finalized on 30-6-2000 and were not barred by time. It is also reported that Mr. Bachani, Inspector was not posted in Zone-C, as alleged in the complaint, Mr. Usman, Supervisor had also denied the allegation. It is admitted that the orders, dated 30-6-2000 were served after a lapse of considerable time on 27-4-2004 and the Commissioner concerned was directed to fix the responsibility for late service of orders. It is contended that delayed service of orders .as such did not render it time barred. It is also pleaded that time limit to file appeal started from the date of service of assessments orders on the taxpayers and therefore the complainant could file appeal against the said orders. It is stated that in this case the department suffered due to non-realization of tax levied on account of late service. It is also reported that show-cause notices for levying additional taxes were issued on 25-5-1999 and the same 'were available on record. The orders clearly mentioned the attendance of Mr. Osman authorized representative of the complainant who had been attending the proceedings in the past. It is confirmed that demand created for additional tax was not included in the recovery notice issued on 11-1-2001. It is pleaded that the orders could not be served due to transfer of the staff members and retirement of the concerned officer who passed the orders.
10. The complainant's Authorised Representative has also filed rejoinder on, the parawise comments of the respondents. It is reiterated therein that no opportunity was provided to the complainant before levying additional tax through the disputed orders. It is also stated that, Mr. Bachani was posted as Inspector in Circle-C-8, Zone-C, Karachi and even now he is posted as Inspector in the Income Tax Department at Karachi. It is also pleaded that Mr. Usman has filed no counter affidavit. It is reiterated that the orders allegedly passed on 30-6-2000 had been prima facie antedated to deprive the complainant of her vested right as per section 17-A(3) of the Wealth Tax Act, 1963.. It is pleaded that no evidence was placed on record to establish the attendance of Mr. Osmanali of Messrs Shahan & Co.
11. It is averred that it is not only a question of delayed service of 3 years and 10 months of the disputed assessment orders but whole chain of deliberated manipulation, tampering of record which needs' to be investigated by independent agency as prima facie there seems to be systemic failure an collusion of the functionaries of tax department as one, fails to appreciate how can a composite wealth tax demand of over Rs. 1.5 lac in case of a single tax payer assessed in a small circle, go un noticed by: (1) the Inspector of the Circle, (2) Supervisor of the Circle, (3) 'Tax Officer of the Circle, (4) the Inspecting Additional Commissioner of the Range who must be carrying out inspection of the circle as per his job responsibility, (5) the Commissioner of the Zone he is responsible for the zone and it's budget and functioning and (6) the RCIT who must be monitoring case (s) where major demands are outstanding. Does all this not point towards systemic failure and collusion? The prima facie fact is that the demand was never raised on 30-6-2000; thus evidently the demand was never carried forward from year to year in arrear demand register of the circle and as such the recovery of tax demand was never demanded from the taxpayer for over 3 years and 10 months.
12. The alleged show-cause notice, dated 25-5-1999, as per rejoinder, was issued by Mr. Safdar Ali Qureshi, Assistant Commis sioner of Income Tax, Circle C-8, Zone C, Karachi under section 35 of W.T. Act 1963 .wanting to rectify the order (s) under section 35 of W.T. Act, 1963 and not to give appeal effect to the order of the Commissioner of Income Tax (Appeals). The operative para. Of the said letter reads:--
"Now I intend to impose the above Additional Tax under section 35 of Wealth Tax Act, 1963. In case you have any objection in this regard you will be heard on 31-5-1999, failing which assessment will be rectified accordingly."
The said letter was duly responded by the complainant vide letter No.57/5, dated 31-5-1999 and duly delivered in the office of the Assessing Officer on 31-5-1999. Further, the additional tax demands raised in recovery notice, dated 11-1-2001 were those that were set aside by CIT(A) vide his orders, dated 3-2-1999 and not those created as a result of orders, dated 30-6-2000 (impugned orders). Two different penalties under same section of law for same year cannot exist. This fact further clearly demonstrates that the orders alleged to have been passed on 30-6-2000 have been antedated. The Assessing Officer who is alleged to have passed the impugned order(s) remained posted in the said circle at least till 11-1-2001 (about seven months after the alleged date of passing of the order) when he issued the recovery notice, dated 11-1-2001 and even beyond that period. Recovery notice, dated 11-1-2001 was served on 11-1.-2001. The circle supervisor to best of our knowledge has remained posted in this circle since past 4 years. And transfer posting of officers is a normal matter and under no circumstances can justify delay of service of assessments orders for 3 years and 10 months.
14. The case has been discussed with the representatives of both the sides. The assessment records produced by the departmental representative have also been examined. The examination of the official files brought by the representatives of the department showed that there have been serious irregularities in proceedings with the matter. There was no entry in the order sheet regarding issuance of notice, dated 25-5-1999 for hearing, nor the alleged attendance of the representative for the complainant prior to passing order, dated 30-6-2000 had been recorded. There was no report of the notice server. Considering the state of record and the manner in which it had been maintained and the gross irregularities pointed out by the learned counsel of the complainant like overwriting on the demand notice by changing the date, the fresh look of the paper and the print of order issued to the complainant on 27-4-2004, it was deemed necessary to make detailed verification/ investigation about alleged manipulation and the irregularities which were not justified according to rules, procedure and practice followed by the department. In such circumstances notices were issued to Mr. Safdar Ali Qureshi who had issued notice under section 35 of the Wealth Tax Act and to Mr. Islamuddin the then Assistant Commissioner of Income Tax/Wealth Tax, Circle 08 Zone-C, Karachi who had issued the demand notice and also alleged to have passed the orders.
15. Both the aforesaid officers appeared on the date of hearing. Mr. Islamuddin examined the files and conceded that there was no entry on the order sheet in respect of hearing, dated 31-5-1999. However, the impugned order, stated that Mr. Osmanali appeared and the case was discussed within him. Mr. Usman Ali has denied the service of any notice on him and reiterated that he did not appear before Mr. Islamuddin in connection with the reassessment proceedings of set aside cases. His statement has been recorded.
16. The departmental representative produced 10 files of assessments made by Mr. Islamuddin on 30-6-2000. The relevant DCR has also been produced but the notice serve register was not produced on the plea that the, same was not traceable. The perusal of demand and collection register showed that this was not closed on 30-6-2000 as per establishment practice of the department. The possibility of adding entries in the said register on 30-6-2000 cannot be ruled out. Wealth Tax assessment records of different assessees in which assessments were by Mr. Islamuddin on 30-6-2000 have been examined. The assessments have been made on different papers and are not on white paper in a typing format as' appear in the assessments orders of the complainant. These orders are old in look and type is also different clearly indicate the aging process of the last four years. The allegations regarding overwriting and tampering of record have also been established.
17. Mr. Islamuddin has conceded the foregoing facts in his statement recorded on 1-9-2004. An extract therefrom his statement is reproduced here under:--
"I see the notice of demand in Form-C addressed to the complainant signed by me. There is an overwriting as 4 has been changed to 00. This notice is marked Exh. D.W.1/2. I see assessment order for the assessment year 1996-97 it bears my signature. There is overwriting regards the year 04 has been changed to 00. It is marked Ex.WD/3. This mistake seems to have been made by the clerk. I cannot give any further explanation."
18. It is also established from record that the impugned demand notices and assessments orders were served on 27-4-2004 i.e. after a period of about 4 years from the alleged date of assessment i.e. 30-6-2000. The plea taken by the respondents that the said orders could not be served due to transfer of staff members and retirement of the concerned officer is not convincing. Mr. Islamuddin remained posted in Circle-C-8 upto 31-1-2001 i.e. for about 7 months after the purported completion of assessment on 30-6-2000. He had sufficient time to ensure the service had any orders been passed by him on 30-6-2000.
19. The above stated facts conclusively prove the allegation made by the complainant that the impugned orders were not passed on 30-6-2000 and the date shown on the orders have been tampered and manipulated. It has been noted with concern that the Assistant Commissioner of Wealth Tax Mr. Islamuddin indulged in manipulation and tampering of record as discussed above. Mr. Islamuddin is reported to have retired from service in 2001. This is a glaring example of maladministration. The only possible reasons for involvement of Mr. Islamuddin after his retirement in such act could be that he either succumbed to blackmailing of Inspector Bachani and Supervisor Usman to cover up his incompetence, inefficiency and dereliction by not completing the reassessments in consequence of appellate orders within the prescribed time or that he aided or abetted them in harassing the complainant.
20. It is recommended that:
(i) The RCIT, Southern Region ensures institution of an enquiry against Inspector Bachani and Supervisor Usman for their role in the whole proceedings because a retired officer alone could not manipulate the record except for subscribing his signatory to antedated orders.
(ii) The Commissioner concerned to consider the Wealth Tax Orders antedated 30-6-2000 relating to the assessment years 1993-94 to 1996-97 under section 25 of the Wealth Tax Act, 1963 for passing appropriate orders in view of the provisions of section 17A(3) of the Wealth Tax Act.
(iii) The compliance be reported within 30 days of the receipt of this order.
C.M.A./301/FTOOrder accordingly.