Sh. WAJID ALI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1036 (2003)

(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 2(3) & 9---Assessment cases---Jurisdiction of Federal Tax Ombudsman---Scope---Ombudsman could take cognizance of and investigate cases involving maladministration regardless of the fact whether such cases involved assessment etc., otherwise very purpose of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 would be defeated.

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

----Ss. 59 & 61---Self-Assessment Scheme years 2002-2003, paras. 7 & 9(ii)--Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 11---Self-assessment---Issuance of notice under S.61 of Income Tax Ordinance, 1979 seeking un prescribed information after non-selection of complainant's return for total by audit by random balloting---Validity---Only those returns had been put to balloting, which fully qualified for Self-Assessment Scheme having fulfilled prescribed requirements---Factum of complainant's return having been fed into computer clearly indicated that same had no deficiency of short document---No reason was shown as to why return had been sent for ballot, if same did not qualify for Self-Assessment Scheme. as para. 7 thereof, and further when same did not qualify for Self-Assessment Scheme under para. 7 thereof, then why show-cause notice was issued under para. 9(ii) thereof---Department, in order to cover up such lapses, attempted to revert to paras. 7(ii) & 7(iv) of Self-Assessment Scheme, which would tantamount to maladministration---Federal Tax Ombudsman recommended to Revenue to drop assessment proceedings and accept complainant's return filed under Self-Assessment Scheme for year 2002-2003.

Muhammad Akbar, Advisor (Dealing Officer).

Javed Iqbal Qazi for the Complainant.

S.M. Ali, D.C.I.T. for Respondent.

DECISION/FINDINGS

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This complaint alleges `maladministration' on the part of the Income Tax Authorities for misapplication of law and abuse of power.

2. The facts of the complaint are that the complainant, an individual, filed his return for Assessment Year 2002-03 declaring net income of Rs.582,000 paying more than 30% tax. The return of the complainant was fed into computer but was not selected for total audit through random ballot. Subsequently, the R.C.I.T. issued him a show-cause notice asking him to explain as to why his case be not set apart for total audit. Accepting complainant's reply to the show-cause notice, the R.C.I.T. admittedly deleted the case from the list of proposed set apart cases. The Taxation Officer issued notices calling for `shot documents' etc. Subsequently by issuance of notice under section 61 assessment proceedings were commenced. This is the cause of grievance. It is pleaded that the Taxation Officer be directed to keep the assessment proceedings in abeyance till the decision on present complaint.

3. In parawise comments, the respondents have taken preliminary objections to F.T.O's. jurisdiction on the grounds that the case being appealable and involving assessment, quasi-judicial function is beyond the jurisdiction of F.T.O. as defined in section 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. Accordingly to the R.C.I.T. non-selection of return by the computer for audit does not mean that the case is eligible for S.A.S. 2002-03. It has to be scrutinized keeping in view other provisions of S.A.S. 2002-03. The complainant was asked to produce the short documents. The wealth statement as on 30-6-2002, filed by the complainant's A.R. on 4-11-2002, was not in accordance with the provisions of section 58(1) of the Income Tax Ordinance, 1979 and Rule 191 of the Income Tax Rules, 1982. The complainant was asked to provide break-up of capital amounting to Rs.7,520,300 including bank accounts and to provide details of cash outside business declared at Rs.7,599,681. The complainant failed to furnish the wealth statement as on 30-6-2002, which was to be filed in a prescribed format requiring him to list in a separate sheet of paper the assets and liabilities of business on the specified date but the complainant while tendering some clarifications failed to join the normal law proceedings. There are discrepancies in the amount of telephone expenses claimed, non-claiming of rental expenses and electricity expenses. As to the complainant's contention that these was no requirement in the S.A.S. 2002-03 to submit bank balance of each account, it is pointed out by the R.C.I.T. that the stand taken by the A.R. with regard to this point is baseless because the wealth statement filed as on 30-6-2002 in response to the short documents notice dated 28-10-2002 was not complete. It was not filed in prescribed form as column 8 thereof was not filled. The R.C.I.T. has thus justified exclusion of the return from S.A.S. 2002-03 because of improper/partial compliance of notice dated 28-10-2002. The character of proceedings initiated by the R.C.I.T. under the provisions of clause 9(a)(ii) of the S.A.S. 2002-03 has been claimed as different inasmuch as the case was excluded in terms of Para. 7(ii) of the S.A.S. 2002-03 read with para.7(vi) thereof and for improper/partial compliance of short documents dated 28-10-2002. The notice under section 61 has been legally issued. The case was excluded after giving proper opportunity to the complainant. In short maladministration is denied.

4. During the hearing the A.R. stated that the complainant, an individual, (no-account case) had paid more tax than in the preceding year and he qualified for S.A.S. The documents required to be submitted under the S.A.S. i.e. copy of trading, profit and loss account, wealth statement, reconciliation statement were submitted in response to notice calling for short documents. The department could not ask for any information beyond the one prescribed. After exclusion of his case from the list of cases for total audit his return should have been accepted under the S.A.S. yet the Taxation Officer instead of accepting the return under S.A.S. issued another notice under section 61 dated 14-6-2003 in deviation of the S.A.S. asking for un-prescribed information. In 2001-02, the complainant had submitted wealth statement on 30-6-2001 along with reconciliation statement about which no query was ever raised by the same Assessing Officer.

5. The D.R. submitted that there has been no maladministration. If documents for an earlier year were accepted it does not mean that the department is disentitled to process the return for 2002-03 independently. Every year involves separate assessment with separate proceedings. No additional document was called except those prescribed. The relevant columns of the wealth statement were not filled in necessitating supplementary information. The complainant had concealed income.

6. The arguments of the parties and the record of the case have been considered and examined. As for respondents' objection to F.T.O's jurisdiction, it is well-settled now that in order to redress the grievance of the complainants, the F.T.O. can take cognizance of and investigate cases involving maladministration regardless of whether such cases involve assessment etc., otherwise the very purpose of the Establishment of the Office of the Federal Tax Ombudsman Ordinance,. 2000 would get defeated. Keeping in mind that only those returns, which fully qualify for S.A.S. having fulfilled the prescribed requirements, are put to balloting, the fact that the complainant's return for 2002-03 was fed into the computer gave a clear indication that it had no deficiency of short documents. When return was not selected by random balloting, set apart was attempted by resort to Para. 9(ii), which also had to be abandoned as the R.C.I.T. felt satisfied with the explanation. Now the department has reverted back to Para. 7(ii) and Para. 7(vi) of the S.A.S. to exclude the return from the ambit of S.A.S. Maladministration is evident because the taxpayer is to jeopardy thrice. No reason was assigned as to why the return was sent for ballot if it did not qualify for S.A.S. as per Para. 7, and further when it did not qualify for S.A.S. under Para. 7, why show cause notice Was issued under Para. 9(ii) of the S.A.S. An attempt is being made to cover up the lapses by reverting to Paras. 7(ii) and 7(vi) of the S.A.S. 2002-03, which is tantamount to `maladministration' as defined in section 2(3) of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000. Accordingly, it is recommended that:

(i) The assessment proceedings be dropped and complainant's Return filed under S.A.S. for the year 2002-03 be accepted.

(ii) Compliance be reported within 30 days.

S.A.K./187/F.T.O.Order accordingly.