NEW HAJI WARIS & CO VS SECRETARY REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1734 (2004)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 89, 63/66A & 61---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Preamble---Additional tax---Assessment made was set aside for de novo proceedings---Fresh notice under S.61 of the Income Tax Ordinance, 1979 was issued---Soon thereafter, notice was received by the assessee whereby additional tax was levied on an alleged default in non-payment of tax demand created against such set aside assessment---Penalty order though, dated 30-6-2003 (served on 13-1-2004) alleged to be mala fide as having been issued at a time when assessment already stood set aside thus obliterating demand of which default was penalized under S.89 of the Income Tax Ordinance, 1979---Validity---Grievance had been redressed to the extent of deletion of demand for Tax and Additional Tax but serious mala fide amounting to maladministration was evident by way of passing an ante-dated order; lapse on the part of those who prepared the parawise comments, and by those who signed the reports without examining the record carefully before reducing a categorical statement in writing---Federal Tax Ombudsman recommended that an enquiry be conducted to identify those who passed an antedated order of penalty purported to be of 30-6-2003 and issued notice on that basis; that those who prepared the parawise comments for the Regional Commissioner of Income Tax be identified by name and warned to be careful and that Central Board of Revenue to impress on Regional Commissioners of Income Tax to be careful in drafting reports to the Federal Tax Ombudsman.

A.A. Zuberi, Advisor (Dealing Officer).

None for the Complainant.

Karamatullah (DCIT) for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).-This complaint alleges mala fide in the issuance of notice and consequential order under section 89 of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) and levy of Additional Tax under section 89 at Rs.9,894 for the assessment year 1997-98.

2. The facts giving rise to the complaint are that business as Rice Dealer was carried on in Individual Capacity and the Complainant existed at NTN 21-21-097136615. Assessment for the year 1997-98 was made under section 63/6-A creating a- demand of Rs.74,305 on 30-6-2002. When the CIT(A), Zone-IV, vide his order, dated 6-10-2003 set aside the assessment for de novo proceedings, fresh notice under section 61 was issued on 9-1-2004. Soon thereafter, on 13-1-2004, notice was received whereby Additional Tax was levied at Rs.9,894 on an alleged default of non-payment of tax demand created on 30-6-2002, under section 63/66A of the repealed Ordinance. The penalty order though, dated 30-6-2003 was (served on 13-1-2004) alleged to be mala fide as having been issued at a time when assessment already stood set aside thus obliterating demand of which default was penalized under section 89.

3. The respondents have forwarded parawise comments by RCIT, Eastern Region, Lahore which admit that consequent upon set aside by CIT(A) on 6-10-2003, the original tax under section 63/66A and Additional Tax under section 89 both have been taken into `minus account' in the Arrears Register on 6-2-2004. It is denied by the RCIT that Additional Tax under section 89 was imposed at a time subsequent to the filing of the complaint because whereas the penalty order was passed on 30-6-2003 the complaint was moved in January, 2004. According to the RCIT, the original tax demand as also additional tax under section 89 having ceased to exist, by transfer to `minus account' in the Arrears Register, hence grievance of the complainant has been redressed and the complaint may kindly be filed.

4. None was present for the complainant when called out. However, a rejoinder has been submitted on 4-3-2004 pointing out the following discrepancies:--

(i) Although parawise comments convey that order under section 89 was passed on 3-6-2003, the order, bears the stamp of Taxation Officer, Circle 21, was shifted from Nankana Sahib to Sheikhupura 'in September, 2003. The order is obviously of a date subsequent to shifting of office to Sheikhupura but has been ante-dated forgetting that on that date the office was located at Nankana Sahib.

(ii) It is once again asserted that the Additional Tax order under section 89 was taken into minus account on 6-2-2004 subsequent in time to the notice under section 61 of 9-1-2004 and the issuance of call notice by the Federal Tax Ombudsman on 31-1-2004.

(iii) The complainant emphasizes that the parawise comments have been doctored as a cover up for misdeeds of the Taxation Officer.

5. Mr. Karamatullah (DCIT) appearing for the Revenue repeated the same arguments as conveyed in the parawise comments but when confronted with the demand notice and penalty order, dated 30-6-2003 he could not reconcile the discrepancy. He agreed that on 30-6-2003 the Office of Circle 21, had not been shifted from Nankana Sahib to Sheikhupura.

6. The scrutiny of documents and consideration of the arguments reveal that the grievance has been redressed to the extent of deletion of demand for Tax and Additional Tax but serious mala fide amounting to "misadministration" is evident by way of (i) passing an ante-dated order, lapse on the part of those who prepared the parawise comments, and by those signed the reports without examining the record carefully before reducing a categorical statement in writing. It is, therefore, recommended that:--

(i) An enquiry be conducted to identify those who passed an ante-dated order of penalty purported to be of 30-6-2003 and issued notice on that basis.

(ii) Those who prepared the parawise comments for the RCIT be identified by name and warned to be careful.

(iii) The C.B.R. impress on RCIT's to be careful in drafting reports to the Federal Tax Ombudsman.

(iv) Compliance report be submitted within 30 days of receipt of this order.

C.M.A./70/FTOOrder accordingly.