Ch. SHER MUHA.MMAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 819 (2003)

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

---Ss. 56, 61 & 62---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 11---Assessment on basis of Inspector's report showing assessee to be a "Arzi-Nawees" on account of his regular visits to District Courts---Validity---Regular visit to Court might make a person a Court bird, but not a petition writer---Such fact could be ascertained from District Judge, Bar Association or evidence of other petition writers or by producing any document prepared by assessee---Certificates of 4 advocates produced by assessee had established his visits to District Court in respect of land cases---Assessing Officer had framed assessments for five years at a fixed amount for each year, while such report did not state income earned by assessee or period during which he had worked as petition writer---Relying on a false and purposeless report and drawing adverse presumption against assessee without hearing him, would make intention of Inspector and Assessing Officer mala fide---Such behavior and treatment was repugnant to confidence building process, which C.B.R. had started in tax matters---Duty of Assessing Officer was to evaluate such report and apply his own mind to facts of case---Burden was not on assessee but was on department to prove his income as Arzi Nawees---Record produced by assessee did not show that he was a Arzi Nawees---Federal Tax Ombudsman 'recommended to C.B.R. to direct concerned authority to cancel impugned assessments and direct Director General Inspection to examine impugned order to evaluate performance of Assessing Officer and take necessary action against him and Inspector concerned as provided under law.

(b) Practice and procedure---

----Regular visits to Court may make a person a Court bird, but not a .petition writer.

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

----S. 62-- Income earned by son could not be looked into while framing assessment of his father.

Ch. Sher Muhammad for the Complainant.

Muhammad Saleem, D.C.I.T.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This is a complaint against the circle Inspector for making false and baseless report on the basis of which assessment was framed. According to the complainant the tax for the assessment years 1997-98 to 2002-03 has been imposed without any basis or evidence.

2. In reply it has been stated that in response to statutory notice assessee furnished returns declaring exempt income from pension and agricultural source. The circle Inspector conducted inquiry under direction of the assessing officer to verify any other sources of income of the assessee. He reported that the complainant assessee is also enjoying receipts as "Arzi Navees" (Petition writer) in District Court in addition to his other sources of income which are exempt from tax. The complainant has not provided any proof to negate observation of the Circle Inspector/Taxation Officer. Making the circle Inspector's report as a basis the assessment were framed for the assessment years 1997-98 to 2002-2003 and income for each year has been assessed at Rs.50,000.

3. At the time of hearing the complainant explained that he is a Diploma holder in Aeronautical Engineering from England where he remained from 1952-55. He then joined Pakistan Air Force and retired in the year 1986 as Flight Lieutenant. His duty included maintenance of aircraft and was posted at several air stations in Pakistan. He had been on deputation in Jordan and Saudi Arabia. He has some agriculture land in respect of which there are certain cases which he attends in Courts. The complainant has produced a certificate from 4 advocates practising in Sargodha. Three of them are advocates of the High Court while one is practising in the District Court. They have certified that they personally know that the complainant is not a petition writer. He has his personal cases in civil Courts, revenue and canal departments. On the other hand the learned representative for the department entirely relied upon the report of Mr. Mukhtar Ahmad Income Tax Inspector dated 13-5-2003 which reads as follows:-

"Report in the case of Sher Muhammad, 537/A, SIT, Sargodha.

Sir,

As directed as per order sheet entry dated 30-4-2003. I have conducted local enquiries in this case which revealed that the assessee continuously goes to district Courts and perhaps is a "Arzi Navees" there. It is also known through local enquiries that the assessee also hold some Agri Land at Chak 1.01/NB, Sargodha.

It is also known that his son is a tuition hawker, he teaches tuition to the students of Beacon House but he is not serving any where.

This report as can be observed is of a general nature and states that local enquiries revealed that assessee continuously goes to District Court and perhaps is a Arzi Navees there. This means that because of regular visits presumption was drawn that he is a petition writer. Such presumption is based on no evidence and is perverse and baseless. The complainant has established that he visits District Court in respect of his land cases which has been certified by four advocates. Regular visits to Court may make a person a Court bird but not a petition writer. The fact whether a person is a petition writer could be ascertained from evidence of other petition writers or by producing any documents prepared by him. This fact could be ascertained from the District Judge and the Bar Association. The report also does not state the income which could be earned as a petition writer. In the report reference has been made to the complainant's son as "tuition hawker" and earning income by teaching the students and is not employed anywhere. This can hardly be a ground to be looked into while making assessment of his father? The report also does not say for how many years the complainant has been working as Arzi, Navees although the assessment has been made for assessment years 1997-98 to 2002-03. This is a clear case of negligence, ineptitude and carelessness in performance of duty. This is a crude attempt to bring a person in tax net, merely to show efficiency and performance by registering number of assessees in a particular area. This behaviour and treatment is repugnant to the confidence building process which, the C.B.R. has started in tax matters. Negligence of this nature, relying on apparently a false and purposeless inquiry report and drawing adverse presumption against the assessee without hearing him makes the intention of the Inspector and assessing officer mala fide. Because at one hand these officers were showing their good performance and on the other hand perpetuating injustice on an innocent party. The assessing officer was duty bound to have evaluated the report of the Inspector which was the only source of information for making the assessment. It is a case where the assessing authority did not apply his mind to the facts of the case. Another factor seems to be the mind set and departmental bias in determining cases with prejudiced behaviour which has caused harassment to the complainant.

4. In the assessment order it has been observed that in response to notice the complainant had filed return declaring agriculture and pension income. After the return was filed notice under section 61 was served on the complainant who appeared and it has been observed by the learned officer that he did not produce books of accounts on the plea that none were being maintained. He had furnished copies of the bank statements, wealth statements, Farad-e-Malkiat of agriculture land, NIC, utility bills, sale deed of C/D category quotation of S/Town dated 10-11-1964, site map, pension book, which were duly examined and nothing was found to justify finding that the complainant is a Arzi Navees. He had produced all the relevant record to justify his income declared in the return tiled in pursuance of the notice issued by the department. The fact that the department's allegation that the income as Arzi Navees, was not disclosed which was denied by him, it was the duty of department to have produced evidence to justify such finding. The burden was on the department and not on the complainant. The assessing officer while referring to the report of the Inspector and noted that the assessce is a Arzi Navees and easily earned ranging Rs.200/300 and proceeded to assess income at Rs.60,000 as Arzi Navees for each of the assessment years. The report does not state that the complainant was earning Rs.200/300 as a petition writer. One may question from where this estimate was brought. There is no mention of income as Arzi Navees in the inquiry report which is the only source and basis for assessment. The assessment made is perverse, illegal and result of negligence in discharge of duties, biased and mala fide.

5. It is recommended that:--

(i) The C.B.R. order the concerned authority to cancel the assessment made in respect of assessment years 1997-98 to 2002-03.

(ii) The Director General Inspection to examine the assessment order to evaluate the performance of the assessing officer and take such necessary action against the Assessing Officer and the Income Tax Inspector involved in this assessment as provided under law.

(iii) Compliance be reported Within 30 days.

S.A.K./195/F.T.O.Order accordingly.