Syed MUHAMMAD AHMAD NAQVI, PROPRIETOR VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2008 P T D 986
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Syed MUHAMMAD AHMAD NAQVI, PROPRIETOR
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.1499-K of 2003, decided on 27/01/2004.
Income Tax Ordinance (XXXI of 1979)---
----S.50 & 59(1)---C.B.R. Circular No.2 of 1998, dated 16-2-1998---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Deduction of tax at source---Self-assessment---Income declared was accepted under Self-Assessment Scheme but credit for deductions under S.50 of the Income Tax Ordinance, 1979 was allowed to the extent of tax payable on the declared income and credit for total deduction claimed was not allowed---Department contended that assessment was completed on the basis of photocopy of return without making any enquiries with reference to filing the original return in time---Credit was restricted to the extent of tax liability only as not a single original challan was enclosed with the return---Claim regarding deductions under S.50(4) of the Income Tax Ordinance, 1979 was adjustable and not covered under presumptive tax regime, needed careful examination---Validity---Date of filing of return was yet to be ascertained as the same had neither been shown on acknowledgment slip nor mentioned in the complaint---Department did not offer any plausible explanation for allowing credit for deduction only to the extent of tax liability as against the total deduction---Applications addressed to Assessing Officer and Regional Commissioner of Income Tax remained unresponded without any justification---Complainant/assessee should not be allowed to suffer for the negligence, carelessness and inefficiency of the department officials--Facts established neglect, inattention, delay, incompetence, inefficiency and inaptitude in the discharge of duties and responsibilities by the concerned officers---Federal Tax Ombudsman recommended that the Central Board of Revenue to direct the concerned officer to decide the claims of the complainant regarding allowance of deductions under S.50 of the Income Tax Ordinance, 1979, determination and issuance of resultant refund within 30 days of the receipt of this order and the responsibility of passing the order under S.59(1) without proper verification etc. be fixed and disciplinary action be initiated and finalized against the delinquent officer within 60 days.
S. Asghar Abbas, Consultant (Officer).
Haider Naqvi for the Complainant.
Mrs. Adeela Bokhari, D.C.I.T. for Respondent.
FINDINGS/DECISION
JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The complainant an individual derives income from business of assembly of computers, manufacturing of allied items and is an existing assessee of Circle-16, Zone-E, Karachi on National Tax Number: 26-16-1259184.
2. The complainant is aggrieved by non-allowance of credit for total deductions made under section 50 of the repealed Income Tax Ordinance 1979 relating to assessment year 2002-2003. The facts of the case are briefly stated as under:--
3. The complainant filed return of income for the assessment year 2002-2003 declaring income of Rs.1,67,535 and claiming deduction of tax under section 50 of the repealed Income Tax Ordinance 1979 at Rs.1,11,571.
4. It is stated that since the assessment order was not received, the A.R. of the complainant addressed a letter to the taxation officer Circle 16, Zone-E, on 3-1-2003 requesting him to issue the assessment order along with the I.T.30 and demand notice. Thereafter the A.R. requested the Commissioner of Income Tax Zone-E, Karachi vide his letter dated 21-1-2003 to issue instructions to the assessing officer for completing the assessment for the year 2002-2003 under the Self-Assessment Scheme. Since the Assessing Officer and the Commissioner of Income Tax, Zone-E, Karachi, did not respond to his aforesaid letters, he addressed a letter on 3-2-2003 to the Regional Commissioner of Income Tax, Southern Region, Karachi for issuing instructions to the assessing officer to complete the assessment. The copies of the aforesaid letters have been along with copies of relevant portion of Peon Book showing the receipt of the letters.
5. The assessment was however, completed under section 59(1) on 10-2-2003 creating no demand against the complainant. It is stated that the declared income was although accepted but credit for deduction under section 50 of the repealed Ordinance was allowed to the extent of tax payable at Rs.8941 on the declared income. It is alleged that credit for the total deduction claimed at Rs.1,11,571 was not allowed by the assessing officer without any justification. This amounted to maladministration committed by the assessing officer.
6. It is further stated that the assessing officer did not even issue the assessment order for the immediately preceding year for which a separate complaint was filed before the Honourable Federal Tax Ombudsman. The officials concerned have deliberately avoided the instructions issued by the C.B.R. vide Circular No.2 of 1998 and Regional Commissioner of Income Tax, Southern Region, Karachi vide his letter dated 29-4-2002 whereby instructions were issued to the assessing officers for making the verification of payments/deductions during the assessment proceedings. The complainant has prayed for issuance of directions to the assessing officer to allow full credit of tax deducted at Rs.1,11,571 and issue resultant refund amounting to Rs.1,02,630.
7. The respondents have filed parawise comments reporting therein that the original return claimed to have been filed by the complainant/his Authorized Representative was not available on record. The receipt of the return was not recorded in the return register maintained in the circle. It is further, stated that the copy of the return available on record did not bear any official stamp showing receipt of return and the signature/initial/name of the official who had received the return. The complainant also did not disclose the date on which the return was filed. It is reported that the enquiries made from the Data Processing Centre, Karachi revealed that the return of the complainant for the year 2002-2003 was not punched/entered in their computerized return register. It is pleaded that the evidence of filing of return in time required careful scrutiny since the same is of crucial importance to determine whether the return qualified for Self-Assessment. The Commissioner of Income Tax concerned has been directed to make enquiries as to how the return was placed on record without corroborative entries in the relevant register etc.
8. The respondents have however, confirmed that the assessment for the assessment year 2002-2003 was finalized under section 59(1) of the Repealed Income Tax Ordinance 1979 vide D.C.R. No.45/27 dated 10-2-2003 on the basis of the photocopy of return filed subsequently by the A.R. of the complainant. It is further stated that the explanation of the assessing officer concerned was being called as to how the assessment was completed on the basis of photocopy of return without making any enquiries with reference to filing the original return in time. It is conceded that the tax credit for the year under consideration was restricted to the extent of tax liability although not a single original challan was enclosed even with the photocopy of the return filed by the A.R. The explanation of the assessing officer has also been called on this issue. It is also stated that the complainant's claim regarding deductions under section 50(4) as adjustable' and not covered under the presumptive tax regime needed careful examination and the Commissioner has been, asked to report the factual position in this regard.
9. The case has been discussed with the above noted representatives of the complainant and the respondents. The relevant records produced. by the Departmental Representative have also been examined.
10. The photocopy of the acknowledgment receipt filed by the A.R. of the complainant shows that the return of income for the assessment year 2002-2003 was filed in Zone-D, Karachi 'whereas the jurisdiction of the case vested with Zone-E. The date of filing the return is not legible on the acknowledgment receipt. The date of filing the return has not been indicated in the complaint as well. The complainant's A.R. in his rejoinder dated 30-12-2003 has however stated that although the return was filed in Zone-A, but it should have been transferred to the relevant circle i.e. Zone-E in accordance with the normal procedure of the department. In support of this observation he has furnished a photocopy of the letter issued by the taxation officer Circle E-14 dated 9-12-2003 showing transfer of a return from Zone-A to Zone-E on the point of jurisdiction. The Authorized Representative of the complainant pointed out that the respondents had given the same treatment to the complainant in the immediately preceding year as well against which a complaint bearing No.1380K/2003 was filed before this forum which was decided on 17-11-2003. He further, argued that the return was available on the record of the department and if it did not bear signature/initial of receiving officials, the complainant could not be held responsible therefor. He also pleaded that if the copies of challans were not filed along with the return how credit for an amount of Rs.8941 was allowed in the relevant I.T.30 dated 10-2-2003.
11. The Authorized Representative of the complainant has stated in his rejoinder that the impugned assessment was finalized on 10-2-2003 out the assessment order, demand notice and I.T.30 were served on the complainant on 17-4-2003 i.e. after notice more than two months from the date of order. He also argued that if there was any deficiency in the return or accompanying documents, the assessing officer could have confronted the complainant as provided in the relevant Circular on the Self-Assessment Scheme. He has pleaded that when a complaint was filed before this forum, the respondents started raising objections and pointing out deficiencies in the return etc.
12. The Departmental Representative reiterated the pleas taken in the parawise comments submitted by the respondents.
13. The facts obtaining on record confirm the observations of the respondents that the date of filing of return for the assessment year 2002-2003 is yet to be ascertained as the same has neither been shown on the acknowledgement slip nor mentioned in the complaint. However, the Authorized Representative's arguments that discrepancies and short-comings are pointed out by the respondents after the filing of complaint with this forum also carry weight. For the immediately preceding year as well under more or less similar conditions the complainant had to file Complaint No.1380-K of 2003. The respondents have also not been able to offer any plausible explanation for allowing credit for deduction under section 50 of the repealed Income Tax Ordinance for Rs.8,941 only as against Rs.1,11,571, claimed by the complainant particularly when it is alleged that not a single challan was furnished along with the return available on record. The Departmental Representative has also not been able to controvert the allegation that the applications of the complainant addressed to the taxation officer, the Commissioner and the Regional Commissioner of Income Tax remained unresponded without any justification. The arguments of the complainant's A.R. that the complainant should not be allowed to suffer for the negligence, carelessness and inefficiency of the departmental officials is quite well founded.
14. The facts stated above establish neglect, inattention, delay, incompetence, inefficiency and ineptitude in the discharge of duties and responsibilities by the concerned officers of the department. Maladministration as defined in Clauses (ii) and (iv) of subsection 3 of section 2 is established and therefore the following recommendations are made:-
(i) The C.B.R. to direct the concerned officer to decide the claims of the complainant regarding allowance of deduction under section 50 of the repealed Income Tax Ordinance, determination and issuance of resultant refund within 30 days of the receipt of this order.
(ii) The responsibility of passing the order under section 59(1) without proper verification etc. be fixed and disciplinary action be initiated and finalized against the delinquent officer within 60 days.
(iii) The compliance be reported within a week after implementing the above recommendations.
C. M. A./99/FTOOrder accordingly.