LUQMAN CORPORATION VS SECRETARY REVENUE DIVISION, ISLAMABAD
2009 P T D 72
[Federal Tax Ombudsman]
Before Justice (Retd.) Munir A. Shaikh, Federal Tax Ombudsman
Messrs LUQMAN CORPORATION and others
Versus
SECRETARY REVENUE DIVISION, ISLAMABAD
Complainant Nos.62-L 326-L, 327-L, 489-L, 405-L, 551 and 527 of 2005, decided on 01/06/2006.
Income Tax Ordinance (XLIX of 2001)---
----S.177---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---C.B.R. Circular No. 1(1)S.(ITAS)/2004, dated 28-7-2004---Audit---Complainants contended that due to issuance of circulars side by side, they could not make a decision either to opt for the concession given by raising the tax liability to 20% over and above the already declared tax liability and paid along with the returns due to which discrimination had taken place, for those persons who had opted for the same had been given benefit whereas due to pendency of cases and confusion about the legality or validity of the Central Board of Revenue's guidelines, the complainants could not make a decision at the relevant time---Validity---No time limitation prescribed in C.B.R. Circular No.1 of 2004 to opt for the benefit thereunder--Contention of the Revenue Division was that said choice could have been made only during the assessment year of the returns and not thereafter, was not maintainable---Complainants should be given a choice or right either to opt for the benefit of the said circular and file revised returns for the said year---Federal Tax Ombudsman recommended that the Central Board of Revenue shall direct the competent authority to annul the order of Taxation Officer passed in these cases; allow time up to 30th June, 2006 to the complainants either to opt for the benefit or Circular No.1(1)S(ITAS)/2004. and file revised returns for the concerned year along with deposit of the amount of tax on which the same shall be accepted and in case all or any of the complainants do not opt for the said benefit up to 30th June, 2006, their cases may be proceeded under section 177 of the Income Tax Ordinance, 2001 by the officer concerned by initiating fresh proceedings in his discretion if he so liked.
Mian M. Rafi and Rizwan Ahmad Urfi, Taxation Officer, Sahiwal for the Complainant (in C. No.62-L of 2005).
Mirza Anwar Baig and Anwar-ul-Haq Jillani, DCIT for the Complainant (in C. No.326-L of 2005).
Mirza Anwar Baig and Mst. Amna Fiaz Bhatti, DCIT for the Complainant (in C. No.327-L of 2005).
Nemo for the Complainant and Mst. Amna Fiaz Bhatti, DCIT (in C. No.405-L of 2005).
M. Siddique Ch. and M. Tahir, DCIT for the Complainant (in C. No.489-L of 2005).
Khawaja Riaz Hussain and Mst. Amna Fiaz Bhatti, DCIT for the Complainant (in C. Nos.527 and 551-L of 2005).
FINDING/DECISION
JUSTICE (RETD.) MUNIR A. SHEIKH (FEDERAL TAX OMBUDSMAN).---This decision shall dispose of C.Nos.62-L, 326-L, 327-L, 489-L, 405-L, 551 and 527 of 2005 involving common questions of law and facts.
2. The complainants filed returns for the assessment year 2003 under Self Assessment Scheme. The C.B.R. issued Circular No.1 of 2004 conferring right on the assessee to opt for the said scheme in that if the assessee is ready to pay 20% higher tax as compared to the tax payable on his original return, he shall be immune from under section 177 of the Income Tax Ordinance, 2001. On the other hand, the C.B.R. had also issued guidelines to the officers dealing with the matters under section 177 of the Ordinance to follow them while deciding the cases under the said section. Different High Courts of the Provinces declared the said Circular ultra vires of the Act and held that C.B.R. was not vested with the power to control the exercise of power by the concerned officer under section 177 ibid who was directed to proceed in accordance with law under the said section and pass fresh order. These judgments were challenged before the Supreme Court of Pakistan and the matter was kept pending here to await the decision of the Supreme Court. The decision of the Supreme Court has been placed on record which shows that the parties in those cases came to a settlement and order was passed accordingly, therefore, learned counsel for the complainants has rightly argued that the said agreement or settlement is not binding on any person other than those who were parties to the cases in which the said settlement took place.
3. Even otherwise, learned counsel's contention was that the C.B.R's. guidelines could not be issued for decision under section 177 and the concerned officer is fully empowered to pass order after applying his own independent mind according to the facts of the case under the said provision of law, therefore, even if judgment of the Supreme Court based on settlement is not binding on the complainants but the complainants' contention in these cases is the same which was accepted by the Supreme Court on the basis of settlement between the parties.
4. The orders passed by the Deputy Commissioner in these cases on the basis of the guidelines issued by the C.B.R. are therefore, not maintainable as the same suffer from maladministration as such are liable to be struck down.
5. Learned counsel for the complainants submitted that due to these Circulars having been issued side by side, the complainants could not make a decision either to opt for the concession given through Circular No.1/2004 by raising the tax liability to 20% over and above the already declared tax liability and paid along with the returns due to which discrimination has taken place, for those persons who had opted for the same had been given benefit whereas due to pendency of these casesand confusion about the legality or validity of the C.B.R's. guidelines, the complainants could not make a decision at the relevant time.
6. I have gone through Circular No. 1/2004 and find that there is no time limitation prescribed therein to opt for the benefit there under. The contention of the DR who has appeared on behalf of the Revenue Division that the said choice could have been made only during the assessment year of the returns and not thereafter is not maintainable.
7. The complainants in these cases should be given a choice or right either to opt for the benefit of the said Circular and file revised returns for the said year.
8. For the foregoing reasons, these complaints are hereby accepted and the following recommendations are made:--
(a) That the C.B.R. shall direct the competent authority to annul the order of Taxation Officer passed in these cases;
(b) Allow time up to 30th June, 2006 to the complainants either to opt for the benefit of Circular No.1 of 2004 and file revised returns for the concerned year along with deposit of the amount of tax on which the same shall be accepted;
(c) In case all or any of the complainants do not opt for the said benefit upto 30th June, 2006, their cases may be proceeded under section 177 of the Ordinance by the officer concerned by initiating fresh proceedings in his discretion if he so likes.
C.M.A./135/FTOOrder accordingly.