MUSLIM TRADERS VS SECRETARY REVENUE DIVISION, ISLAMABAD, 2017 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1205 (2017)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 165 & 153---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9 & 10---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Scope---Complaint against proceedings initiated for default in filing of withholding statement and short deduction of tax under Ss.165 & 153 of the Income Tax Ordinance, 2001----Contention of complainant was inter alia that notice was issued to the complainant by the Department without looking at the relevant record, which was tantamount to "maladministration"---Validity----Department had required the complainant to explain his position with regard to rate of deduction of tax and it was complainant's obligation to reply to the issues raised in the notice, however, the complainant preferred to file present complaint, which was premature---Federal Tax Ombudsman observed that issuance of notice does not cause any grievance or prejudice for filing of complaint---Complaint was rejected, in circumstances.

Haji Ahmad, Advisor and Abdur Rehman Dogar, Advisor Dealing Officers.

Riaz Ahmad Raja, ITP Authorized Representative.

Muhammad Masood, DCIR Departmental Representative.

FINDINGS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.--The complaint has been filed under section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against the proceedings initiated for default of filing withholding statement under Section 165(2) of the Income Tax Ordinance, 2001 (the Ordinance) and short deduction of tax under section 153(1) of the Ordinance, vide Notice No.WHT/LY/ 2016-17/118 dated 18.10.2016.

2.Brief facts of the case are that the Directorate of Revenue Receipt Audit (DRRA) reported to the Inland Revenue Officer, Withholding Unit, Layyah that the Complainant, a prescribed person, deducted tax @ 1% instead of 4% on account of purchases of fruit and vegetable juices from Messrs Country Chemical (Pvt.) Ltd. and also failed to file withholding statement under Section 165(2) of the Ordinance. Based on this information, the IRO issued notice to charge/ levy short payment of tax. According to the Complainant, notice was issued without looking into on line record of the Complainant, without mentioning any tax year and without incorporating barcode which was tantamount to maladministration.

3.The complaint was sent for comments to the Secretary, Revenue Division. Islamabad in terms of Section 10(4) of the FTO Ordinance. In response, the Chief Commissioner IR vide letter No.CCIR/RTOMN/ 6431 dated 15.11.2016 forwarded comments of Commissioner IR, Withholding Zone bearing No.492 dated 24.11.2016. The Deptt contended that the Complainant was engaged in the business of purchase of fruit and vegetable juices, but at the time of making payment to Messrs Country Chemical (Pvt.) Ltd., deducted tax @ 1% instead of 4% treating the goods as pharmaceutical. This caused loss of revenue, so an opportunity of hearing has been provided to the Complainant through notice dated 18.10.2016, but no compliance was made.

4.The DR reiterated the stance taken in the written comments. According to him, non-mentioning of tax year and barcode were procedural lapses and therefore, did not affect levy of tax as per law. He, however, assured to consider Complainant's reply to the notice on merit without being influenced by the audit observations.

5.Both the parties heard and case record perused. The Deptt. required the Complainant to explain his position with regard to the rate of deduction of tax. It was his obligation to file reply/explanation to the issues raised in the notice, but he preferred to file complaint which was premature. The issuance of notice does not cause any grievance to the Complainant as held by this office in various similar complaints.

6.In view of the above, the complaint is rejected and case file consigned to record.

KMZ/11/FTO Complaint rejected.