ABDUL RASHEED VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2013 P T D 350
2013 P T D 350
[Federal Tax Ombudsman]
Before Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman
ABDUL RASHEED
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.225/LHR/IT(166)441 of 2012.
(a) Income Tax Ordinance (XLIX of 2001)--- ----Ss.121, 122A & 122(5A)---Best judgment assessment---Opportunity of being heard---Complainant contended that ex parte action under S.121 of the Income Tax Ordinance, 2001 was against law as he was not accorded proper opportunity to explain the issues; that Assessing Officer being posted in Audit Zone did not have jurisdiction to amend deemed assessment; and that information relied on to amend the deemed assessment regarding investment made in two motor vehicles did not qualify as "definite information"---Validity---Ex parte assessment had been made on misplaced reliance which was patently defective information as the complainant did not own either of the two motor vehicles---Only one motor vehicle had been acquired on lease under a Hire Purchase Agreement with a bank and the complainant had debited his profit and loss account appended with the return for tax year 2010 with the expenses incidental to the arrangement---Evidently neither of the two motor vehicles referred to by the Department in the assessment order passed under S.121 of the Income Tax Ordinance, 2001 constituted tax payer's property in tax year 2010---Department had brought forth no evidence to establish his ownership of the other vehicle cited in the assessment order---Decision to consider a Hire Purchase Agreement as purchase of a vehicle, and treat the purchase of second vehicle as such, without any documentary basis, was perverse, arbitrary and unreasonable and was tantamount to maladministration---Federal Tax Ombudsman recommended the Federal Board of Revenue to direct the Commissioner to revise the assessment order, as per law, invoking S.122A of the Income Tax Ordinance, 2001.
2012 PTD (Trib.) 170 ref.
(b) Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S.9(2)(a)---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Department contended that complainant had filed an appeal that was pending before First Appellate Authority and complaint could not be taken up for investigation---Validity---Complainant filed complaint before Federal Tax Ombudsman on 3-4-2012 whereas he approached the First Appellate Authority on 9-4-2012---No appeal before First Appellate Authority was pending on the day the complaint was filed before the Federal Tax Ombudsman.
(c) Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S.9(2)(b)---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Department contended that complaint fell outside the jurisdiction of Federal Tax Ombudsman as the same pertained to assessmentproceedingsandinvolveldinterpretationoflaw---Validity---AssessmentpersewasnotamootpointbeforeFederalTaxOmbudsmanandnorwasanyinterpretationoflawinvolvedinthe complaint---Complaint was maintainable in circumstances.
No.178 of 2005-Law (FTO) dated 26-5-2006 distinguished.
Muhammad Munir Qureshi, Advisor Dealing Officer.
Riaz Ahmad Raja, ITP Authorized Representative.
Muhammad Saeed Ansari, DCIR Departmental Representative.
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).---This complaint is against illegal amendment of income under section 121 of the Income Tax Ordinance, 2001 (the Ordinance).
2.Thecomplainantcontendsthattheexparteactionundersection 121 was against the law as he was not accorded proper opportunity to explain the issues raised by the Assessing Officer. Moreover, the assessing officer being posted in the Audit Zone of the RTO did not have jurisdiction to amend the deemed assessment. Reliance is placed on ATIR judgment cited as 2012 PTD (Trib.) 170. It is further contended that the information relied on to amend the deemed assessment regarding alleged investment made by him in two motor vehicles valuing Rs.2,375,918 did not qualify as "definite information." The complainant accepts one motor vehicle (Suzuki APV/GC415 Wagon, Model 2010, Registration No.LEB-10-7655) acquired under a Hire Purchase Agreement from Bank Alfalah. (Copy of registration book and authority letter from Bank Alfalah have been filed as supporting documentation.) Asregardstheothervehicle,alsoaSuzuki(registrationdateof10-9-2009), referred to in the assessment order, the complainant denies any knowledge of the vehicle.
3.When confronted, the Deptt. filed a reply in which a preliminary objection was raised that the matter raised in the complaint pertained to assessment proceedings and involved interpretation of law. It therefore fell outside the Hon'ble FTO's jurisdiction (section 9(2)(b) of the FTO Ordinance). The complainant had also filed an appeal that was pending before the CIR (Appeals), and so the complaint could not be taken up for investigation by the Hon'ble FTO as stipulated in section 9(2)(a) of the FTO Ordinance. On merits the Deptt asserted that the amendment of income was based on definite information received from the Chief Commissioner,RTO,Multan.However,whenformallyconfronted,thecomplainantdidnotresponddespiteopportunityaccordedtohim.Adverseinferencewasthereforerightlydrawnagainsthim.TheDeptthasreferredtothedecisionofthePresident(No. 178/ 2005-Law(FTO) dated 26-5-2006), disposing of Representation in Complaint No.1096-L/2005, that the FTO did not have jurisdiction to hear the complaint.
4.Both sides have been heard, record examined and cited case-law perused.
5.The preliminary objections raised by Deptt have been considered. The Departmental contention that the provisions of section 9(2)(a) were applicable has been looked into and found to be misconceived as the complainant filed the complaint before the Hon'ble FTO on 3-4-2012 whereas he approached the CIR (Appeals) on 9-4-2012. No appeal before the CIR (Appeals) was thus pending on the day the complaint was filed before the Hon'ble FTO. As for the Departmental reference to the bar laid down in section 9(2)(b) of the FTO Ordinance, the assessment per se is not the moot point before the Hon'ble FTO. Nor is any interpretation of law involved in the complaint, as was the case in the cited decisionof the Hon'ble President. Here it is ex parte assessment and misplaced reliance on patently defective information as the complainant did not own either of the two motor vehicles in question. Only one motor vehicle had been acquired on lease under a Hire Purchase Agreement with a bank and thecomplainant had debited his profit and loss account appended with the Return for Tax Year 2010 with the expenses incidental to the arrangement. Evidently neither ofthetwomotorvehiclesreferredtobytheDeptt. in the assessment order dated 22-2-2012 passedundersection 121 constitutes his property in Tax Year 2010. The Deptt has brought forth no evidence to establish his ownership of the other vehicle cited in the assessment order. These are the core issues raised before the Hon'ble FTO and they all relate to maladministration as defined in Section 2(3) of the FTO Ordinance.
Findings:
6.The decision to consider a Hire Purchase Agreement as purchase of a vehicle, and treat the purchase of second vehicle assuch, without any documentary basis, is perverse, arbitrary and unreasonable. This is thus tantamount to maladministration as defined in Section 2(3) of the FTO Ordinance, 2000.
Recommendations:--
7.FBR to direct the Commissioner to-
(i)revise the assessment order, as per law, invoking section 122A of the Ordinance; and
(ii)report compliance within 30 days.
CMA/193/FTOOrder accordingly.