MAQSOOD AFZAL VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 12 (2015)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 177(10), 121(1)(d), 137 & 214-C---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 10(4)---Selection of case for audit---Maladministration---Complainant contended that he started business with effect from 18-12-2012; that return was due from tax year 2013, and not for tax year 2012; that his case could not be selected for audit under S.214-C of Income Tax Ordinance, 2001; that department issued illegal demand under S.137 of Income Tax Ordinance, 2001, and assessment order of another party was attached with the said demand notice and that rectification application was not responded, which tantamounted to maladministration under S.2(3) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Validity---Filing of return on e-portal of the FBR, was not established from the record being maintained by the department---Department failed to provide proof regarding service of order on the complainant passed in his name---Contention of the complainant that the assessment order of another taxpayer was appended with the demand notice issued in his name, had been found correct and the same was verified from the documents provided by him---Since the department failed to establish the filing of return by the complainant, question of its selection under S.214-C of the Income Tax Ordinance, 2001, would not arise---Order passed under Ss.177(10)/121(1)(d) of the Income Tax Ordinance, 2001, was not tenable in law, as mistake in passing/service of order upon the complainant was not rectified---Act of the department in dispatching the demand notice with incorrect assessment order in a hasty manner, had shown inefficiency and incompetence, which tantamounted to maladministration under S.2(3) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue, was recommended to direct the Chief Commissioner to revisit the order passed under Ss.177(10)/121(1)(d) of Income Tax Ordinance, 2001, and finalize the same by ascertaining true facts after providing opportunity of being heard to the complainant, as per law within four weeks, report compliance within 7 days thereafter.

Mian Munawar Ghafoor, Advisor Dealing Officer.

Riaz Ahmad Raja, Authorized Representative.

Malik Rafique Ahmad, IRO Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.--This complaint is against assessment order passed under section 177(10)/ 121(1)(d) of the Income Tax Ordinance, 2001 (the Ordinance) for the tax year 2012.

2. The Complainant contended that he started business with effect from 18.12.2012 which was evident from taxpayer's on line verification certificate. The return was due from tax year 2013 and not for tax year 2012, his case could not be selected for audit u/s 214C by the FBR. The Deptt. issued illegal demand notice u/s 137 and assessment order of another party was attached with the said demand notice. The rectification application was not responded which tantamounted to maladministration under section 2(3) of the FTO Ordinance.

3. The complaint was referred for comments to the Secretary, Revenue Division, in terms of Section 10(4) of the Ordinance. In response, the Deptt. filed para-wise comments through FBR's letter C.No.4(1471)TO-1/2014 dated 16.01.2015 contending therein that the Complainant filed return for the tax year 2012 which was available on FBR's e-portal and the same was selected for audit through random computer balloting under section 214C of the Ordinance. As per registration profile, business starting date was shown as 02.07.2011 which indicated that return for tax year 2012 was due and the same was filed. The assessment was finalized u/s 177(10)/121(1)(d) under the law and order was properly served upon the Complainant.

4. During the hearings, the parties reiterated the averments of their written pleadings. The DR stated that no element of mal-administration was involved in the case. The proceedings were initiated/concluded as per law and amended order along with demand notice was issued properly. The AR contended that return was not e-filed and the case was wrongly selected for audit u/s 214C of the Ordinance. The Deptt. had not issued rectified assessment order till the filing of instant complaint. As the Complainant had not e-filed return, selection for audit u/s 214C of the Ordinance was inappropriate.

5. The complaint has been examined in the light of the written and oral submissions of the parties and available record. Perusal of the record showed that the Deptt failed to provide proof regarding service of order on the Complainant passed in his name. The filing of return on e-portal of the FBR is not established from the record being maintained by the Deptt. The contention of the Complainant that the assessment order of another taxpayer existing at NTN 4103592 was appended with the demand notice issued in his name has been found correct and the same is verified from the documents provided by him. Since the Deptt failed to establish the filing of return by the Complainant, its selection under section 214C of the Ordinance does not arise.

Findings:

6. The order passed under sections 177(10)/121(1)(d) of the Ordinance is not tenable in law as mistake in passing/service of order upon the Complainant was not rectified. The act of the Deptt. in dispatching the demand notice with incorrect assessment order in a hasty manner shows inefficiency and incompetence which tantamounted to maladministration u/s 2(3) of the FTO Ordinance.

Recommendations

7. The FBR to direct the Chief Commissioner to-

(i) revisit the order passed under section 177(10)/121(1)(d) and finalize the same by ascertaining true facts after providing opportunity of being heard to the complainant, as per law, within four weeks; and

(ii) report compliance within 7 days thereafter.

HBT/63/FTOOrder accordingly.