MUHAMMAD ZAFAR IQBAL VS SECRETARY REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1212 (2016)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 171, 173 & 177----Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Appeal to the Commissioner (Appeals)---Finality of Appellate Order ----Maladministration---Scope---Assessment order passed against complainant was annulled on first appeal before Commissioner Inland Revenue (Appeals), and the Department did not file second appeal against said Appellate Order, therefore the same attained finality---Department subsequently repeated the same assessment order against complainant---Validity----Annulled order was legally void and ceased to exist---Department, if it fails to file second appeal in the Appellate Tribunal, then the effect of the first appeal was required to be allowed within two months as prescribed by law---Repetition of assessment after annulment of earlier order by the Commissioner Inland Revenue (Appeals); therefore, was arbitrary, and unlawful; which tantamount to maladministration in terms of S. 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the Department to direct the concerned Commissioner to revisit the unlawful order within a period of 21 days---Complaint was disposed of, accordingly.

Muhammad Daud Khan, Advisor for dealing Officers.

Sardar Irshad Shaheen, Advisor Dealing Officer.

Riaz Ahmad Raja, ITP for Authorized Representative.

Allah Wasay, IRO for Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUHRY, FEDERAL TAX OMBUDSMAN.---This complaint is against alleged unlawful order passed under sec ion 161 read with 205 of the Income Tax Ordinance, 2001 (the Ordinance) for tax year 2013.

2.The complaint was sent for comments to Secretary Revenue Division, in terms of Section 10(4) of the Federal Tax Ombudsman Ordinance 2000. In response, the FBR submitted its comments vide letter dated 01.01.2016.

3.According to the AR, CIR(Appeals) passed order dated 05.03.2016 annulling the order for the tax year 2013. Deptt: did not file appeal to the ATIR and therefore it attained finality. However, the Deptt: repeated the same withholding assessment order on 28.10.2015 without selection of case for audit by FBR/CIR. No Bar Code appeared on the notice issued (computerized system generated notice) which was required with effect from 01.07.2015 as per FBR Notification No.1(177)S(IDT-FATE)/2015, dated 30 06.2015. He also relied on High Court Judgment in WP 8466 of 2015 which was produced during the hearing also. He prayed that unlawful orders be quashed as it amounted to maladministration.

4.The DR contended that tax was not withheld by some dealers and, therefore, tax demand was raised against the Complainant as per law under section 161 with default surcharge under section 205 of the Ordinance. He averred that annulment and setting aside an order are synonymous as per ATIR's order No.ITA Nos.420 and 421/LB 408 and 409, dated 01.12.2009. So after annulment of earlier order by CIR(A), another order was passed to retrieve the loss of revenue and there was no element of maladministration.

5.Both the parties heard and case record examined. An annulled order is legally void order which ceases to have existence. In numerous cases, this office has held on the strength of case laws that if the Deptt fails to file second appeal in the Appellate Tribunal, appeal effect is required to be allowed to the decision ref CIR(A) within two months as prescribed in law. The judgment of Lahore High Court cited by the AR is also relevant in the instant case. There is no provision of law which would permit retrieval of loss of revenue' in an illegal manners'. The Dept'l treatment is, therefore, arbitrary and illegal.

Findings:

6.Repetition of assessment after annulment of earlier order by CIR(A) is arbitrary and unlawful tentamounting to maladministration in terms of sections 2(3)(ii) of the FTO Ordinance, 2000.

Recommendations:

7.FBR to--

(i)direct the Commissioner to revisit the unlawful order within 21 days; and

(ii)repot compliance within 7 days thereafter.

KMZ/37/FTOOrder accordingly.