Rao IMRAN NASIR VS The SECRETARY, REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2037 (2016)

Income Tax Ordinance (XLIX of 2001)---

----Ss 175 & 239D---Federal Ombudsmen Institutional Reform Act (XIV of 2013) S. 11---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3), 5 & 10---Power to enter and search premises under S.175 of the Income Tax Ordinance, 2001---Jurisdiction of Federal Tax Ombudsman---Maladministration---Temporary injunction, grant of---Scope---Contention of complainant, inter alia was that the raid conducted by Department was without jurisdiction and did not comply with provisions of S.175 of the Income Tax Ordinance, 2001, and the same was tantamount to maladministration---Validity---Only show-cause notice had been issued to the complainant and no order had been passed by the Department's officers and complainant had submitted explanation with material facts before concerned officers to enable them to arrive at some conclusion---Raid, if properly carried out under provisions of S.175 of the Income Tax Ordinance, 2001 could not be termed unlawful and tax under S.236D of the Income Tax Ordinance, 2001 was to be paid once and at a fixed rate for the relevant period whether business of the raided premises belonged to one person or two different persons---Show cause notice in the present case had detailed figures of apparent tax evasion for the relevant period---Substance had to take precedence over technicalities and complainant had to refute allegations properly to support his case and could not challenge the issuance of the show-cause notice---Complainant's plea for grant of temporary injunction under S. 11 of Federal Ombudsmen Institutional Reform Act, 2013 was not valid as a temporary injunction under said provision was against operation of an impugned order or decision and not against proceedings, as in the present case---Federal Tax Ombudsman, however, observed that Department was required to consider the matter sympathetically and settle proceedings in a transparent way after affording fair opportunity of hearing to complainant---No case of maladministration was made out and the proceedings were accordingly closed---Complaint was dismissed, accordingly.

Muhammad Daud Khan, Advisor, Dealing Officer.

Riaz Ahmad Raja, ITP, Authorized Representative.

Ghulam Nabi Sheikh, IRO, Departmental Representative.

FINDINGS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---This complaint is regarding alleged illegalities committed by the Deptt. while conducting raid under section 175 of the Income Tax Ordinance, 2001 (the Ordinance) on business premises of Pak Railway Club near KFC, Multan. The Complainant derives income from event catering and services.

2.The complaint was sent for comments to Secretary Revenue Division, in terms of Section 10(4) of the Federal Tax Ombudsman Ordinance, 2000 (the FTO Ordinance). In response, the FBR submitted its comments vide letter dated 25.06.2015.

3.According to the AR, the seizure of record after raid' was patently illegal as business done at Pakistan Railway Club belonged to Mr. Amir Sharif Rajput, jurisdiction over whose case vested with RTO at Karachi with business address at 95-H, Block 2, PECHS, Karachi (NTN 0520338-4 and CNIC 42201-8550642-7). It was also contended that raid was conducted by unknown persons on 24.04.2015 and provisions of section 175(4) of the Ordinance to provide inventory were not complied with. Raid carried out was without jurisdiction together with entering and searching premises without pendency of inquiry and impounding of record was violation of circular No.(4)WM/86 dated 20.03.1988. All these acts, according to the Complainant, amounted to maladministration cognizable under Section 2(3) of the FTO Ordinance.

4.DR, on the other hand, refuted all the allegations and claimed that raid and proceedings in pursuance thereof were carried out according to law. The authorities conducting raid had jurisdiction over the case and were authorized to this effect and they did nothing unlawful in the matter of seizure of records, computers etc. The complainant was declaring receipts with doubtful fluctuations without apparent reasons. The DR claimed that records seized showed much higher receipts and Show Cause Notice (SCN) was issued vide No.869 dated 28.05.2015 under sections 161/205 of the Ordinance. It was prima facie a case of substantial concealment of income and evasion of tax as per the issues raised in the SCN. He averred that there was no bar on the Department in conducting proceedings after filing of complaint unless the proceedings were specifically stayed by the competent authority and Complainant's reference to contempt were thus unwarranted.

5.Both the parties heard and record examined. Admittedly, only show cause notice has been issued to the Complainant. No order has been passed by the Deptt's officers and the Complainant had submitted explanation with material facts before the concerned officers to enable them to arrive at some conclusion. The raid, if properly carried under the provisions of Section 175 of the Ordinance, cannot be termed unlawful. Moreover, Tax under Section 236D of the Ordinance was to be paid once and at fixed rate of 5% for the relevant period whether business of the raided premises belonged to one person or two different persons as claimed. SCN has detailed figures of apparent tax evasion for the relevant period. Substance has to take precedence over technicalities and the complainant has to refute these properly to support his case and cannot challenge the vile of issuance of notice.

6.The AR's plea for grant of stay, under Section 11 of the Federal Ombudsmen Institutional Reform Act, 2013 is also not valid. Stay under this provision is against "operation of impugned order or decision" and not against proceedings as appears to be the case here. Deptt's officers are, however, required to consider the matter sympathetically, and settle the proceedings in a transparent way after affording fair opportunity of hearing to the Complainant.

7.There being no case of maladministration, the proceedings are closed and case file be consigned to record.

KMZ/39/FTOOrder accordingly.