PRIME LUBRICANTS (PVT.) LTD. VS The SECRETARY, REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2522 (2016)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 117 & 114---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 10 & 2(3)---Return of income---Notice of discontinued business---Deletion of National Tax Number (NTN)---Maladministration--- Scope--- Complaint against inordinate delay in deletion of complaint's name from the list of NTN holders and against issuance of notices to complainant for furnishing return of income---Contention of complainant was that despite various applications to the Department intimating closure of business and request for issuance of NOC for deletion of its name from list of NTN holders, no response was forthcoming from the Department and instead notices under S. 114 of the Income Tax Ordinance, 2001 were issued to the complainant for furnishing return of income---Validity---Under S. 117 of the Income Tax Ordinance, 2001 any person discontinuing business was required to give notice to the Commissioner Inland Revenue to the such effect within a period of fifteen days and the complainant, in the present matter, neither disclosed the exact date of closure of business nor furnished any such notice---Department, under such circumstances, had no option except to serve notices to complainant to furnish fresh return of income under S. 117 of the Income Tax Ordinance, 2001---Federal Tax Ombudsman observed however, that the Department had not disposed of the complainant's application, which was the Department's responsibility, in order to enable the complainant to seek further legal remedy and such inattention to the applications of the complainant tantamount to maladministration under S. 2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the Department to direct the concerned Commissioner to dispose of the complainant's application for deletion its name from list of NTN holders within a period of 21 days after providing opportunity of hearing to the complainant---Complaint was disposed of accordingly.

Haji Ahmad, Advisor and Muhammad Daud Khan, Advisor for Dealing Officers.

Riaz Ahmad Raja, ITP Authorized Representative.

Arsalan Bukhari, DCIR Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---This complaint is filed under section 10(1) of the F.T.O. Ordinance, 2000 (F.T.O. Ordinance) against delay in deletion of Complainant's name from the list of NTN holders and withdrawal of statutory notices under section 114(4) of the Income Tax Ordinance, 2001 (the Ordinance) for tax years 2014 and 2015.

2.The Complainant, a Private Limited Company, engaged in the business of manufacturing of refined petroleum products statedly discontinued business in 2012 due to some unavoidable circumstances. Its name was struck of from the list of companies in Securities and Exchange Commission of Pakistan on 25.09.2012 and by the Registrar of Companies on the basis of auditor's certificate dated 25.09.2012 reproduced below--

"a.the company has no assets and liabilities;

b.the company is not carrying on any business or any operation; and

c.the company had no liabilities outstanding in relation to any loan(s) obtained from the banks/financial institutions, taxes, utility charges, or any obligations towards government departments or private parties; and

d.the company has obtained No Objection Certificate/s from all concerned licensing/permitting authorities.

3.The Complainant's AR vide applications dated 16.05.2013, 06.07.2013, 24.09.2013 and 26.05.2015 intimated the closure of business and requested the IR authorities to issue NOC for removal of its name from the list of NTN holders, but solicited no response. Instead, the Deptt. issued notice under section 114(4) of the Ordinance for filing returns by 29.05.2016 and 03.06.2016 respectively.

4.The complaint was sent for comments to the Secretary, Revenue Division, Islamabad in terms of section 10(4) of the FTO Ordinance. In response, Chief Commissioner IR vide letter No.CIR/RTO-MN/16665 dated 24.06.2016 forwarded comments of the Commissioner dated 23.06.2016. The Deptt. contended that the Complainant neither provided relevant documents nor followed the procedure for closure of business as prescribed in section 117 of the Ordinance and so the name could not be deleted from the list of NTN holders.

5.The DR reiterated the written comments contending that NOC for deletion of name from the NTN list could be issued once the Complainant would file returns for tax years 2014 and 2015 for which notices have been issued. It was its obligation to clear the liabilities before the name was struck off from the record.

6.Both the parties heard and the matter discussed. Under section 117(1) of the Ordinance, any person discontinuing business is required to give a notice to the Commissioner IR to that effect within 15 days of the discontinuance. The Complainant neither disclosed the exact date of closure of business nor provided proof of filing application/notice within 15 days of the discontinuance. Under the circumstances, the Deptt. had no option except to serve notice on the Complainant to furnish return of income as empowered under subsection (3) of section 117 of the Ordinance. It was the obligation of the complainant to provide relevant documents for deletion of name from the list of NTN holders. This has not been done. On the other hand, the Deptt. has also not disposed of Complainant's applications dated 16.05.2013 06.07.2013, 24.09.2013 and 26.05.2015 as yet. It was their responsibility to dispose of applications to enable the Complainant to seek further legal remedy, if so required. In C. Nos. 293 and 294/LHR/CUS(11 and 12)/524 and 525/2010, this office has held that inattention to the letter of the Complainant amounts to maladministration.

Findings:

6(sic.) The Deptt's inaction on the aforementioned applications is tantamount to maladministration under section 2(3)(ii) of F.T.O. Ordinance, 2000.

Recommendations:

7.FBR to-

(i)direct the Commissioner IR to dispose of pending applications dated 16.05.2013, 06.07.2013, 24.09.2013 and 26.05.2016 for deletion of Complainant's NTN, after providing opportunity of hearing to the Complainant within 21 days; and

(ii)report compliance within 07 days thereafter.

KMZ/95/FTOOrder accordingly.