DECISION /FINDINGS ' The complainant, an Income Tax assessee, alleges maladministration on the part of the respondents for passing illegal assessment order, dated 28-9-2002 for the assessment year 2001- 2002 saddling him with unjustified tax liability.
2. Brief facts as explained in the complaint are that the assessee derives income from a hotel only.
The business premises comprises of two flooRs, The complainant runs hotel business on the first floor whereas his brother Muhammad Anwar Hussain runs restaurant business on the ground floor.
Each of the two is separately assessed. The Special Officer, Circle-15, Sheikhupura served the complainant a notice under section 62 of the Income Tax Ordinance, 1979 (hereinafter called repealed Ordinance) wherein on the basis of Inspector's report, the Taxation Officer intended to finalize the assessm ent of income both from hotel and the restaurant. In reply to the tax notice the complainant had explained to the tax authority that he had no concern with the restaurant, which is owned and run by his brother who had been filing his tax teturns independently. The case was transferred to another circle. The Taxation Officer, Circle-17. Sheikhupura passed assessment order, dated 28-9-2002, which was served after a lapse of six months on 20-3-2003. The case was decided ex pane. The order did not even discuss the complainant's point of view. The complainant was condemned unheard. Maladministration is obvious from the para. 3 of the order, which says that the brother of the complainant attended the hearing on 31-5-2002 whereas nobody appeared before the officer who passed the assessment order. The business of the restaurant being independent and separately assessed, could not be clubbed with that of. The hotel without first.
Cancelling the previous assessm ent as held by the Income Tax Appellate Tribunal in a case reported as 1995 PTD Trib.
19. The complainant had not declared any income from business of restaurant. No case for concealment was made out. While assessing the estimate of sales of the restaurant no overhead expenses were allowed. The hotel rooms remained vacant but this factor too was ignored. The room rent at the rate of Rs,200' per day was unjustly applied. The assessment order may he cancelled.
3. In their reply, the 'respondents have stated that since the case involves assessment proceedings the jurisdiction of the Honourable FTO does not extend to the case. Maladministration has to be established before entertaining the complaint. The President in Complaint No, 779-K of 2001 has held that the jurisdiction of the FTO is confined to cases of maladministration only. The complainant filed the return for the year 2001-2002 in Circle-15, Sheikhupura, which had no jurisdiction in the case. In fact, it was the jurisdiction of Circle-17 to deal with the case. The premises consist of two portions one for restaurant and the other for hotel. 'Notice under section 62 of the repealed Ordinance was issued confronting the complainant with the proposed action to be taken.
Mr. Nazar Hussain, the younger brother of the complainant, who attended the assessment proceedings recorded a statement on, behalf of the complainant that his elder brother was running the business of both hotel and restaurant for the last two yeaRs, It was never claimed that the two units were independent entities and were being assessed separately. Thus income from restaurant was charged to tax alongwith income from hotel. Notice under section 61 of the Ordinance for compliance on 28-9-2002 was issued without number and date, which was a clerical omission protectable under section 155 of the repealed Ordinance. The assessment was finalized on 28-9-2002. The complainant became contactable on 20-3-2003 after which the demand notice and order were served on him. The complainant has tried to avoid proper incidence of tax by declaring hotel business in one circle and the restaurant business the other.
He has not provided any documentary evidence to prove that two different persons own two businesses. The assessm ent has been finalized on the basis of facts and law. The complainant's reply, dated 27-6-2002 was unsubstantiated and could not be relied upon. Vacancy allowance was duly allowed vide assessm ent order, dated 28-9-2002. Room rent at the rate of Rs,200 per day is reasonable for a well-located place of business.
4. During the, hearing the complainant reiterated the points earlier advanced in the written complaint adding that each of the two brothers has been filing separate income returns from 1999-2000 onwards. The building premises are owned jointly. The income from two businesses was illegally clubbed.
5. The respondents submitted that the complainant owns the place of business, restaurant and hotel. The electricity bills are also in the name of Munawar Hussain, the complainant. Mr. Anwar Hussain is, in fact, a minor. Nazar Hussain, the complainant's own brother had given statement that both the hotel and the restaurant businesses were being carried out by the complainant, which proves the department's case.
6. The arguments of the parties and the record of the case have been examined and considered. It has already been ruled that the FTO can take cognizance of cases involving maladministration even if such A cases involve matters relating to assessment. In this case the assessment order, dated nil assessed the total income at Rs,405344. While the order says that notice was issued under section 61 of the Ordinance and Mr. Nazar Hussain, the brother of the complainant, attend the office, filed statement and copies of residential sui gas bills but the complainant denies the very attendance by Nazar Hussain. The assessment is based on the inquiry of the Inspector who had recorded the statement of complainant's brother Nazar Hussain. According to the assessment order he had filed wealth statement as on 30-6-2001, personal expenditure statement and copies of paid residential sui gas bills; Although the complainant denies that Nazar Hussain had attended the proceedings, in the face of these documents brought on record, his presence cannot be denied. The Inspector had made inquiries in which Nazar Hussain stated that Munawwar Hussain deals in household work and refused to give any written statement. However during the course of assessm ent proceeding for the assessment years 2001-2002 the Inspector had recorded the statement in which he stated about the room charges the number of rooms and the daily sales.
One person had been employed for preparing breads to who whom Rs,2000 per month was paid.
Two nephews and one brother are always in the hotel for rendering service. The inquiry made by the Inspector was comprehensive. After the notice was served confronting the facts which were made the basis of assessm ent it was the duty of the complainant to have filed and produced record and documents to negate the department's claim and substantiate his own contention about the running business of hotel and restaurant. Even the affidavit of Nazar Hussain has not been filed to controvert the averments made in the assessment order. In these circumstances the assessm ent order cannot be said to be unjust nor does it suffer from maladministration. The investigation is closed.