' By this order we would prefer to dispose off appeals captioned above, arising from the order under section 17-B of the Wealth Tax Act, dated 29-4-2003, passed by the learned IAC. Facts in brief are that Deputy Commissioner in all the 4 years passed separate orders under section 16(3) of the Wealth Tax Act, whereby assessed the property bearing No, D-5, Block-9, Clifton, Karachi on the basis of GARV on account of rent at Rs,31,37,170 as against declared at Rs,2,79,150. The learned IAC after perusal of the record noted that computation of wealth filed by the assessee revealed that the property was on rent at Rs,2,850 per month and GARV on account of rent of the premises should have been at Rs,3,42,240 (28,520 x 12) and value of property at Rs,34,22,400 + (3,42,240 x 10).
2. The learned IAC further observed that the furniture and fixture was also given on rent for Rs, 12,680 per month, whereas while value of the property/GARV on account of furniture and fixture, has not been taken into consideration as DCWT accepted the declared value on account of furniture and fixture at Rs, 2,44,351, whereas the property should have been assessed under Rule 8(3) of the Wealth Tax Rules, 1963 read with sections 7 and 46 of the Wealth Tax Act, 1963 on the basis of GARV of the property including GARV on account of furniture and fixture. The result of observation appears as under: --{{TABLE}} GARV on account of rent of the premises = 28,520 X 10 X 12 Rs,34,22,400 GARV on account of furniture & fixture 28,520 X 10 X 12 = R.,$_,15 21 600 Total/Correct GARV Rs,49.44,000 {{TABLE}}
3. In view of the above, assessee was served through a notice, dated 19-2-2003 that the assessm ent order completed by the Deputy Commissioner of Income Tax has found erroneous so far as prejudicial to the interest of Revenue. The brief of the notice is hereunder:-- "Your case record called for and examined. On examination it has been found that value of immovable Property bearing No, D-5, Block-9, Clifton, Karachi declared at Rs,27,91,150 on the basis of GARV of the property has been erroneously assessed at Rs,31,37,170.
' Perusal of the computation of the assessment year under reference reveals that the property was on rent as on valuation date i,e, 30-6-1996 for monthly rent of Rs,28,520 hence GARV of the rent should have been assessed at Rs,28,520 x 12 x 10 = Rs,34,22,400.
' Besides in the wealth reconciliation as on 30-6-1996 you declared value of furniture and fixture given at Rs,2,44,351 and the same was erroneously assessed as movable assets on the declared value."
4. In reply thereof the A.R. Of the assessee Messrs Aslam Shelot and Company vide letter No, IT/12/2003, dated 22-2-2003 contested that the correct ALV as per Rule 8(3) has been declared by the assessee which is neither erroneous nor prejudicial to the interest of Revenue in view of the fact that paragraphs 3(a), 3(c) and 3(d) of the C.B.R.'s Circular No, 14(7)/IT-6/WT/79, dated 21-8-1979 has been deleted by the Board vide another Circular No,5 of 1994, dated 29-6-2004. It is added that the ALV determined is as per rent of the premises and the value is rightly assessed as 10 times of the ALV and no adverse interference can be drawn in view of deletion of paragraphs 3(a), 3(c) and 3(d) of the C.B.R.'s Circular dated 21st August, 1979 referred to above.
5. The learned IAC did not agree with the contention above, on the contrary found the reasons narrated in the reply, unsatisfactory, accordingly intimated the assessee that amendments in the paragraphs of the Board's Circular, dated 21st August, 1979 regarding the valuation of furniture and fixture is to the effect that in case the owner is charging separate rent for furnishing such as carpets, furniture, curtains etc. a deduction up to 25% of the total gross rental (gross rent of house and fixture plus rent of furnishing) should be allowed. The learned IAC while referring the above Circular also referred the subsequent Circular issued for the withdrawal of the above Circular, dated August 21st, 1979, invoking provisions of section 17-B of the Wealth Tax Act valued the house as per rule 8(3) on the basis of GARV, whereby taking into consideration the rent of the premises as well as rent of furniture and fixture.
6. Heard the learned representatives of the two parties. It is argued that the order passed by the IAC is bad in law as the order passed by the DCIT is neither erroneous nor prejudicial to the interest of Revenue as valuation of land and building has been properly taken by DCIT as per Rule 8(3) of Wealth Tax Act, 1963 under the C.B.R. Circular No,11 of 1994, which is binding on the officers by virtue of section 13 of the Wealth Tax Act, 1963 being applicable from Assessment Year, 1994-95. It is further argued that the IAC erred in treating hiring charges of furniture and fixtures as rent of property for GARY (Gross Annual Rental Value). The rent of property is covered under section 19 of the Income Tax Ordinance, 1979 and it is Annual Value of the Property, which is charged to tax therein, whereas the hiring charges of furniture is covered under section 30(1)(2)(d) of the Income Tax Ordinance, 1979 and is not rent of property. Counsel also stressed that prior approval as per law for valuing the property at more than 10 times of ALV was not obtained from higher authorities.
7. Perusal of the facts in view of above arguments reveals that the assessee declared the value of immovable Property bearing No, D-5, Block-9, Clifton, Karachi on the basis of GARV at Rs,279,150.
There was arithmetical mistake which is rightly corrected as Rs, 34,22,400 (28,520 X 10 X 12).
8. It is worth mentioning that the furniture and fixture is also given on rent for Rs, 12,660 per month and while valuing the property/GARV on this account, the Assessing Officer accepted the declared value at Rs,244,351, as against this treatment, the learned IAC applied GARY including the rent of furniture and fixture at Rs,15,21,600 (12,680 x 12) in view of a separate agreement executed for furniture and fixture at Rs,12,680 per month. In order to resolve legal controversy "whether the order of the Assessing Officer accepting the declared value of furniture and fixture is erroneous and so far as prejudicial to the interest of Revenue". It would be necessary to refer section 3 of Wealth Tax Act, 1963.
"Section 3 of the Wealth Tax Act, 1963. Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of July, 1963, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth or assets on the corresponding valuation date of every individual ' Whereas subsection (5), section 2 defines as under:--- (5) "assets" includes-
(1) in the case of individual and a Hindu undivided family, property of every description movable or immovable. The word movable or immovable, except---
9. The above referred definitions are crystal clear to show that assets are chargeable to tax as provided under section 3 of the Wealth Tax Act as the term assets includes property of every description movable or immovable, as such we are of the considered opinion that the furniture and fixtures movable or immovable rented out separately from the building would be charged to tax in view of above referred provisions of law.
10. The next question would be "whether the value of the fittings, furniture and fixture will be assessed as part of the property in which these are affixed and their rental be a part of, on the basis of the GARV of the immovable property or the Assessing Officer was justified in accepting the declared version" (ALV as per rule 8(3) excluding rent of furniture and fixtures. However, before taking into consideration other aspects we would like to take into consideration the basic argument that declared ALV is in accordance with the wealth tax law as paragraphs 3(a) 3(c) and 3(d) of the C.B.R's Circular No, 14(7)/IT6/WT/79, dated 21-8-1979 has been deleted by the Board through another Circular No, 5 of 1994, dated 29-6-1994. We are in agreement with the finding of the IAC in this context as the argument of the A.R. Is not legally acceptable for having no basis, deletion of the paragraphs 3(a)(3)(c) and 3(d) of the Board's Circular No, 14(7), dated 21-8-1979 does not benefit the assessee in any manner. In fact certain amendments to favour the assessee were made vide above referred Circular No, 14(7), dated 21-8-1979 regarding valuation of furniture and fixture to the effect that while working GARV of property if the owner is charging separate rent for furnishing, a deduction up to 25% of total gross rental of the house and its fixtures plus rent of furniture and fixture would be permissible and balance would be liable to be capitalized for 10 years to determine the value of the property. However, before further discussion we would prefer to refer the extract from C.B.R.'s Circular letter C. No, 14(7)/IT-6/WT/79, dated August 21, 1979:-- "The value of houses which are let out shall be normally determined by capitalizing the gross annual rental value for ten years. Fixtures like fans, heaters, geysers, water pumps and cooking ranges etc. Shall be considered as part of the house and any rent house. If the owner is charging separate rent for furnishing such as carpets, furniture, allocable separately to such fixtures shall be taken as a part of the gross annual rent of the curtains, etc., a deduction up to 25% of total gross rental/gross rent of the house and its fixtures plus rent of furnishings shall be allowed and balance rent shall be capitalized for ten years to determine the value of the property".
11. After withdrawal of the benefit above, the situation will be reverted and total GARV of both the rent of the premises as well as rent for furniture and fixtures will be taken into consideration meaning thereby that both rent of premises as well as rent of furniture and fixtures should be taken into consideration for valuing the immovable properties under rule 8(3) of Wealth Tax Act, 1963 on the basis of GARV.
12. The Sindh Rented Premises Ordinance defines the term "building" vide section 2(a) as under:-- "Buildings" means any building or part thereof together with all fittings and fixtures therein if any.
' The word "building" as defined above connotes any building or part thereof together all fittings and fixtures if any".
13. In addition to this, West Pakistan Urban Rent Restriction Ordinance (now repealed) defines "building" vide section 2(a) the same is reproduced hereunder:-- "2(a) "Building" means any building or part of a building let for any purpose, whether being actually used for that purpose or not, including any land godowns, outhouses, together with furniture let therewith..............
14. In the circumstances, we are of the opinion that all the enactments which have been referred above, give the expression "building" of specific connotation and visualizes whole of the building let out for any purpose and include fitting and fixtures let therewith or have been separately through independent agreement, therefore, while working the total GARY of the property the rent of furniture and fixture should be taken into consideration for determining the correct GARV.
15. It is worth mentioning that the assessee declared monthly rent of the property and furniture & fixture at Rs,28,520 and Rs,12,680 respectively whereas the ratio of the value of the two will show that rate of furniture and fixture is on very higher side as compared to the house whereas there is big difference between the price of the house and furniture and fixture.
16. The next argument that proviso to Rule 8(3) of the Ordinance is not followed, has also no basis as prior approval of the IAC would be required where the gross annual rental value is estimated at a sum higher than the rent paid or payable by the tenant, whereas in the present case, there is no enhancement in the rent paid or payable and the rent declared by the assessee has been duly accepted for the purpose of determination of GARY and the matter has been re-opened invoking section 17-B because of wrong computation of GARY and not due to low rent declared, hence the appeal in this regard also finds no merit.
17. Accordingly the appeal stands dismissed.
Appeals dismissed.
2004 PTD 2870 [Federal Tax Ombudsman] Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman Messrs CRESCENT TECHNOLOGIES (PVT.)
LTD., LAHORE versus SCRETARY, REVENUE DIVISION, ISLAMABAD Complaint No, 1019-L of 2003, decided on 23rd April, 2004.
(a) Income Tax Ordinance (XXXI of 1979)--- ----Ss. 59(1)'& 61---Income Tax Ordinance (XLIX of 2001), S. 61(2)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---C.B.R. Circular No, 7 of 2002, dated 15-6-2002 [Self Assessm ent Scheme] Para. 8(b)(c) & 9(b)---Self-assessment---Assessment year 2002-2003---Donation was claimed as direct deduction from income---Exclusion of return from Self-Assessm ent Scheme by way of issuance of a letter indicating that Complainant/assessee had claimed donation as direct deduction from income while the Complainant/ assessee was not entitled to direct deduction but to rebate only--Validity---Letter did not indicate that it was issued under Para. 8(b) of the Self-Assessme nt Scheme rather it gave the impression that it was issued under S.61(2) of the Income Tax Ordinance, 2001---Letter did not call for any documents but informed the Complainant/assessee that its return was excluded from Self-Assessment Scheme and that the Complainant/assessee should furnish its objection, if any---If the Complainant did not make up the deficiency of short documents within 1-5 days the Taxation Officer was required to exclude tbe return from Self-Assessment Scheme within 15 days from the date of expiry of the time required to be given under Para. 8(b) of the Self-Assessment Scheme and in any case not later than 15 days after expiry of the time period given under Para. 8(b) of the Self-Assessment Scheme but letter isued did not indicate that it was issued within mandatory time period of 15 days as indicated in Para. 8(c) of the Self- Assessm ent Scheme--Validity---Letter indicated gross violation of provisions of paras. 8(b) & 8(c) of Self-Assessm ent Scheme----Under para. 9(b) of the Self-Assessment Scheme the Taxation Officer had the authority to accept the return under Self-Assessment Scheme by making add-back of donations in accordance with the provisions of S. 59(3) of the Income Tax Ordinance, 1979 but instead of taking action under para. 9(b) of the Self-Assessment Scheme the Taxation Officer illegally excluded the return from Self-Assessment Scheme which constituted a serious maladministration---Federation Tax Ombudsman recommended that the Taxation Officer should accept the return of the Complainant but after making addition of inadmissible expenses in respect of donation. [pp. 2881, 2885, 2886] A, C & F
(b) Income Tax Ordinance (XLIX of 2001)--- ----S. 61(2)---Income Tax Ordinance (XXXI of 1979), S. 59(1)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Si 2(3)---Charitable donations---Application of provision of Income Tax Ordinance, 2001 on return filed under Self-Assessment Scheme for the assessm ent year, 2002-2003 issued under S.69 of the Income Tax Ordinance, 1979 was a serious mistake and indicated ignorance of law by the Taxation Officer which was totally illegal. [p. 2883] B
(c) Income Tax Ordinance (XXXI of 1979)--- ----S. 59(1)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3) Self-Assessm ent---Exclusion of return from Self-Assessment Scheme---Deviation from the procedure provided under Self-Assessment Scheme---Burden of proof---Onus to prove that "deviation from the procedure provided under Self-Assessment Scheme for exclusion of return was bona fide and for valid reasons" was on the Department. [p. 2886] D
(d) Income Tax Ordinance (XXXI of 1979)--- ----S. 59(1)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---Self-Assessm ent---Exclusion of return from Self-Assessment Scheme was an independent action not relating to assessm ent against which no appeal was provided. [p. 2886] E Younas Khalid for the Complainant.
Muhammad Jamil Bhatti, D-CIT for the Revenue.
FINDINGS/DECISION ' The complainant is a Private Ltd. Company earning its income from development of Computer Software. For the Assessm ent year, 2002-2003, the complainant filed its return under Self- Assessm ent Scheme declaring income at Rs,11,044. The complainant received a letter, dated 15-1- 2003 from the DCIT Circle 02 Companies Zone-II Lahore indicating that the complainant has claimed donation of Rs,80,621 as direct deduction from the income although under section 61(2) of I.T. Ordinance, 2001 the complainant is not entitled to direct deduction but to rebate only. This letter further indicated that because of the above discrepancy the return of the complainant fell outside Self-Assessm ent Scheme and that the complainant should furnish its objection if any by 23-1-2003.
The complainant furnished its reply vide letter, dated 23-1-2003 indicating that the objection raised was not correct but the explanation furnished by the complainant was ignored by the DCIT and he proceeded to complete the assessme nt under normal law by issuing notice under section 61 of the repealed Ordinance, dated 7-6-2003 for 16-6-2003. The complainant attended the office of DCIT and came to know that an order excluding the return of the complainant from Self-Assessment Scheme had already been passed by the. DCIT under para. 8(c) of the Self-Assessment Scheme for assessm ent year, 2002-2003. The complainant alleges that this was in violation of provisions contained in paras. 8(b), (c) and 9(b) of Self-Assessment Scheme. This has caused grievance to the complainant.
2. In reply the RCIT Eastern Region Lahore has submitted that in this case the only controversy between the Income Tax Department and the complainant revolves round the question whether donations paid by the complainant rank for direct deduction as profit and loss expense or only rebate can be allowed on donations. But this controversy, by no stretch of imagination, can be called as maladministration hence this complaint, keeping in view the provisions of section 9(2)(b) of the Establishment of the office of the Federal Tax Ombudsman Ordinance, 2000 falls outside the jurisdiction of the Federal Tax Ombudsman. The RCIT has submitted that this was not a case of short documents as the complainant has tried to show it but it was a case of wrong determination of income. According to the RCIT the Complainant did not attach any evidence along with the return indicating that donations were made to the approved institution nor any evidence was provided in compliance of notice issued by the Taxation Officer, rather it was admitted that the donations were given for the business purposes and not for charitable purposes. Finally it was submitted by the RCIT that the exclusion of return from the Self-Assessment Scheme was in accordance with the provision of Self-Assessment Scheme.
3. Mr. Younas Khalid, Advocate attended for the complainant. He has reiterated the contentions made in the complaint and has pleaded that the return filed by the complainant under Self- Assessm ent Scheme could be disqualified only according to the provisions of Self-Assessment Scheme. It was explained by the AR that the Complainant was not required to attach proof were donations along with the return but even if any of the documents were not attached with the return, the Taxation Officer should have issued a notice under para. 8(b) of the Self-Assessment Scheme but Taxation Officer instead of issuing a notice under Para. 8(b) of Self-Assessment Scheme issued a notice under section 61(2) of the Ordinance, 2001 which was in fact not a notice but intimation to the complainant that its return has been excluded from Self-Assessment Scheme and that the complainant should furnish its objections by 23-1-2003. The AR submitted that under para. 8(b) of Self-Assessm ent Scheme a time of 15 days is to be given to the complainant for compliance. Again the Taxation Officer made an undated order under para. 8(c) of the Self- Assessm ent Scheme, which was in violation of para. 8(c) of Self-Assessment Scheme. The AR has further submitted that in case of inadmissible expenses the Taxation Officer should have made adjustment under para. 9(b) of Self-Assessment Scheme but the return could not be excluded from Self-Assessm ent Scheme. Finally it was submitted by the AR that it was not a case of difference in interpretation of provisions of Self-Assessment Scheme as submitted by the RCIT but exclusion of return of the complainant from Self-Assessment Scheme in violation of provisions of para. 8(b)(c) of Self-Assessm ent Scheme, which is illegal and constitutes maladministration.
4. Mr. Muhammad Jamil Bhatti, DCIT attended for the Revenue and defended his action of exclusion of return from Self-Assessm ent Scheme by reiterating the contentions made in the report of RCIT Eastern Region Lahore.
5. The complaint and Respondent's reply have been examined and arguments of the two sides have been considered. There is no dispute regarding the Act that this return qualified for Self- Assessm ent except that the complainant claimed Rs,80,626 as a donation in profit and loss account as direct deduction and did not attach any evidence that this donation was paid to the approved institutions. The Taxation Officer was required by the provisions of Self-Assessment Scheme to call for the documents not attached with the return under para. 8(b) of the Self- Assessm ent Scheme giving the complainant a time period of fifteen clear days for compliance but the Taxation Officer instead of issuing a notice under para 8(b) issued a letter, dated 16-1-2003 for compliance by '23-1-2003. This letter which is reproduced as under can by no,stretch of imagination be considered as a notice under para. 8(b) of Self-Assessment Scheme rather it gives an impression that this letter was issued under section 61(2) of I.T. Ordinance, 2001.
"No, 1177293 Office of the Taxation Officer of Income Tax Circle-02, Companies Zone-II, Lahore.
' SUB: FILING OF RETURN OF TOTAL INCOME ASSESSMENT YEAR, 2002-2003 ' Please refer to the subject cited above.
' You have filed return of total income to declare total income at Rs,11,044. Persual of profit and loss account has been revealed that during the year under consideration you have claimed a deduction of Rs,80,626 under the head "Chairty and Donation" as per Note No,12 to the accounts. No evidence in this regard has been enclosed with the return wherefrom it could be ascertained whether the said donations have been made to approved institutions or otherwise. Even if it is considered that the said donations have been made to approved charitable institutions, yet the expense is not admissible as a direct deduction and only rebate in tax was admissible as elaborated under subsection (2) of section 61 of the Income Tax Ordinance, 2001.
' This discrepancy has made your return of total income outside the purview of Self-Assessment Scheme. Therefore, the undersigned intends to proceed under normal law. If you have any objection, please convey the same in black and white by 23-1-2003.
(Muhammad Jamil Bhatti)
Taxation Officer of Income Tax Circle-02 Companies Zone-II, Lahore".
The issuance of above letter was a serious mistake and indicated ignorance of law by the Taxation Officer because Self-Assessm ent Scheme for assessment year, 2002-2003 was issued under section 59 of repealed Ordinance, 1979. Application of provisions of I.T. Ordinance, 2001 to the facts of this case was totally illegal. The Complainant was required to attach evidence of donations as provided under para. 4 of Self-Assessment Scheme but it did not do so. After issuing letter, dated 16-1-2003 the Taxation Officer issued an undated letter under para. 8(c) of the Scheme which is again in violation of provision of Para. 8(c) of the Self-Assessment Scheme. This letter is reproduced as under:-- "Order under para. 8(c) of SAS of 2002-2003 ' The assessee is a private limited company, derives income from developing and sale of software.
This income-tax return for the assessment year, 2002-2003 was filed claiming that the said return is to be processed under Self-Assessment Scheme. The assessee company has claimed expenses under the head, donation/charity amounting to Rs,80,626. Perusal of enclosures revealed that no evidence regarding this expense has been attached with the return. The assessee company has been provided an opportunity showing that the expense under the head donation/charity was incurred with reference to approved charitable institutions."
' On 23-1-2003, Mr. Muhammad Younis Khalid, AR of the assessee company filed reply vide his letter No, 4 of 2002-03/01, dated 23-1-2003 in which he claimed:--
(1) That the evidence in respect of deduction under the head donation/charity at Rs, 80,626 was not required to be enclosed with the Income Tax Return for the assessment year, 2002-2003.
(2) The AR repeatedly stressed that the expense was incurred for the purpose of business of the company.
' The contention of the AR of the assessee company is not tenable in the eye of law as he is misinterpreting the provision of Self-Assessment Scheme for the assessment year, 2002-2003.
' As on para. 4 of the Self-Assessm ent Scheme for the assessment year 2002-2003, the evidence of donation/charity should be attached with the return of income. The said para. Is reproduced as under:-- "Evidence of payments made on account of donations, or contributions to any approved institutions or funds and rebates and tax credits as admissible under the Ordinance, shall be attached with .The return of income."
' The contention of the AR of the assessee company that this expense has been incurred for the purpose of business of the company is not understandable. The expense under the head donation/charity is for the purpose of public affairs etc. As evident from its nomenclature.
' It is established that the donation/charity amounting to Rs,80,626 claimed by the assessee company is not made to approved charitable institutions, therefore, the assessee company is not providing evidence of such expense. This is violation to Para.4 of Self-Assessment Scheme for the assessm ent year, 2000-2003. Therefore, the case of the assessee company is excluded from the Self-Assessm ent Scheme and will be processed under normal law.
(Muhammad Jamil Bhatti)
Taxation Officer of Income Tax, Circle-02 Companies Zone-II, Lahore".
6. From the above facts it is quite obvious that Taxation Officer although excluded the return of the Complainant from Self-Assessm ent Scheme under para. 8(c) of the Scheme but the provisions of paras. 8(b) and 8(c) were not followed by the Taxation Officer. These provisions of para. 8 are reproduced as under:-- PROCESSING OF RETURNS FILED UNDER THE SCHEME
(a) The Assessing Officer, will make initial scrutiny of the returns with respect to the provisions of Scheme to determine the acceptability thereof.
(b) In case of non-filing of documents as required by this Scheme, a notice shall be issued to the person indicating the deficiency to be made up within 15 days of the receipt of such notice.
(c) In cases of non-compliance within the time so allowed, the DCIT shall exclude the case from the SAS by passing a speaking order immediately but not later than fifteen days from the expiry of prescribed time.
' From the above provision of the scheme it is quite obvious that if the complainant had not attached any document along with the return required under Self-Assessment Scheme a notice under para. 8(b) was to be issued. This para. Indicates that a time period of 15 days is required to be given for compliance but in this case Taxation Officer issued only letter, dated 16-1-2003 for compliance by 23-1-2003 and did not indicate that it was issued under para. 8(b) rather it gave the impression that it was issued under section 61 (2) of I.T. Ordinance, 2001. Secondly this letter did not call for any documents but informed the complainant that its return was excluded from Self- Assessm ent Scheme and that the complainant should furnish its objection if any. However if the complainant did not make up the deficiency of short documents within 15 days then the Taxation Officer was required to exclude the return from Self-Assessment Scheme within 15 days from the date of expiry of the time required to be given under para. 8(b) of the Self-Assessment Scheme and in any case not later than after expiry of 15 days of the time period given under para. 8(b) of Self-Assessm ent Scheme but in this case letter under para. 8(c) of the scheme issued by Taxation Officer does not indicate that it was issued within mandatory time period of 15 days as indicated in para. 8(c). The letter dated 16-1-2003 and undated letter under para. 8(c) indicate gross violation of provision of paras. 8(b) and 8(c) of Self-Assessment Scheme. Under para. 9(b) of Self- Assessm ent Scheme the Taxation Officer had the authority to accept the return under Self- Assessm ent Scheme by the making add-back of donations in accordance with the provisions of section 59(3) of repealed Ordinance but instead of taking action under para. 9(b) the Taxation Officer illegally excluded the return from Self-Assessment Scheme which constitutes a serious maladministration.
7. The RCIT has raised a preliminary objection that the issue involved in this complaint relates to interpretation of provisions of section 61(2) of I.T. Ordinance, 2001 and that this complaint does not fall in the jurisdiction of the Federal Tax Ombudsman. The learned RCIT in order to protect the illegal action of the Taxation Officer has totally ignored the provisions of law. The return of the complainant was excluded from Self-Assessment Scheme illegally and arbitrarily. The Revenue Authorities have failed to prove that deviation from the procedure provided under Self-Assessment Scheme for exclusion of return was bona fide and for valid reasons. The onus to prove this fact lays on the respondent which has not been discharged. Furthermore the exclusion of return from the Self-Assessm ent Scheme is an independent action not relating to assessment against which no appeal is provided. The objection to jurisdiction is overruled. Maladministration is proved. The entire action and proceeding constitute maladministration within the provisions of section 2(3)(i)(a)(b) of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000.
8. It is therefore recommended that:---
(i) The Taxation Officer accepts the return of the complainant but after making addition of inadmissible expenses in respect of donations.
(ii) Compliance report be submitted within 40 days of receipt of these recommendations by the Revenue Division.