DECISION /FINDINGS ' The Complainant, a partner of defunct registered firm; ("Messer Muhammad Altaf, Azam Cloth Market ,Lahore) is aggrieved by nonpayment of refund and accuses the A-CIT, Circle 5 Zone A Lahore for delaying its issuance.
2. The complaint was received on 12-6-2002 and report was called from the Secretary, Revenue Division, who, vide letter, dated 29-7-2002, requested for extension of time for one month as the relevant record was not traceable as per CIT's report, dated 17-7-2002. This was allowed. In the meantime 'interim report' dated 17-8-2002 from R-CIT, Lahore was forwarded by the Secretary, Revenue Division on 20-8-2002 intimating that a Committee has been formed to dig out the lost record. This was followed by another request on 13-9-2002 seeking further extension of time. This was allowed and the case finally came up for hearing on 12-11-2002.
3. The facts, briefly stated, are that the Complainant's case was set apart for detailed scrutiny for the Assessm ent year 1981-82. Assessm ent was framed on 21-4-1982 under section 62 of Income Tax Ordinance, 1979 (hereinafter called repealed Ordinance) estimating Sales at Rs,12,500,000 to which GP was applied at 4%, thus determining Income at Rs,465,000 (declared Rs,49800). This resulted in an aggregated Supper tax and Surcharge demand of Rs,133,375. The Complainant went in appeal upto the Income Tax Tribunal who set- aside the assessment on 21-10-1990. However, during the pendency of appeal before the Tribunal, the Assessing Officer imposed penalty on 25-4-1984 at Rs,182,270 under section 111 for concealment of income. Complainant's' appeal against the penalty order was dismissed by the CIT(Appeal) but on further challenge the ITAT set aside the, penalty order on 1-12-1974. The two set aside orders ought to have been taken up for fresh determination "within one year from the end of the financial year in which these orders were received". The Assessing Officer failed to appreciate this legal subtlety and action now initiated as said to be hit by limitation as per section 66(1)(c) of the repealed Ordinance.
' During the pendency of appeal before the Appellate Tribunal following payments on account of tax demand were made by the Firm and its Partners. {{ TABLE }} Paid by the Firm = Rs,255,160 Paid by the partner Muhammad Ishaq 49,938 Paid by Mr. Muhammad Altaf = 19,981 Paid by Mr. Muhammad Afzal = 6,037 Total = Rs,331,113 {{TABLE}} NB:--Detail of the .Payments and photostat copies of the Treasury Challan showing payment of tax have been furnished.
' Being aware of the fact that the Department could not reframe assessment for the year 1981-82, due to obstacle placed by the time limitation, the Complainant approached the ITO, Circle' 05, Zone A, Lahore and CIT Zone A for refund of the abovementioned amounts but having failed has approached this Secretariat for redressal of his grievance.
5. The Counsel for the Complainant vehemently contended that since the Department failed to make re-assessm ent within one year of the setting aside of the order by the ITAT, any assessment made now will be illegal and the excuses by the respondent as respects issuance of refund as a mala fide cover-up of their own failing.
6. Mr. S.M. Ali, 'D-CIT, appearing for the respondent conceded outright, that despite best efforts records could not be traced out. He was, therefore, unable to advance arguments or lead evidence to rebut the Complainant's claim for refund. He, however, repeated the words of the R-CIT, as per comments, dated 27 2002, that "order of the learned ITAT was not received earlier and the question of creating refund does not arise as the assessment was not made. The set aside assessment will be finalized in accordance with law and facts in the shortest possible time".
7. For quick appreciation of law and the arguments developed on it, the relevant provision of the repealed Ordinance is reproduced here:-- "Section 66(1) Notwithstanding anything contained in section 64 and subsection (3) of section 65, where in consequence of, or to give effect to, any findingor decision contained in an order . Made under this Chapter or Chapter...Or any order made by any High Court or the Supreme Court of Pakistan in exercise of its 'original or appellate jurisdiction
(a) an assessm ent is to be made on any firm or a partner of any ' firm; or
(b) an assessm ent is to be made on the assessee or any other person; or
(c) an assessm ent has been set aside, in full Or in part, by an order under section 132 or section 135 and no appeal is filed under section 134 against such order or no (appeal filed) under section 136 in respect thereof, as the case may be, such assessm ent may be made at any time within..., and within one year in any case to which clause (c) applies, from the end of the financial year in which such order is received by the Deputy Commissioner.
(here underlined for emphasis)
' It is not without significance that the term "such order is received by the Deputy Commissioner" does not specify the source from which the order is "received". This clearly implies that the order may be received by the D-CIT (i) directly from the Appellate Tribunal, or (ii) through the CIT, or (iii) through the Departmental Representative at the Tribunal, or (iv) it may even be supplied to him by the taxpayer. On this view, letter, dated 19-12-1992 addressed by the Complainant to the D-CIT, Circle 5, assumes great importance because it carried the request to give effect to the ITAT's order for the assessm ent year 1981-82 and a copy thereof was supplied. Even if the ITAT order had not been received by the D-CIT through normal channel, on receipt of Complainant's letter of 20-12- 1992, he should have attempted to find out the Tate of appeal at the hands of the Tribunal and should have endeavored to obtain a copy of the appellate order through 'normal or usual channel' followed by the Department. No such effort appears to have been made though undoubtedly on 20-2-1992 when the Complainant approached him, the D-CIT had come to have full knowledge of the contents of the appellate order. Counting from this date, the set, a side order became barred by time on 30-6-1993 entailing the necessary and unavoidable consequence that the Return of Income (as filed) came to be accepted under section 59 of the repealed Ordinance by operation of law, which carried the implication that any amount of tax paid, which exceeded the liability admitted under section 54; became refundable to the complainant. The respondent's plea that fresh "assessm ent will be finalized in accordance with law and facts in the shortest possible time" quite apparently not A possible in law except that an IT-30 is to be prepared showing refund for posting in the relevant record. Since this is being denied, maladministration' is manifest in multidimensional ways viz:
(a) neglect in allowing the assessme nt to get time-barred,
(b) inattention to the Complainant's correspondence with regard to the payment of refund as evidenced by letters, dated 2-4-1989, 20-12-1992, 31-3-2000 and 30-1-2002 addressed to the TRO, ITO and the CIT respectively, and
(c) the loss of record some part of which are classified 'permanent' are all acts betraying inefficiency which fall under the definition o `maladministration' as defined in the FTO Ordinance.
8. It may be worthwhile to refer to section 126 of the Income Tax Ordinance, 2001 relating to Evidence of Assessm ent, subsection (1) whereof declares an assessment order as "conclusive evidence" as respects 'amount' and 'particulars' mentioned therein. Therefore, if the Department is not able to trace out the record, there seems no way but to accept the assessment record presented by the Complainant, as a basis to take further action to carry the matter its logical and legal end.
9. It is, therefore, recommended that:--
(i) Complainant's tax liability be worked out on the basis of Income declared to Rs,49,800 in the Return and refund determined and B paid promptly.
(ii) Tax liability of Partners on the basis of their Returns be worked out to determine final liability/refund.
(iii) Additional payment for delayed refund be also worked out in the case of the Complainant and its Partners, and disbursed forthwith.
10. Compliance report be submitted within the 30 days of the receipt of this order.