FINDINGS /DECISION ' Brief facts of the case are that the complainant, an individual, derived income from a general store. For the assessm ent year, 2002-2003 return was filed under Self-Assessment Scheme declaring an income of Rs,294,600. The case was selected for total audit under para. 9(a)(ii) of the SAS 2002-2003 and assessm ent was made under normal law vide order, dated 24-5-2003 at an income of Rs,2,503,750. It is stated among other grounds that the complainant was confronted by the RCIT on account of ownership of immovable property and two telephone connections which were not owned by him about which the complainant had clarified his position before the RCIT and had also rebutted other grounds of proposed selection. The case was, however, selected for total audit and the Assessing Officer who had a biased attitude towards the complainant made arbitrary assessm ent on the basis of a so-called report of the Inspector by estimating the sales at Rs,16,425,000 which are 233% of the sales declared at Rs,49,35,400. It is stated that the estimate of sales was without any justification and based on mere conjecture and included the sale of Rs,55,20,000 on account of toys and crystal decorations with which the complainant had never dealt. It is further stated that a notice under section 62 was issued on 14-6-2003 whereas the assessm ent had been completed on 24-5-2003 which was illegal. It is prayed that the assessment order being arbitrary and biased be vacated and the income declared by the complainant be ordered to be accepted.
2. In reply the respondent has stated that the complaint which related to the matter of assessment did not fall within the jurisdiction of the FTO and also because the complaint was not signed and verified by the complainant in the proper manner. It is further stated that the selection of the case for total audit was made in accordance with the C.B.R.'s guidelines after hearing and considering the averments of the complainant. The assessment is stated to have been made strictly in accordance with the provisions of law after confronting the complainant under section 62 on the basis of spot enquiry of Circle Inspector. As regards notice under section 62 issued on 14-6-2003 i,e, after the assessm ent order, dated 24-5-2003 it is stated that the said notice pertained to the assessm ent year, 2001-2002.
3. Representatives of the both sides were heard and the record produced was examined. The complaint is signed and duly supported by affidavit. The respondent's objection in this regard is fallacious. So far as the question of jurisdiction is concerned, it may be pointed out that when an allegation of maladministration has been made and established, the Federal Tax Ombudsman has jurisdiction to investigate the matter.
4. The complainant had not contested the selection of his case for total audit at the appropriate time and remained associated with the assessment proceedings. The AR of the complainant emphasized that the complainant had been assessed to tax on sales of certain items i,e, toys and crystal decoration pieces which he never sold and the sales estimated under this head at Rs,55,20,000 were based on mere conjecture. The perusal of record showed that the assessment is based on Circle Inspector's enquiry report, dated 28-6-2001 wherein he had estimated the stocks of toys and crystal pieces at Rs,800,000 and had suggested the turnover to be taken at 3 times of the stock which would amount to Rs,24,00,000 but the Assessing Officer adopted the sales of the said items at Rs,55,200,000 i,e, at 6:9 times of the stock without giving any reason. The sales of other items such as cosmetic/perfumes and general store were suggested by the Inspector to be taken at 3 and 5 times of the respective stocks which were estimated at Rs,3,50,000 and Rs,12,00,000. The sales would have accordingly been worked out to Rs,1,050,000 and Rs,60,00,000 instead of the sales adopted for the assessm ent at Rs,26,25,000 and Rs,82,80,000 which form 7.5 and 6.9 times of the stocks for which no reason at all has been given by the Assessing Officer. Total sales have been estimated at Rs,1,64,25,000 against declared at Rs,49,35,000. During the survey for documentation of economy the survey team had assessed the sales at Rs,52,00,000. The estimates adopted for assessm ent at more than thrice of survey team's estimate are arbitrary and baseless. The enquiry report itself is unfounded, as the Inspector has not supported his estimates with any, kind of documentary evidence. The main issue involved however is that the complainant denies to have dealt in any kind of toys and crystal decoration pieces for which he states to have been illegally assessed. Till date the Department has not been able to collect and produce any independent evidence to rebut the complainant's stand taken in the complaint that he did not deal in toys and crystal decorations. The respondent's reply is also silent about this allegation of the complainant and it has simply been stated that the assessment was made on the basis of Inspector's enquiry report. Justice requires that a person should not be assessed on an income, which he has not earned. The assessm ent order is thus arbitrary, perverse, biased and unjust. The decision on merits may not be questioned provided it is not tainted with maladministration. Where the facts, reveal glaring illegality and perversity which shock the conscience of justice the Federal Tax Ombudsman can take cognizance of the matters which suffer from maladministration. It is the process by which decision is reached, mane and implemented which is the main concern of FTO. The entire proceeding as discussed above reveals that the decision is not based on any cogent or reliable and relevant evidence. In fact it is based on no evidence.
5. It is recommended:--
(i) The Commissioner by invoking jurisdiction under section 122A examine the case in the light of the above observations and pass a proper and just order according to law.
(ii) Compliance within 30 days.