FINDINGS /DECISION This complaint has been filed to allege highhanded and inimical attitude of the Assessing Officer (Ms. Naureen Yaqoob) for issuing notices under sections 61/62 initiating re-assessment for the year 2000-2001 ignoring that the Appellate Tribunal had at an earlier date vacated the section 66A order of the IAC whereby assessme nt' under section 59 was cancelled and direction issued for normal law proceedings.
2. The background of the dispute is that the Complainant-`individual' is a taxpayer since 1948. He has been carrying on the business of manufacture and sale, of medicine. During the course of framing of assessm ents, he came to have the knowledge that the Department has faltered in respect of adjustment of demand/refund on relief by various appellate authorities. He alleges harassm ent, victimization and agony lashed out now for over 20 years. The assessment for the year, 2000-2001 framed under section 59 was revised by the IAC on 29-12-2001 by resort to section 66A of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) whereby he directed the Assessing Officer to reframe the assessment. This order when challenged before the Appellate Tribunal was vacated vide order, dated 28-3-2003. It is alleged that despite this cancellation the Assessing Officer issued notice under sections 61/62 on 12-5-2003 which is the cause of grievance.
3. The Respondent has forwarded para-were comments by RCIT Eastern Region, Lahore which deny "maladministration" and question the competence of the complaint for admission in view of the bar as per subsection (2) of section 9 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance). The R-CIT has explained that the status of the Complainant was Registered Firm till the assessment year 1986-87 and for subsequent assessm ent years Returns were filed as 'individual' and assessments framed under section 59 of the repealed Ordinance. It is further submitted that the IT-30s were revised whenever relief was granted by the Appellate Tribunal or Lahore High Court. The R-CIT concludes by submitting that the Department fixed the case for the assessment year 2000-2001 for the first time after 19-6-2002 because "neither any order from the Appellate Tribunal is received by the office nor provided by the assessee in support of his contention about the cancellation of section 66A order for the year, 2000-2001".
4. The Complainant submits that Return for the year, 2000-2001 was accepted under SAS but the IAC wrongly alleged that the Return did not qualify for acceptance under SAS because, according to him, the declared Income was not higher by 20% of the last declared/assessed income. The IAC, therefore, directed the Assessing Officer to frame regular assessment. However, on appeal the Appellate Tribunal vide order passed on 28-3-2003 held that Return had been rightly accepted under section 59(1). This order by the Appellate Tribunal was served on the Department on 4-4- 2003, still the Assessing Officer had the audacity to initiate reassessment proceedings on 12-5- 2003 by issuing notices under sections 61/62 which is a glaring instance of "maladministration" aimed at harassm ent of the Complainant.
5. Syed Muhammad Ali (DCIT) appearing for the Revenue explained that as per subsection (8) of section 135 of the repealed Ordinance the orders by the Tribunal are communicated to the assessee and to the Commissioner. Therefore, these take time to trickle down to the Assessing Officer after processing as to the possibility of further legal action. This particular order by the App'ellate Tribunal hade not yet reached the Assessing Officer by 12-5-2003, whereas the time limit for completing the reassessm ent, as per order under section 66A, was to run out on 30-6-2003.
Therefore, in the regular course of performance of her duties, the Assessing Officer issued notices under sections 61/62 on 12-5-2003. However, as soon as it came to the knowledge of the Assessing Officer that the Tribunal had vacated the order of the IAC, thus restoring the assessment as framed under section 59(1) on 28-7-2001, no further action was taken. In these circumstances, the DR canvassed, it is not fair to blame the Assessing Officer for being harsh or vindictive.
6. After hearing arguments from both sides, the conclusion is inescapable that due to a long standing dispute for adjustment of tax/refund between the Complainant and the Department an atmosphere of mistrust and misunderstanding emerged. This fact surfaced during several hearings in complaint No.1283-L of 2002, dated 12-9-2003 filed by the present Complainant where repeated hearings were granted in an attempt for reconciliation of demand/payments/withholding etc. To determine the exact quantum of refund and compensation due thereon. As it is, there is need to defuse the Complainant's distrust.
7. The record of the Department was obtained and scrutinized with the help of concerned Taxation Officer. It transpired that the Appellate Tribunal vacated the 66A order on 28-3-2003. Thereafter:--
(i) Copy of the order was authenticated by the Assistant Registrar on..2-4-2003 (ii)Served on CIT, Zone-A on ................. 4-4-2003 (iii)Forwarded by CIT to Circle 26(a wrong Circle) on.... 5 13-5-2003 (iv)Circle 26 passed on to Circle 20 (correct Circle) on........ 18-6-2003 The period from 4-4-2003 to 13-5-2003 (29 days) is attributed to the processing by the Judicial Branch of the CIT's office with a view to examine whether further action by way of reference (etc.) is called for. However, no explanation could be offered for (i) dispatch by the CIT office to Circle 26 whereas the case pertained to Circle 20, and (ii) delay of 36 days by Circle 26 to pass on (by hand) the ITAT order to Circle 20.
8. From the facts stated above, it is obvious that unexplained delay was caused in forwarding the Order of the Income Tax Appellate Tribunal, to the relevant and concerned officer. These delays for which no valid explanation has been offered fall within the definition of maladministration. Under subsection (3) clauses (ii) and (i.e) of section 2, of the FTO Ordinance delay, inattention, neglect incompetence and ineptitude in the administration or discharge of duties and responsibilities amount to "maladministration". In this regard, the objection of the Department that the Federal Tax Ombudsman has no jurisdiction, is misconceived.
According to the Department, the matter relates to the assessment of income and, therefore, the FTO has no jurisdiction. Subsection 2(b) of section 9 cannot be interpreted in a narrow and literal sense. It is pertinent to note that under clause (i.e) of subsection (3) of section 2, repeated notices, unnecessary attendance or prolonged hearing while deciding cases involving assessment of income or wealth, determination of liability of tax 'or duty, classification or evaluation of ,goods, settlement of claims of refund, rebate, duty, draw back or determination of fiscal and tax concession or exemption has been defined as "maladministration". The law itself contemplates that in assessm ent of income or wealth and other categorized acts which suffer from repeated notices, unnecessary attendance or prolonged hearing, fall within the category of "maladministration". Therefore, if the department's interpretation is accepted these provisions not only become completely redundant but lead to absurdity and come in conflict with each other.
Furthermore, for argument sake if department's interpretation is accepted then section 9(2)(b) provides a rider that for the alleged maladministration remedy by way of appeal, review or revision, should be available in the relevant legislation. In the present case, the. Process and procedure adopted in intimating the Order of the relevant Circle for implementation, does not relate to assessm ent of income or wealth nor for such inaction, delay and neglect, any appeal or revision is provided. In these circumstances, the Federal Tax Ombudsman has the jurisdiction to investigate into the allegation of maladministration.
9. It is recommended that:-
(i) The C.B.R./R-CIT evolve a more expeditious method to process Appellate orders for further action and to quickly apprise the tax functionaries of further action to be taken.
(ii) The CITs and Taxation Officers to ensure that communications are handled with care to avoid lapses as identified above.
(i.e) Compliance report be submitted within 30 days of receipt of this order.