The complainant is an AOP driving income from media marketing, production and selling air time on T.V. Channels. The complainant purchase air time from PTV. T.V. Dramas and programmes from third parties and also procure commercials which are shown during the air time purchased from PTV. The complainant filed tax return under the Self-Assessment Scheme declaring income at Rs.18,13,200. Lt has been alleged that the assessment was completed under section 59 of the Income Tax Ordinance by assessm ent order, dated 30th June, 2003. The return was accepted under the Self-Assessm ent Scheme a refund of Rs.11,02,720 was created and IT -30A was issued.
Thereafter a notice, dated 4-1-2003 was issued under para.9 for total audit. On complainant's reply, dated 15-1-2003, the action was dropped and the return was not selected for total audit. On 28-8- 2003 the complainant filed an application, dated 19-8-2003 for refund amounting to Rs.11,02,720. As no reply was received reminders were issued on 3-12-2003, 10-12-2003, 23-12-2003 and several visits were paid without any result. As no action was taken by the Department nor any reply was given to the complainant, the complaint was filed on 15-1-2004 claiming refund along with compensation under section 102 of the Income Tax Ordinance, 2001.
2. Notice was issued to the Department on 11-2- 2004 which submitted its reply on 3-3-2004. The case being from Lahore jurisdiction it was transferred to Lahore, Regional Office and file delivered there on, 5-3-2004.
3. The department in its reply admitted that the refund amounting to Rs.11,02,720 was determined for the assessm ent year, 2002-03 on 30th June, 2003 vide DCR No. 742/C. Lt was submitted that the complainant drives income by telecasting dramas on PTV channel through purchase of air time under contract. The Assessing Officer while passing the assessment order did not consider that Prima facie the receipts were contractual in nature and fell within the presumptive tax regime which were liable to be taxed under Income Tax Ordinance. Under law the complainant was required to file statement under section 143B of the Income Tax Ordinance, 1.979. As deduction of tax under section 50(4) was in full and final discharge of liability, therefore, the complainant was not entitled for any refund, In view of this fact remedial action under section 122 of the Income Tax Ordinance, 2001 has been initiated against the complainant. Notice under section 122, dated 17- 9- 2003 was issued and served upon the assessee. Although it was pleaded that copy of the notice was enclosed it was not submitted with the reply and was obtained during hearing, lt was further stated that from record the assessee has not claimed air time charges expenses in the account and corresponding tax deductions claimed by the assessee do not relate to it.
4. The learned counsel for the complainant contended that no notice under section 122 was served upon the complainant and that the action was initiated mala fide with the object to block the claim of refund. As the complainant has denied service of notice ,the representative for the department was asked to produce evidence of service. The notice under section 122 was available in the file which bears a signature which has been denied by the complainant. Scrutiny of this notice shows that it does not bear the signature of the process server nor any report or evidence of service is available on record. The learned representative was asked to show whether in the diary sheet/order sheet or anywhere in .The file there is any order or noting for issuing the notice or anything was recorded about the issuance and service of notice under section 122, After examining the file he stated that no such entry is available in the record. The learned counsel for the complainant submitted that after the complaint had been filed his associate Mr. Shahzad Qadir ITP visited the Income Tax Office in February, 2004, in connection with another matter when a copy of notice under section 122 was delivered to him without obtaining his signature. From the above facts it is clear that the notice under section 122 was planted after the complaint had been filed and notice had been issued to the Department in order to create a defence. This notice was issued with mala fide intention, with the object to defend their action and default in not making the refund in spite of several reminders. The entire exercise is merely a ruse and a smoke screen for justifying default in performance of duties and delay in making the refund.
Besides this a perusal of the notice, under section 122 produced during hearing it is noticeable that although the complainant has been asked to produce records and documents enumerated therein but no date for complying the direction has been given. Furthermore, if it was a genuine notice issued on 17-9-2003 as alleged the question arises why no action was taken and the file remained dormant. All these facts justify the presumption that the action was mala fide and maladministration has been committed by the officer concerned.
5. So far the question of treating the case under ,the presumptive tax regime is concerned without entering into the merits of this aspect the leamed counsel for the complainant has produced an assessm ent order in respect of its sister concern Tele World Marketing, Karachi for assessment year, 2000-01. This company carries on the same business as the complainant and has been assessed by the Taxation Officer, Audit Division, Large Taxation Unit, Karachi. The company has been assessed under section 62 of the Income Tax Ordinance, lt is an exhaustive order running in 24 pages and this assessm ent has been completed under section 62. It is rather enigmatic that the same Department at Lahore may take a different view of the same facts.
6. The clear fact emerges is that application for refund was made on 28-8-2003 followed by reminders, dated 3-12-2003, 10-12-2003 and 23-12-2003 but none were replied or even acknowledged Several personal Visits remained unproductive. If the Department had issued a, notice under section 122, dated 17-9-2003 they should have in reply to so many letters could have informed the complainant that notice under section 122 had been issued. This was not done. Even the date of notice under section 122 shows that it was issued (though not accepted) after the complainant had made an application for refund on 28-8-2003. In the circumstances particularly considering the law applicable the Department could not withhold the refund already created. The mala fide action of the Department in withholding the refund and refusel to replay several letters establishes maladministration, ln these circumstances it is recommended:--
(i) Refund created under I.T. Rs.11,02.720 be paid to the complainant.'
(ii) Compensation/additional payment for delayed refund be paid to the complainant according to law.
(iii) The Director-General (Inquiries) to hold an inquiry personally or through an independent officer in respect of alleged issuance of notice under section 122 and recommended appropriate action in the matter.
(iv) Compliance with regard" (i) and (ii) be submitted within 30 days and as regards (iii) within 45 days.