FINDINGS /DECISION ' JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX. OMBUDSMAN).---The complainant an individual derives income from business of fertilizer in the name and style of Messrs Karachi Fertilizer Agency, Khipro. The complainant is aggrieved by non-acceptance of his returns of income for the assessm ent years 2000-2001, 2001-2002 and 2002-2003 under Self-Assessment Scheme by the Assistant Commissioner of Income Tax Sanghar. The facts of the case are briefly stated as under.
2. The complainant filed first return of income tax for the assessment year 2000-2001 declaring income of Rs,1,10,000 under the Self-Assessment Scheme. It is stated that tax of Rs,4,400 was paid on the returned income and required documents/statements were also filed with the return. It is alleged that the income tax officer Sanghar finalized the assessment ex parte under section 63 of the repealed Ordinance, 1979 instead of accepting the return under the Self-Assessment Scheme. It is further, alleged that a bald estimate of income was made by the assessing officer without assigning any reason or justification for the estimate. This amounted to maladministration. The complainant has also alleged that for subsequent assessment year i,e, 2002-2003 a heavy tax of Rs,10,500 has been imposed and he has no information regarding the assessment year 2001-2002 so far. It is further, stated that the plea of the respondent that there should be increase of 15 to 20% tax as compared to last tax paid was against the principle of justice which may kindly be redressed. It is stated that interior of Sindh suffered drought and there was hardly any possibility of increase of income by 20% or more.
3. The complainant has further, alleged that the aforesaid harsh assessment made by the assessing officer had deprived him of the benefit of Self-Assessment Scheme. The complainant has prayed for redressal of his grievances relating to the assessment years 2000-2001, 2001-2002 and 2002-2003 in the interest of justice and fair play.
4. The respondent has filed parawise comments raising the preliminary objection therein regarding jurisdiction in terms of section 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. It is reported that the return for the assessment year 2000-2001 was filed by the complainant for the first time declaring income of Rs,1,10,000 under the Self-Assessment Scheme.
The return was selected for total audit through computer random balloting. The complainant was accordingly informed and statutory notices were issued for filing the wealth statement and trading and profit and loss account. The complainant failed to furnish the requisite documents, which resulted in ex parte assessm ent under section 63 of the repealed Ordinance. The Departmental Representative has filed photocopies of the intimation letter dated 12-3-2001 and notices under section 61 dated 9-4-2001, 12-3-2001 and 18-4-2001 in support of the aforesaid observations regarding non-compliance of notices. It is pleaded that the contention of the complainant that the income assessed for the year 2002-2003 was on the higher side as compared to the assessment made for the year 2000-2001 was not correct. The facts and circumstances of assessment differ from year to year. The complainant did not fulfills the prerequisites of qualification for Self- Assessm ent Scheme for the year 2002-2003 as per law. In the first year income was declared at Rs,1,10,000 and for the subsequent years i,e, 2001-2002 and 2002-2003 income of only Rs,50,000 was declared for each year on estimate basis. It is further, reported that the assessment for the year 2001-2002 was still pending and would be completed shortly. The return for the year 2002-2003 fell out of the ambit of Self-Assessm ent Scheme and Income was estimated at Rs,1,80,000 as against Rs,1,66,966 assessed for the previous year and therefore the estimate was not harsh. The respondents have reiterated that the complainant's return for the year 2000-2001 was selected through random balloting and income was assessed after providing proper opportunity to him and therefore the allegation of maladministration was not correct.
5. The case has been examined with the assistance of departmental representative, as the complainant remained absent despite the fact that two opportunities were provided to him to establish his allegations.
6. As regards the assessm ent for the year 2000-2001, the allegations made by the complainant are misconceived and misplaced. The return was selected through random balloting strictly in accordance with the provisions laid down in the C.B.R's. Circular on Self- E Assessment Scheme for the year under consideration. The facts obtaining on record establish that wealth statement which was a prerequisite for availing the benefit of Self-Assessment Scheme in new cases was not filed despite adequate opportunity provided to the complainant by the assessing officer. Notice under section 58(1) was issued on 16-4-2001 for compliance by 30-4-2001 but the complainant failed to file the wealth statement and the assessing officer had therefore no other alternative but to complete the assessm ent ex parte under section 63 of the repealed Ordinance for non- compliance of statutory notices. No maladministration is established as alleged by the complainant regarding assessm ent for the year 2000-2001.
7. The return for the year 2001-2002 was filed on 11-10-2001 declaring income of Rs,50,000. The return did not qualify for Self-Assessment Scheme as per Board's circular on Self-Assessment Scheme. The assessm ent is however reported to be pending.
8. The examination of records produced by the Departmental Representative shows that the return for the assessm ent year 2002-2003 was filed on 29-9-2002 declaring income of Rs,50,000. As per records only one notice under section 61 was issued on 12-11-2002 for compliance in the last week of November, 2002 as the date is not legible due to tampering and interpolation. The relevant order sheet for the year 2002-2003 is absolutely blank. The date fixed for hearing of the case is not ascertainable from the record available with the department. The photo stat copies of demand notice and I.T.-30 show that the assessment was completed under section 62 of the repealed Ordinance on 17-3-2003.
9. The Departmental Representative however, failed to produce the assessment order and conceded that no separate order under section 62 was passed by the assessing officer. The assessm ent was made only on I.T.-30 on an income of Rs,1,80,000 against declared income of Rs,50,000. It is established that assessing officer made the assessment for the year 2002-2003 in very irresponsible manner without observing the legal requirements i,e, issuance and service of statutory notices and passing a legal and proper order. This is apparently a case of maladministration so far as the assessment for the year 2002-2003 is concerned.
10. In the presence of aforesaid gross irregularities the objection regarding jurisdiction in terms of section 9(2)(b) of the Federal Tax Ombudsman Ordinance, 2000 is absolutely misconceived.
Furthermore, the complainant has been deprived of his right of appeal before the Commissioner (Appeals) as no order under section 62 was passed as provided in section 129 of the repealed Income Tax Ordinance 1979. The objection regarding jurisdiction is therefore, overruled.
11. In view of the facts stated above it is recommended as under:--
(i) The Zonal Commissioner of Income Tax to cancel the tax demand created on I.T.-30 for the year 2002-2003 under section 122-A of the Income Tax Ordinance 2001 and direct the taxation officer to pass a proper assessm ent order after service of statutory notices and enquiries regarding the extent of business. The assessm ent pending for the year 2001-2002 be also completed in accordance with law.
(ii) The compliance be made within 30 days of the receipts of this order and reported within a week thereafter.