FINDINGS /DECISION JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---Brief facts of the case are that the complainant, an A.O.P. Derives income from sale of cloth. Return for the assessment year 2001- 2002 was filed under Self-Assessm ent Scheme declaring net income of Rs,67,600. The case was selected for total audit through random computer ballot. During the pendency of assessment, the complainant revised his return on 27-2-2003 in terms of the agreement dated 31-1-2003 made by the R.C.I.T., Multan and Tax Bar Association, Faisalabad whereby all cases of total audit both BF and current excluding yarn dealers and cases of concealment, assessments were to be completed by enhancing tax by 35% where declared income was upto Rs,200,000. The assessing officer, however initiated the assessm ent proceedings and issued notice under section 61 on 21-5-2003 for by 26-5- 2003 which was served on 25-5-2003. In response to this notice the complainant had stated that he had filed a revised return on 27-2-2003 declaring income at Rs,84,700 and increasing tax @ 35% on the basis of tax payable on declared income in accordance with the terms and conditions of the agreement made by the R.C.I.T., Multan & Tax Bar Association and that the instructions given by the C.I.T. Sargodha on 21-5-2003 at the time of meeting with Tax Bar Association, Gojra on the point of implementation of agreement in letter and spirit were fully applicable in the assessee's case. It was further stated that the doctrine of promissory estoppels was fully applicable in this case. The receipt of notice under section 62 along with notice under section 61 was denied. It was requested that the revised return filed on the basis of the above stated agreement be accepted and assessm ent order issued accordingly. The assessing officer however did not accept the declared income as per revised return dated 27-2-2003 and made ex parte assessment for default of notice under section 61 at an income of Rs,2,098,600 on the basis of Inspector's report dated 3-4-2003. It is contended that notice under section 61 was duly complied with in writing and that no notice under section 62 was served on the complainant. It is further stated that the report of Inspector was concocted in office and the alleged statement of the complainant was never signed by him and the said report was not relevant to the assessment year 2001-2002. The assessment order is contended to be illegal, harsh, arbitrary to victimize the complainant who had earlier made a complaint bearing No,741/03 for issuance of refund in this case for the years 1999-2000 and 2000- 2001. It is prayed that the assessm ent order be vacated and income returned by the complainant as per revised return be ordered to be accepted.
2. The respondent in its reply has defended the ex parte assessment for non-compliance of notices under sections 61 and 62 served upon the complainant from time to time. It is also stated that the return did not qualify to be processed according to the spirit of the agreement made between the R.C.I.T. And Tax Bar Association because the requisite documents were not filed during the course of proceedings and that the concealment of income was established in view of the complainant's admission of stock at Rs,1,914,039 and daily average sales of Rs,40,000 by the Qamar-uz-Zaman, a member of the complainant A.O.P. At the time of Inspector's visit who made stock inventory on the spot. It is further stated that contention of the complainant that the assessment was a reaction of complaint No,471/2003 was incorrect because the said complaint was received after the assessm ent had been completed.
3. Representatives of the both sides were heard and relevant record was examined. The main issue involved is that the assessing officer made the assessment in total disregard of the agreement between that the R.C.I.T., Central Region, Multan and Tax Bar Association executed on 31-1-2003. The contents of the agreement are reproduced below:--- "(1) In all the cases of traders excluding Yarn dealers assessment will be finalized at income by enhancing tax according to following scales where income tax department does not have definite evidence of concealment i,e, un-explained investment, concealment of income and non- disclosure of expenditure. Declared Income Tax Increase
(i) up to Rs.200,000 35% of tax on declared income (ii)Rs.200,000 to RS.400,000 30% of tax on declared income (iii)More than Rs.400,000 25% of tax on declared income
(2) This agreement shall not apply where evidence of acquisition of undisclosed assets, investment and expenditure is available with the department or comes into possession of the department during the course of assessm ent proceedings.
(3) This agreement shall be valid for and upto the assessment year 2002-2003.
(4) This agreement shall in no way absolve the assessee from filing of documents necessary for completion of assessm ent."
The agreement was circulated by the R.C.I.T. Vide his letter dated 1-2-2003 to all Commissioner of the Central Region, Multan in the following manner:--- "Please find enclosed herewith copy of agreement with Income Tax Bar Association, Faisalabad for disposal of pending Total Auditor cases (B.F & Current) for information and necessary action."
4. Mr. Muhammad Arif Khan (D-C.I.T.) appearing for the Revenue on his turn submitted that the arrangement made by the R-C.I.T. With the Tax Bar had no legal sanction because after the selection of the case for Total Audit, the framing of assessment was the responsibility of the assessing officer. Main question for consideration is whether the agreement between the Tax Bar Multan and the R-C.I.T. Is valid and according to law. Close examination of this agreement indicates that it does not have any legal force because assessment is a matter between taxpayer and Taxation Officer. The taxpayers of Multan had not authorized the representative of Tax Bar Association Multan to enter into any such agreement. Similarly the R-C.I.T. Is not an assessing authority. He had also legal authority to enter into such an agreement. The Income Tax assessment is to be completed according to provisions of Income Tax Ordinance 1979 especially section 59, 62 or 63 of the repealed Income Tax Ordinance and not on the basis of a blanket agreement covering all the taxpayers. Thus the document dated 19-3-2003 is neither an agreement nor a contract because the parties involved in the Income Tax assessment have neither signed this agreement nor they had authorized any person to enter into any agreement on their behalf. Secondly this agreement was cancelled by the C.B.R. Vide their letter No,2 (25)A/02 dated 11-3-2003 conveyed to the Commissioner of Income Tax by the R-C.I.T. Central Region Multan vide his letter dated 31-3- 2003.
5. Because of the above reasons the complainant has failed to prove any 'maladministrationon the part of Taxation Officer Circle-04 Multan hence further proceedings in this case are closed.