FINDING /DECISION ' JUSTICE (RETD.) MUNIR A. SHEIKH (FEDERAL TAX OMBUDSMAN).---This decision shall dispose of C.Nos.62-L, 326-L, 327-L, 489-L, 405-L, 551 and 527 of 2005 involving common questions of law and facts.
2. The complainants filed returns for the assessment year 2003 under Self Assessment Scheme. The C.B.R. Issued Circular No.1 of 2004 conferring right on the assessee to opt for the said scheme in that if the assessee is ready to pay 20% higher tax as compared to the tax payable on his original return, he shall be immune from under section 177 of the Income Tax Ordinance, 2001. On the other hand, the C.B.R. Had also issued guidelines to the officers dealing with the matters under section 177 of the Ordinance to follow them while deciding the cases under the said section. Different High Courts of the Provinces declared the said Circular ultra vires of the Act and held that C.B.R. Was not vested with the power to control the exercise of power by the concerned officer under section 177 ibid who was directed to proceed in accordance with law under the said section and pass fresh order. These judgments were challenged before the. Supreme Court of Pakistan and the matter was kept pending here to await the decision of the Supreme Court. The decision of the Supreme Court has been placed on record which shows that the parties in those cases came to a settlement and order was passed accordingly, therefore, learned counsel for the complainants has rightly argued that the said agreement or settlement is not binding on any person other than those who were parties to the cases in which the said settlement took place.
3. Even otherwise, learned counsel's contention was that the C.B.R's. Guidelines could not be issued for decision under section 177 and the concerned officer is fully empowered to pass order after applying his own independent mind according to the facts of the case under the said provision of law, therefore, even if judgment of the Supreme Court based on settlement is not binding on the complainants but the complainants' contention in these cases is the same which was accepted by the Supreme Court on the basis of settlement between the parties.
4. The orders passed by the Deputy Commissioner in these cases on the basis of the guidelines issued by the C.B.R. Are therefore, not maintainable as the same suffer from maladministration as such are liable to be struck down.
5. Learned counsel for the complainants submitted that due to these Circulars having been issued side by side, the complainants could not make a decision either to opt for the concession given through Circular No.1/2004 by raising the tax liability to 20% over and above the already declared tax liability and paid along with the returns due to which discrimination has taken place, for those persons who had opted for the same had been given benefit whereas due to pendency of these cases and confusion about the legality or validity of the C.B.R's. Guidelines, the complainants could not make a decision at the relevant time.
6. I have gone through Circular No. 1/2004 and find that there is no time limitation prescribed therein to opt for the benefit there under. The contention of the DR who has appeared on behalf of the Revenue Division that the said choice could have been made only during the assessment year of the returns and not thereafter is not maintainable
7. The complainants in these cases should be given a choice or right either to opt for the benefit of the said Circular and file revised returns for the said year.
8. For the foregoing reasons, these complaints are hereby accepted and the following recommendations are made:--
(a) That the C.B.R. Shall direct the competent authority to annul the order of Taxation Officer passed in these cases;
(b) Allow time up to 30th June, 2006 to the complainants either to opt for the benefit of Circular No.1 of 2004 and file revised returns for the concerned year along with deposit of the amount of tax on which the same shall be accepted;
(c) In case all or any of the complainants do not opt for the said benefit upto 30th June, 2006, their cases may be proceeded under section 177 of the Ordinance by the officer concerned by initiating fresh proceedings in his discretion if he so likes.