' ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN. -- This complaint is regarding alleged illegalities committed by the Dept while conducting raid under Section 175 of the Income Tax Ordinance, 2001 (the Ordinance) on business premises of Pak Railway Club near KFC, Multan. The complainant derives income from event catering and services.
2. The complaint was sent for comments to Secretary, Revenue Division, in terms of Section 10(4) of the Federal Tax Ombudsman Ordinance, 2000 (the FTO' Ordinance). In response, the FRB submitted its comments vide letter dated 25.6.2015.
3. According to the A.R., the seizure of record after raid was patently illegal as business done at Pakistan Railway Club belonged to Mr. Amir Sharif Rajput, jurisdiction over whose case vested with RTO at Karachi with business address at 95-H, Block 2, PECHS, Karachi (NTN 0520338-4 and CNIC 42201-8550642-7). It was also contended that raid was conducted by unknown persons on 24.4.2015 and provisions of Section 175(4) of the Ordinance to provide inventory were not complied with. Raid carried out was without jurisdiction together with entering and searching premises without pendency of inquiry and impounding of record was violation of Circular No, (4)WM/86, dated 20.3.1988. All these acts, according to the complainant, amounted to mal-administration cognizable under Section 2(3) of the FTO Ordinance.
4. D.R., on the other hand, refuted all the allegations and claimed that raid and proceedings in pursuance thereof were carried out according to law. The authorities conducting raid had jurisdiction over the case and were authorized to this effect and they did nothing unlawful in the matter of seizure of records, computers etc. The complainant was declaring receipts with doubtful fluctuations without apparent reasons. The D.R. Claimed that records seized showed much higher receipts and show-cause notice (SCN) was issued vide No, 869, dated 28.5.2015 under Sections 161/205 of Ordinance. It was prima facie a case of substantial concealment of income and evasion of tax as per the issues raised in the SCN. He averred that there was no bar on the Department in conducting proceedings after filing of complaint unless the proceedings were specifically stayed by the competent authority and complainant's reference to contempt were thus unwarranted.
5.Both the parties heard and record examined. Admittedly, only show-cause notice has been issued to the has been issued to the complainant. No order has been passed by the Depth's officers and the complainant had submitted explanation with material facts before the concerned officers to enable them to arrive at some conclusion. The raid, if properly carried under the provisions of Section 175 of the Ordinance, cannot be termed unlawful. Moreover, tax, under Section 236D of the Ordinance was to be paid once and at fixed rate of 5% for the relevant period whether business of the raided premises belonged to one person or two different persons as claimed. SCN has detailed figures of apparent tax evasion for the relevant period. Substance has to take precedence over technicalities and the complainant has to refute these properly to support his case and cannot challenge the vile of issuance of notice.
6.The A.R.'s plea for grant of stay, under Section 11 of the Federal Ombudsman Institutional Reform's Act, 2013 is also not valid. Stay under this provision is against "operation of impugned order or decision" and not against proceedings as appears to be the case here. Deptt's officers are, however, required to consider the matter sympathetically, and settle the proceedings in a transparent way after affording fair opportunity of hearing to the complainant.
7.There being no case of mal-administration, the proceedings are closed and case file be consigned to record.