DECISION /FINDINGS The complainant is aggrieved of action taken under section 66A by the IAC Range-I, Zone-B, Lahore for the assessm ent year 2000-2001. The issuance of notice under section 66A has been termed as "maladministration" as envisaged by section 2(3) of the. Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. None was present for the complainant when called out. However for the respondent Mr. Ghulam Rasool (D-CIT) is present and made the record available. The complaint is, therefore, taken up for adjudication on merits.
2. The facts of the case are that assessment for the year 2000-2001 was finalized under section 59(1) on 12-6-2001 by accepting the declared income under the Self-Assessment Scheme by the ITO, Circle-03, Zone-B, Lahore. On 31-12-2001, the IAC, Zone-B, Lahore issued a show-cause notice under section 66A pointing out that the assessment made under section 59(1) was erroneous insofar as it was prejudicial to the interest of Revenue because the Assessing Officer, who finalized the assessm ent, was not vested with the jurisdiction over the case. A protest was then lodged with the CIT, Zone-B on 11-1-2002 requesting him for instructions to the IAC to drop the proposed proceedings. Almost simultaneously complaint was lodged with this Secretariat on 14-1-2002 vide Diary No.514. The respondent's report vide No.RCIT/J85/FTO/SO11/4503, dated 21-2-2002 (received on 25-5-2002) explains that complainant's representation, dated 11-1-2002 was considered by CIT, Zone-B, Lahore and the show-cause notice for action under section 66A was cancelled. The Representative of the respondent produced photocopy of the CIT's Letter No.3780, dated 20-2-2002 addressed to the IAC, Range-I, Zone-B, a copy of which was forwarded to the complainant's AR, Messrs Rathore and Company. This appears to be reason for the disinterestedness of the complainant as to fate of the complaint.
3. Since the complainant's grievance stands redressed, the investigations on this issue could be closed had not the scrutiny of record exposed some serious deficiencies/maladministration as are identified hereunder.
4. The IAC on inspection of record noted that the Assessing Officer who completed the assessment had no jurisdiction over the assessee. He, therefore, presumed that the order was 'erroneous' but made no effort to see how it was 'prejudicial to the interest of Revenue" as well. This simultaneous existence of these two elements is a sine qua non to vest jurisdiction in the IAC for resort to section 66-A of the Income Tax Ordinance. Moreover, the IAC's lack of knowledge of law is betrayed by his failing to recall the provisions of section 5(5) of the Income Tax Ordinance which read as under:--- "Section 5(5). No person shall be entitled to call in question the jurisdiction of Deputy Commissioner after he has made the return of total income or, where he has not made such return, after the time allowed by any notice served on him for making such return has expired."
It is evident that as soon as an assessee files return in a jurisdiction, he is debarred from challenging the same. Therefore, in the present case mere filing of return had already vested jurisdiction in the Assessing Officer of Circle-03, Zone-B who made the assessment under section 59(1). Thus there was no 'erroneousness' as such in the assumption of jurisdiction and the framing of assessm ent. The impugned show-cause notice contains absolutely no mention of instance of prejudice to Revenue. The record further reveals, that on receipt of show-cause notice, the complainant approached the CIT on 11-1-2002 for help but he conveniently ignored taxpayer's appeal for help till summon from the FTO Secretariat was served on 23-1-2002. This is not an isolated instance of indifference by the tax officials towards the predicament of taxpayers who are then compelled to knock doors in search for a fair dispensation.
5. It has time and again been noted and complained that whenever an assessee approaches the Department for issuance of refund, the IACs, mostly (i) issue show-cause for action under section 66-A alleging erroneousness and prejudice to Revenue, or (ii) cause the Assessing Officer to initiate proceedings under section 65 for Additional Assessment. Such-like actions are obviously intended to forestall the claim for refund. The revising of assessment under section 66A, if based on genuine and valid grounds, has a serious and hitherto unattended dimension inasmuch as it exposes the inefficiency or indifference of the Assessing Officers who routinely pass so many "erroneous" orders which are "prejudicial to the interest of Revenue" thus knowingly or otherwise cause loss to the Government. It is to be ascertained whether IACs, CITs or the RCITs have ever taken notice of working of the officers, or simply issue notice to the taxpayers for retrieving the suspected/presumed loss. In case the proceedings initiated under section 66A had to be dropped/filed without affecting the assessment, or these fail at the appellate stage, the IAC's efficiency for invoking section 66A is to be evaluated by his superiors. It can be safely presumed that no such cognizance has been taken systematically and the practice of so-called 'preventive steps' blocking the issue of refunds has gained wide-spread currency. Similar is the position with respect to action for reopening of assessment, under section 65 of the Ordinance. A well focused study of the percentage of success of such proceeding is necessary to establish the bona fide of action under section 65 or section 66A of the Ordinance. It is, therefore, recommended that C.B.R.
Submit:
(i) Report stating the number of cases initiated under section 65 and section 66A of the Income Tax Ordinance showing their success or failure at the enquiry stage or appellate stage during the past two years.
(ii) Monthly inspection reports of IACs of each Zone for the period January, 2001 to May, 2002.
(iii) Compliance be reported by 15-7-2002.