DECISION /FINDINGS These three complaints filed by Members of the A.O.P., contain identical facts and common grievance alleging 'maladministration' C.I.T., Zone-B, Lahore and Mr. Shahid Bashir, I.A.C., Range-IV Zone-B, Lahore. All three complains have common grounds and similar facts hence these are taken-up simultaneously for adjudication through a consolidated order.
2. The facts as per complaint and as emerged after hearing the representatives of both the sides are that assessm ent in the case of Mirza Muhammad Nazir (Complaint No.1433/L of 2001) for the year 1995-96 was made under Self-Assessment Scheme wherein return declaring income at .Rs.106,000 was accepted under section 59(1). Subsequently this assessment was reop'ued by resort to section 65 and reassessm ent came to be made on 30-6-1998 at Rs.7,393,460 which included an addition of Rs.6 (Million) under section 13- of the Income Tax Ordinance. On appeal this assessm ent was set aside but the complainant preferred a second appeal before the Appellate Tribunal. In the meantime, Tax Amnesty Scheme, 2000 (TAS-2000) was announced in March, 2000 para.9 whereof related to a situation obtaining in complainant's case relating to "undisclosed assets" and additions made under section 13 of the Income Tax Ordinance. The Scheme provided that such persons could file declaration under TAS-2000 and pay tax at 10% of the declared amount. The complainant availed the Amnesty and filed. The declaration after paying 10% tax on the undisclosed income of Rs.6 Million. This declaration was filed on 29-6-2000 i.e. Before the expiry date of 30-6-2000. After over 5 months, on 19th December, 2000 the complainant was served with a notice that his declaration was not in accordance with law hence it was to be rejected. For this decision reliance was placed on Circular No.14 of 2000 dated 28-6-2000 publicized in July, 2000 wherein it was provided that those cases where appeals were pending were not eligible to filing the TAS-2000 declarations. This show-cause notice was replied on 27-12- 2000 contending that Circular 14 though dated 28-6-2000 was brought to public notice after expiry of the date i.e. 30-6-2000 and hence was not in the knowledge of the complainant when he filed the declaration. However, an undertaking was given that the appeal which was pending before the Tribunal would not be pressed and would be withdrawn on the date the Tribunal lists it for hearing.
This appeal finally came up for hearing before the Tribunal on 28-12-2000 and was withdrawn on the same day, evidence of which was tendered to the Income-tax Department on 8-1-2001 in reply to letter dated 5-1-2000 whereby evidence to this effect was called for. The Department rejected the declaration through notice dated 27-3-2001 which was served on the complainant by post. The complainant then filed a representation on 7-5-2001 to the Commissioner against the rejection of the declaration pointing out certain manipulations by his subordinates to cover up the delay in communicating the decision to the complainant and also for making such entries as placed the complainant's facts in an adverse light. This representation was rejected by the Commissioner. A reassessm ent was then framed on 30-6-2001 under section 62 read with section 135 of the Income Tax Ordinance.
3. The representatives for the Revenue at the outset referred to clause (a) of subsection (2) of section 9 of the F.T.O. Ordinance, 2000 to point out that against reassessment dated 30-6-2001 and appeal had already been filed before the Appellate Tribunal on 3-8-2001 and, therefore, the matter being sub judice complaint cannot be entertained. As respects other material facts summarized hereinabove, the Representatives of the Revenue had no quarrel.
4. It seems appropriate to first deal with the objection relating to jurisdiction to entertain the complaint. Having considered the circumstances, as obtaining on record, and having heard the arguments of the contending parties it is clear that the present complaint does not focus on the validity of the assessm ent or on the quantum of assessed income but primarily relates to the acceptance/rejection of a declaration filed under TAS-2000 and this substantially distinguishes it from such cases as have been excluded form the jurisdiction of the F.T.O. As per subsection (2) of section 9. The thin line that identifies `maladministration' as respect arbitrary rejection of a declaration is to be focused upon when appraising whether rejection of the claimants declaration under the Amnesty Scheme against which no appeal is provided either in the Income Tax Ordinance or the TAS-2000 is illegal, arbitrary and unjust as distinct from a dispute concerning the determination of income and the process of assessment. Such a case falls in the domain of Federal Tax Ombudsman. In this view of the mattei, the objection by the Department is overruled.
5. Reverting to the facts of the case, it is clear that the contents of a circular issued as late as just two days before the expiry of the last date for filing of TAS-2000 declaration could not be in the knowledge of the. Taxpayers throughout the length and breadth of the country when, it is a common knowledge that such circulars generally take a long time in getting published, in officially authentic journals etc. Anyhow, in order to ascertain the date on which Circular No.14 dated 28-6- 2000 of the C.B.R. Saw the light of the day, verification was sought from the office of the RICT, Eastetn Region, Lahore whereupon it transpired that in actual fact the Circular was received on 3- 7-2000 and diarized at No.62. Thus, it would be highly presumptuous to suppose that a declarant of TAS-2000 had the knowledge of the contents of Circular No.14, dated 28-6-2001 as early as the date of its issue or a day thereafter. Therefore, in all fairness the validity of the TAS-2000 declaration is to be judged independent of the restrictions imposed by Circular No.14 of 2000. On that criterion, the complaint's declaration warranted acceptance.
6. Under para.9 of Circular No.14 of 2000 the filing of declaration for any year shall not affect the pending assessm ent or reassessm ent for that/these three years and the pending appeals will be heard and decided in the normal course. Thus the pendency of appeal was not a bar to the filing of declaration nor the declaration was to affect the pending .Assessments. By Circular 14 of 2000 responding to references, and queries the Board clarified that in a case that has been set aside and against which further appeal has been filed and the appeal is pending, declaration cannot be made under the Tax Amnesty Scheme, 2000. Thus a condition was imposed adverse to the declarant which was not found in the Scheme. It had the overriding effect on para.9 of the Scheme.
Such adverse conditions can be imposed by amending the Scheme and not by way of clarification and explanation.
7. Admittedly Circular 14 of 2000 is a clarification in respect of pending proceedings referred to in para.9 of the TAS-2000. The object of clarification or explanation is to remove obscurity or ambiguity in any expression or phrase in the main provision. An explanation or clarification cannot amend, limit or expand the scope and extent of the main provision. The provision of para.9 could not be restricted or limited by clarification offered by C.B.R. Through Circular No.14 of 2000. The rejection of declaration of all the three complaints was illegal.
8. It is recommended:
(i) The declaration filed by the complainants under TAS-2000 be accepted and conveyed to the complainant as per requirement of B para.10(2) of Circular No.4 of 2000.
(ii) RCIT to take suo motu action to cancel all proceeding including assessment framed in consequence of the rejection of the declaration fired by the complainants.
(iii) Compliance be reported to this Secretariat within 30 days of the receipt of this order. .