DECISION /FINDINGS ' The complainant is a retired officer of National Bank of Pakistan, Gambat, District Khaipur. He retired from service under golden hand shake scheme. According to him he received his dues after allowing permissible exemptions under Second Schedule of Income Tax Ordinance and deducting an amount of Rs,74,205 out of chargeable income which was paid to Income Tax Department by the bank. The amount of golden hand shake was taxed as separate block of income on the basis of Circular No,1 of 1965 and Circular No, 15 of 1997. The complainant invested the amount in Regular Income Certificates (RIC) purchased from National Savings Centre (NSC) Ranipur. However, according to the complainant, respondent No,1 Mr. Tufail Ahmed, Assessing Officer treated the separate block income as income chargeable at normal rate and started issuing notices for recovery of tax. He approached the respondent No,1 and cited certain rulings said to be given by superior Courts. It is alleged that respondent No,1 demanded illegal gratification on the pretext that he had received huge amount from bank under Golden Hand Shake Scheme, and if he fulfilled his illegal demand, then he will be exempted, but the complainant refused to grease his palm.
2. Subsequently he received a letter, dated 28-7-2001 from Manager, National Savings Centre Ranipur informing him that an amount of Rs,475,295 had been deducted from his deposit against RICs and was paid to Circle Officer Income Tax, Ranipur on 28-7-2001. The complainant protested against the unlawful act of the Officer of National Savings Centre, Ranipur in making such payment but he did not receive any satisfactory reply. He made complaints to the higher authorities of NSC but to no effect.
3. The complainant preferred appeal to the Appellate Additional Commissioner Income Tax, Sukkur Range Sukkur, who, after hearing, set aside the said assessment made by respondent No,1 on 17-11- 2001. Still the respondent No,1 was not ready to re-assess the case. The complainant allegedly approached higher authorities but did not receive any response. Ultimately seeing no other remedy he fulfilled the illegal demand and paid Rs,10,000 to Mr. Tufail Ahmed's successor Mr. Fazal Hussain Channa, who re-assessed the income on 30-4-2002. Subsequently refund was issued by successor of Fazal Hussain Channa on 11-3-2003. The CIT, Sukkur Zone also did not take any action and was allegedly in collusion with the respondent No,1 in causing heavy loss to the complainant amounting to Rs,1,50,000 on account of profit on deposits against RICs illegally drawn from National Savings Centre Ranipur and Rs,50,000 incurred on Advocate fees and miscellaneous expenses.
4. The complainant prays allowing for allowing compensation under section 22 of Ordinance XXXV of 2000 against loss of profit amounting to Rs,1,,50,000 for two years on RIC's worth Rs, 475,295 and Rs,50,000 paid by way of expenses of engaging Advocates at various Courts besides recommending disciplinary/appropriate action against respondent No,l. He further prays for recommending any other relief, that the Federal Tax Ombudsman may deem fit and proper.
5. Parawise comments on the complainant were submitted by the respondent stating that the complainant availed the Golden Hand Shake Scheme announced by the Bank in 1977. The Assessing Officer, Mr. Tufail Ahmed (since retired) taxed the whole amount at normal rate and completed the assessm ent ex parte treating the entire receipts computed at Rs,2,797,728 as taxable. Income for A.Y. 1998-99. Measures were initiated for recovery of outstanding tax demand and Mr. Fazal Hussain Channa, the then Assessing Officer Circle Ranipur, issued notice under section 92, to the Manager, National Savings Centre, Ranipur and recovered an amount of Rs,475,295 on 28-7-2001 accordingly. The Appellate Additional Commissioner, Sukkur, set aside the assessm ent and directed for re-assessment proceedings vide Order No, 169, dated 17-11-2001.
6. Mr. Fazal Husain Channa reassessed the case on 30-4-2002 in the light of order passed by the learned Appellate Additional Commissioner, Sukkur, and his normal income for assessment year, 1998-99 was reassessed at Rs,2,14,726 and amount of Golden Shake Hand was assessed as separate block of income at Rs,775,089 and charged under section 62/132 at average rate of tax for the preceding 3 years that worked out at 8.7% amounting to Rs,48,619. Total tax including 10% surcharge amounted to Rs,90,441. Refund of Rs,461,123 was created in favour of the assessee. The order was rectified on 28-10-2002 under section 221 read with section 156 of repealed Income Tax Ordinance, 1979 and demand was created at Rs,179,727. Resultantly the refund was reduced to Rs,381,837. The concerned Commissioner has further informed that as the complainant has not been able to corroborate his allegation with any material evidence, further action against the officer is not being taken. However, the Commissioner is being directed to obtain explanation of the Assessing Officer and take action accordingly under intimation to this office which shall be communicated to the Honourable Federal. Tax Ombudsman, through the Board.
7. The complainant had filed a rejoinder at the time of hearing along with copies of letters, dated 25-4-2000, 5-6-2000, 13-2-2001, 7-2-2002, 9-3-2002, 21-3-2002, 5-8-2002, 31-10-2002, 9-12-2002 and 7-2-2003 addressed to the Assessing Officer with copies endorsed to IAC, CIT and at times to RCIT as well. A few receipts of registered post were also produced. Responding to the reminder, dated 19-5-2000 for recovery of tax levied amounting to Rs,475,295, the complainant submitted before the Special Officer, Ranipur vide letter, dated 5-6-2000 that he may not be harassed for recovery because the High Courts of Lahore and Sindh had already held that deduction of Income Tax from the pension benefits of bank employees was without any lawful authority and the same should be refunded to the petitioner. Further the matter was sub judice as contempt applications for delaying the refund of income-tax were pending disposal at High Court. Again he addressed a letter, dated 20-12-2000 addressed to the entire hierarchy from Chief Executive of Pakistan down to the DCIT, Ranipur apprising them of the arbitrary recovery being pursued by the DCIT despite decision of High Court to the contrary. None of the authorities came to his rescue and arbitrary recovery was made against his RICs from NSC, Ranipur on 28-7-2001. Ultimately the AAC set aside the assessm ent order on 17-11-2001 to pass a revised order in accordance with law but the Assessing Officer did not pass the revised order till 30-4-2002 when he was paid Rs,10,000 because even the IAC and the CIT turned a deaf ear to his letters, dated 7-2-2002, 28-2-2002, 9-3-2002 and 21-3-2002. According to complainant, he was compelled to act unlawfully by the authorities responsible for upholding the law because he was suffering a much heavier recurring monthly loss of profit on RICs worth Rs,475,295. Still his ordeal did not end. The Assessing Officers instead of issuing refund, rectified the order on 28-10-2002 reducing the refund to Rs,381,837. The order was not correctly rectified till 28-11-2002 to determine refund of Rs,471,904 and refund was not issued till 11-3-2003. Mr. Aamir Talpur, IAC representing the respondent submitted that the CIT took keen interest in allowing the refund.
8. Although the allegation of bribery could neither be supported by the complainant with any direct evidence nor through any witness, the facts emerging from the investigations support the allegations of mala fide, arbitrariness, unreasonability, oppression, discrimination, exercise of powers for corrupt or improper motives, administrative excess, neglect, invention, delay, ineptitude in the administration and discharge of duties and responsibilities, uncalled for coercive methods of tax recovery, wilful errors in the determination of refunds and deliberate withholding of refund. All the foregoing traits found in the decisions made, process employed and acts committed or omitted tantamount to maladministration defined in sub-clauses (a)(b)(d) of clause (i), clause (ii)
(vi) (iv) and (v) respectively of subsection (3) of section 2 of Ordinance XXXV of 2000. The maladministration on the part of the various Assessing/Recovery Officer, IACs and CITs at several stages and at different points of time as recorded supra has caused immense harassment, loss of income and unnecessary expenditure to the complainant. Show-cause notice under section 22 of Ordinance XXXV of 2000 is being issued separately through Revenue Division to Mr. Fazal Hussain Channa, Taxation Officer now posted in Dadu Circle, Hyderabad Zone to explain why compensation amounting to Rs,200,000 be not awarded to the complainant for the loss and damage suffered by him on account of maladministration by him.
9. It is recommended.
(a) That the CIT Sukkur Zone streamlines the system of monitoring performance of all tax employees working under him and ensures prompt action on all applications received in his office under intimation to such applicants.
(b) That the CIT ensures that written counselling of the concerned serving officers is done to impress upon them the elements of maladministration found in their conduct while dealing with complainant's case at various stages.
(c) That the Taxation Officer of the concerned Circle shall allow compensation for the delay in issuance of refund admissible under the law.
(d) Compliance be reported within 45 days.