FINDINGS /DECISION ' This complaint has been filed alleging "maladministration" in the set apart of Return for the assessm ent year, 2002-2003 by resort to para. 9(a) of the SAS.
2. Briefly the facts are that the Complainant-Individual runs a Steel Re-rolling Mills which was obtained on lease. Admittedly no books of accounts are maintained. Return was filed declaring income at Rs,11,27,000 on a turnover of Rs,238,809,430. It was not picked up for Total Audit in the computer random ballot. However, R-CIT issued show-cause notice on 4-1-2003 expressing intention to set apart the Return for Total Audit by resort to para. 9(a)(ii) for the reasons:--
(a) Evident fall in NP rate compared to previous years.
(b) Disclosed NP rate being considerably lower than in comparable cases.
(c) Excessive claim of Overhead expenses thus reducing net income.
' The reply, dated 23-1-2003 failed to satisfy the R-CIT who finally passed an order of set apart on 31-3-2003 for the same reasons as intimated in the show-cause notice. This is the cause of grievance.
3. The Respondent have forwarded para-wise comments by R-CIT Eastern Region, Lahore which in addition to questioning the competence of the complaint for admission in view of the bar as per subsection (2) of section 9 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 .(hereinafter called the FTO Ordinance), deny "maladministration". It justifies the set apart of the Return because of evident decline in Income, and excessive Overhead claim of expenses. It is contended that Guidelines as prescribed by the C.B.R. Were adhered and also opportunity of hearing was extended.
4. The learned counsel for the Complainant submitted that issue of NP rate being lower than in identical cases was dropped by the R-CIT who considered the explanation in this behalf as satisfactory. It was pleaded that R-CIT erred in comparing result in the Complainant's case who had obtained the unit on lease with those who had their own units. The learned counsel vociferously disputed the contention of the R-CIT that the Complainant is engaged in the manufacturing of Guarder whereas the parallel cases related to those who were engaged in the manufacturing of M.S bars only. The Guarder carried higher sale rate than M.S. Bars.
5. None was present for the Department when called out. However, the para-wise comments by the R-CIT place heavy reliance on the Finding/Decision; dated 19-11-2002 on C. No, 792-L/2002 where the term "evident decline in business" has been elaborately discussed and interpreted. It has been emphasized that existence of 'reasons to believe' due to suppression of true particulars of Income is to be inferred after examination of collateral facts like the history of the case as well as the parallel cases and other relevant material.
6. The scrutiny of record in the light of arguments by the contending parties leads to the inference that a lower Net Profit (quantum-wise or percentage-wise) in effect means decline in Income. This phenomenon coupled with higher claim in respect of Overhead Expenses was clearly a justification for a prima facie view that true particulars of Income were not disclosed thus needing an Audit. It also is not to be lost sight of that in a "no account" case, the 'reason to believe' has to be based on comparing result with more-or-less identical cases because no two cases can be exactly similar.
On this visualization, there appears to be no discrimination or arbitrariness which could be viewed as "maladministration" as defined in clause (3) of section 2 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. The complaint is thus held to be devoid of merit. It is, therefore, filed and the case is closed.