DECISION /FINDINGS Maladministration is alleged in the instant complaint against the Taxation Officer, Circle-8 Cos Zone-I, Lahore, as well as his CIT for the administrative excesses and actions in initiation and continuation of assessm ent proceeding despite having no jurisdiction over the assessee, disregarding repeated submissions that due to transfer of the Registered Office of the complainant from Lahore to Karachi, jurisdiction of the case no more lies with him thereby causing unnecessary delay in transferring the case record of the complainant to the office having lawful jurisdiction over the case and ultimately passing orders that are void in law.
2. Briefly, the facts are that the complainant had filed its return of income on February 28, 2001 for the assessm ent year, 2000-2001. No notice under any section of the Income Tax Ordinance, 1979 (repealed Ordinance) was ever served until February 25, 2003 on the assessee for the assessment year under consideration. The first notice under section 61 was served on the complainant on February 27, 2003. The AR of the complainant vide its letter, dated March 27, 2003 duly informed the Taxation Officer that by virtue of change of Registered Office allowed by the Securities and Exchange Commission vide letter, dated 27-2-2003 the jurisdiction of the complainant stands transferred to Companies Zone-I, Karachi. He emphasized on immediate transfer of the case records from Lahore to the Zone having lawful jurisdiction over the case.
3. The Taxation Officer referred the matter to the CIT, Companies-I, Lahore on April 1, 2003. However, vide his letter, dated April 16, 2003 he insisted that jurisdiction to assess the incomes of the year for which returns were filed in his circle still lay with him and could not be changed. He persisted with a notice under section 62 of the repealed Ordinance referring to provisions of sections 52 and 86, which was served on the complaint on May 28, 2003. It was duly responded by the AR of the complainant vide letter, dated June 2, 2003. Two other notices, dated April 16 and June 6, 2003 were served for compliances on April 26 and June 18, 2003 respectively.
4. The Taxation Officer again insisted vide his letter, dated June 12, 2003 that transfer of jurisdiction could not be made as the limitation of time specified in law for finalization of assessment was about to expire on 30-6-2003. It is alleged that it was due to maladministration on his own part because he himself did not commence assessment proceedings for over two years and then the request for transfer of case records made at least three months before the end of the financial year was ignored. Besides, he also failed to appreciate that the excuse given by the Taxation Officer would not cure the legal infirmity of the proceedings being conducted by him without jurisdiction. The Taxation Officer totally disregarded the provision of law that the succeeding officer was entitled to proceed from the stage of the assessment where his predecessor had left. Further, the Taxation Officer continued to pursue notice issued under section 116 of the repealed Ordinance for assessm ent year, 1998-99.
5. Complainant vide its complaint, dated 24-6-2003 filed on 3-7-2003 prayed for recommendations that the concerned Taxation Officer (i) discontinues his illegal attitude towards the complainant and complies with due legal procedure in this regard, (ii) that he immediately transfers the case records of the complainant to the respective circle and zone where the jurisdiction of the appellant lies, (iii) that he refrains from making any assessment order after the date of transfer of jurisdiction of the complaint from his office or (iv) that the competent authority cancels any and every order, if passed, during the filing or pendency of this complaint and (v) that he refrains from any retributory act which he may contemplate against the complainant because of filing the complaint besides any other recommendation which the Federal Tax Ombudsman may deem fit in the circumstances. The complainant filed an addendum to the complaint, dated 19-7-2003 informing that the Taxation Officer persisted in passing not only the assessment order under section 63 without having jurisdiction but in issuing notice under section 116 on July, 7, 2003 and passing order under section 111 of the Ordinance after eight days of passing of order under section 62 of the Ordinance for assessment year, 1998-99.
6. Para-wise comments furnished by the Commissioner of Income Tax Companies Zone-I, Lahore were submitted on behalf of the respondents. Preliminary objection was raised that no cause of action accrued to the complainant as no act of maladministration had been alleged in the instant complaint. It was stated that assessment record could not be transferred before 30th June because the assessee company did not communicate change of Registered Office promptly. A circular letter of the CIT, Companies-I, Lahore was produced to suggest that it was the policy of the department not to transfer assessm ent record during the last quarter of financial year from one circle to another in view of several statutory limitations that expire on 30th June. In instant case, assessm ent for assessm ent year, 2000-2001 was to be made by 30th June, 2003. Keeping in view the complexity of issues involved, it was not advisable to transfer the case before finalizing assessm ent for assessm ent year, 2000-2001. The record was sent to the RCIT, Corporate Region, Karachi by the CIT Coys Zone-I, Lahore on 26-7-2003 after completing assessment for 2001-2002. It was submitted that the cause for delay in transfer of record was unavoidable as explained. The respondent further submitted that the question of jurisdiction could not be raised after filing of return and that the issue of jurisdiction was a subject-matter of appeal and assessee was not justified to agitate the issue before this forum.
7. The respondent submitted that allegation of mala fide were misplaced because assessments for assessm ent years, 2001-2002 and 2002-2003 were also pending but records were transferred without completing those assessm ents. The Assessing Officer finalized only the time-barred action.
It was added that loss of time during the process of transfer of record due to administrative reasons was not found affordable as the assessment proceedings were already in progress and the Assessing Officer was close to conclusion of the impugned assessment.
8. Personal hearing has been given to representatives of both sides. It transpires from the investigation conducted into the complaint that the CIT Companies-I, Lahore did not pay due attention to the reference made by the Taxation Officer of April 1, 2003 on the basis of complainant's request for transfer of the case. He advised the Taxation Officer to continue the proceedings in accordance with his circular letter directing not to transfer cases from one circle to the other during the last quarter of the year. The CIT did not appreciate that the Application for transfer of record was based on entries bearing numbers (3), (5) and (41) of S.R.O. No, 711(1)/79, dated 4-8-1979 read with "Explanation" of the expression "place of business", attached to the S.R.O. He did not r.Alize that the issue of jurisdiction between one Region and another was either to be resolved by concerned Regional Commissioners or it was to be referred to the C.B.R. Under subsection (4) of section 5 of the Repealed Ordinance.
9. It is proved that jurisdiction over the case stood transferred from Companies-I, Lahore to Central Region Karachi as soon as the registered office of the Company was transferred from Lahore to Karachi. Entries bearing numbers (3), 5 and (41) of S.R.O. NO. 711(1)/79, dated 4-8-1979 read with "Explanation" of the expression "place of business, attached to the S.R.O. Leave no doubt about the validity of complainant's view. Maladministration alleged on account of non-transfer of record from Lahore to Karachi and persisting without jurisdiction to pass assessment order for 2001-2002 and the order under section 111 of the repealed Ordinance for A.Y. 1998-99 by the Taxation Officer, Circle-08 on the directions of CIT Companies-I, Lahore has been proved. The entire process and proceedings suffer from arbitrariness and administrative excesses which proves improper motive as defined in clause (d) of subsection of section 2 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000.
10. It is recommended.
(a) That the Member Direct Taxes, Central Board of Revenue calls for an explanation from the Commissioner concerned regarding the circumstances under which the S. R.
0. No,771(1)/79, dated 4-8-1979 was disregarded and an assessment order for the A.Y. 2001-2002 as well as a penalty order under section 111 of the repealed Ordinance for A.Y. 1998-99 was allowed to be passed by an Officer who had no jurisdiction over the case.
(b) Thai the Member (DT) C.B.R. Submits a report within 30 days on the explanation offered by the Commissioner.