2004 PLP 1236 (PTD)

3. It is alleged that the ITO did not bother to consider his explanation and completed the assessment ex parte under section 63 of the repealed Income Tax Ordinance, 1979 despite proper compliance of the notices. The net income has been arbitrarily estimated at Rs.800,000 resulting in tax demand of Rs.165,000.

4. It is further stated that an appeal was filed on 8-8-2001 before the CIT(Appeals), Hyderabad against the assessment order for the year 2000-2001. On the date of hearing of appeal, the learned CIT (Appeal) asked the complainant and his AR to deposit 15 r6 of the tax demand amounting to Rs.24,750 otherwise his appeal would be dismissed. Since the complainant could not deposit the tax demand due to financial problems, his appeal was dismissed vide order, dated 30-12-2002. The complainant has prayed for redressal of his grievances and remission of unlawful demand created against him by the Assessing Officer.

5. The respondents have filed parawise comments stating therein that the complainant did not make compliance of the statutory notices issued under sections 61 and 62 of the repealed Ordinance which resulted in completion of assessment ex parte under section 63 of the Ordinance. The first notice under section 61 was issued on 12-4-2001 for compliance on 24-4-2001 which was served or 17-4-2001. The second notice under section 61 alongwith notice under section 62 was served upon the assessee on 29-5-2001 for compliance on 4-6-2001. The complainant did not make compliance of the said notices. It is further stated that the assessment was completed on the basis of Inspector's report but this fact has not been mentioned in the assessment order. The RCIT concerned has conceded that the assessment made by ITO is apparently harsh, excessive and against the history of the case. He has directed the CIT concerned to obtain the explanation of the Assessing Officer and, take further action accordingly. It is also reported that the complainant's appeal was dismissed due to non fulfillment of mandatory requirement.

6. The case has been discussed with the complainant as well as the departmental representative. The assessment records produced by the D.R. have also been examined. It is stated by the complainant that in compliance to the first notice issued under section 61 of the repealed Ordinance, he personally appeared before the Assessing Officer on 24-4-2001. However in the relevant order-sheet non compliance of the said notice has been recorded on 24-4-2001 and ITT was asked to report. The Inspector was not authorized to make enquiries as provided by section 146 of the repealed Income Tax Ordinance, 1979. The relevant order sheet further shows that the ITT filed his report after a lapse of one month on 25-5-2001. Notices under sections 62 and 61 were issued on 25-5-2001 for compliance on 4-6-2001. No reference to any enquiry report was made in the notice under section 62 as correctly pointed out by the complainant. The Assessing Officer made the following entry on the order-sheet on 4-6-2001. "none attended nor any application for adjournment received. Assessed under section 63 as per notice under section 62 at Rs.800,

000. Issue notice, challan and IT-30 and assessment order accordingly".

8. The compliance has vehemently contended during the course of hearing of the complaint that compliance of statutory notice was duly made and explanation was filed by his A.R. on the stipulated date i.e. 4-6-2001. He has furnished the copy of the said explanation which bears the office stamp of the DCIT, Tando Adam Circle. In the presence of this documentary evidence there is no reason to doubt the statement of the complainant in this regard.

9. The copy of ITT's report furnished by the DR shows that his estimate of income is not supported by any evidence. His report is too sketchy to be of any significance. He even failed to contact the complainant or collect any information from his employee during a period of one month. It is also established from record that copy of the ITT's report was neither supplied to the complainant nor any reference of the report has been made in the assessment order. These facts lend support to the allegation of the complainant that no enquiries were made by the Inspector before the assessment was completed and the report has been obtained from him later on to justify the estimate of income made of the assessment year under consideration. It has also been noted that as per order-sheet entry the ex parte assessment was completed on 4-6-2001 but this was entered in Demand and Collection Register on 30-6-2001 vide No.2392/130. This is an established practice that the entry in the DCR is made on the same date the assessment is completed. The D.R. has not been able to offer any satisfactory explanation in this regard.

10. It is apparent from the facts stated above that the whole assessment proceedings are tainted with maladministration. The assessment made by the ACIT for the year 2000-2001 is perverse arbitrary; unreasonable and oppressive. It is however, gratifying to note that the RCIT, Southern Region, Karachi has taken cognizance of the irregularities committed by the Assessing Officer and has directed the Commissioner concerned to call for the explanation of the Assessing Officer and take necessary action against him. It is also evident that the appeal filed by the complainant was dismissed by the CIT (Appeals) on technical ground only as he did not deposit 15 % of tax demand as provided under section 129(2) of repealed Income Tax Ordinance, 1979. The ground of appeal were not adjudicated.

11. In view of the above it is recommended as under:-- (i) The Zonal Commissioner be asked to set aside the assessment under section 122 of the Income Tax Ordinance, 1979 made for the year 2000-2001 and issue directions to Taxation Officer to reframe the assessment after making proper enquiries within 30 days of the receipt of this order. (ii) Disciplinary proceedings be initiated against the Assessing Officer and the Inspector and finalized within 60 days of the receipt of the this order. (iii) The compliance be reported within a week after implementing the above recommendations. C.M.A./1018/FTO Order accordingly.