2020 PLP 510 (PTD)
SH. QAISER MEHMOOD Versus The SECRETARY REVENUE DIVISION, ISLAMABAD
| Citation | 2020 PLP 510 (PTD) |
| Forum / Court | Federal Tax Ombudsman |
| Bench Members | Mushtaq Ahmad Sukhera, Federal Tax Ombudsman |
| Parties | SH. QAISER MEHMOOD Versus The SECRETARY REVENUE DIVISION, ISLAMABAD |
| Primary Law | Income Tax Ordinance (XLIX of 2001) |
Q1: What are the key laws and sections cited in 2020 PLP 510 (PTD)?
This judgment primarily cites: Income Tax Ordinance (XLIX of 2001) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2020 PLP 510 (PTD)?
The case was heard and decided by the Federal Tax Ombudsman bench comprising: Mushtaq Ahmad Sukhera, Federal Tax Ombudsman.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2020 PLP 510 (PTD) (SH. QAISER MEHMOOD Versus The SECRETARY REVENUE DIVISION, ISLAMABAD). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
Ss. 122(1), 122-A, 127 & 221
Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3)(i)(a) & (d) & 10(1)
Complainant was income tax assessee who was aggrieved of action taken under S. 122(1) of Income Tax Ordinance, 2001 by income tax authorities and same had been set aside by Commissioner Inland Revenue in exercise of powers under S.122-A of Income Tax Ordinance, 2001
Plea raised by authorities was that complaint was not maintainable
Order passed by tax authorities under S.122(1) of Income Tax Ordinance, 2001 was appealable under S.127 of Income Tax Ordinance, 2001 and provisions of S.122-A of Income Tax Ordinance, 2001 were attracted
Action taken by Commissioner Inland Revenue in setting aside assessment by taking action under S.122-A of Income Tax Ordinance, 2001 was contrary to law
Amendment in assessment was made on 29-09-2018 and demand notice was served on complainant on 02-10-2018 when he had sufficient time of filing appeal before Commissioner Inland Revenue (Appeals) till 11-02-2018 and during such period no activity under S. 122 of Income Tax Ordinance, 2001 could be made
Complaint had become infructuous but action of Commissioner Inland Revenue setting aside order passed under S. 122(1) of Income Tax Ordinance, 2001 by invoking provisions of S. 122-A of Income Tax Ordinance, 2001 was contrary to law, procedure, established departmental practice and involving exercise of powers for corrupt motives was established and same tantamount to maladministration as defined in S.2(3)(i)(a) & (d) of Federal Tax Ombudsman Ordinance, 2000
Federal Tax Ombudsman directed Federal Board of Revenue to direct concerned Zonal Commissioner Inland Revenue to rectify order passed under S.122-A of Income Tax Ordinance, 2001 while exercising powers conferred under S.221 of Income Tax Ordinance, 2001
Federal Tax Ombudsman further directed Federal Board of Revenue to initiate disciplinary proceedings in terms of S.14(6) of Federal Tax Ombudsman Ordinance, 2000 against Zonal Commissioner Inland Revenue for passing order under S. 122-A of Income Tax Ordinance, 2001 as same was contrary to law, procedure, established departmental practice and involving exercise of powers for corrupt motives to extend illegal benefit to complainant and causing substantial loss of revenue to the State
Complaint was dismissed accordingly. Abdur Rehman Dogar, Advisor Dealing Officer. None for Authorized Representative.
Judgment & Decree
18-10-2018
5. Appeal filed before CIR (Appeals) 29-10-2018
6. Application for withdrawal of appeal from CIR (Appeal) 31-10-2018
7. Complaint filed before this forum on:- 30-10-2018
8. Application for withdrawal of complaint before this forum on:- 31-10-2018
9. Submission of DFA of Order under section 122A by the SA to CIR. 31-10-2018
10. Order passed under section 122A by the CIR 1-11-2018
11. Receipt Of Order By The AR From CIR (Appeals) Office. 1-11-2018
12. Despatch of Order to Zonal CIR 7-11-2018
9. The file of CIR office was consulted which shows following order sheet entries. "18.10.2018: Application received from the taxpayer regarding revision application under Section 122A and POF. Letters received from taxpayer regarding withdrawal of appeal and complaint before Federal Tax Ombudsman and POF. Submitted please. Sd/- Az/IIR S/A "31.10.2018: DFA of order under Section 122A of the Income Tax Ordinance, 2001 is submitted for perusal and signature please. Sd/- (Special Assistant)(S/A) CIR Issue order under Section 122A". Sd/- 02.11.2018
10. The above entries reveal that an application for revision was filed on 18.10.2018 and on the same date an appeal too was filed before the CIR (Appeals). Whereas actually on 18.10.2018, no appeal was pending before the CIR (Appeals) which was filed on 29.10.2018 and the complaint before this office was filed on 30.10.2018. The only inference which can be drawn is that some collusive arrangement was arrived at, amongst the Complainant and the Zonal CIR on 18.10.2018, about filing of the appeal and complaint and then withdrawal of both.
11. The CIR, Sialkot Zone, Sialkot has not only gone beyond his jurisdiction while invoking the provisions of Section 122A of the Ordinance, in an appealable case, but the mechanism given under Section 122A of the Ordinance, had also been ignored. Under the provisions of Section 122A of the Ordinance, no revision could be made unless time for filing of appeal had been expired. In this case, demand notice was served on the Complainant on 02.10.2018 and thirty days were expiring on 01.11.2018 and an application for revision under Section 122A of the Ordinance, was received on 18.10.2018 (before expiry of appeal period). Further draft order was prepared by SA to CIR on 31.10.2018 (as per order sheet entry dated 31.10.2018) and was put up on the same day, which was signed by CIR on 01.11.2018 and released on 02.11.2018. The SA to CIR submitted his response to the notice of this office addressed to Zonal CIR, stating as under:- "Regarding observation of the Honourable FTO that why I put up draft under Section 122A of the Ordinance on 31.10.2018 when time for filing of appeal was available. Sir, in this regard it is respectfully submitted that your honour handed over me file of Sh. Qaiser Mehmood on 31.10.2018 and I prepared draft under your honour's instructions. Furthermore, Sir I have to obey your honour's order and as directed by your honour, I prepared the draft under Section 122A of the Ordinance on 31.10.2018 and order under Section 122A was passed by your honour on 02.11.2018".
12. When confronted the CIR, stated that appeal was filed before CIR (Appeals) on 29.10.2018 which was withdrawn on 31.10.2018, hence order passed is in accordance with law. CIR (Appeals) was asked to apprise the actual position. He vide letter No.265 dated 01.01.2019 stated as under:- "On 31.10.2018 Authorized Representative filed application for withdrawal of appeal and my predecessor allowed the same and passed order vide No.CIR(A)/SKT-I.Tax/225 dated 31.10.2018 which was served upon the Authorized Representative on 01.11.2018 and also dispatched the batch containing the said order to the Commissioner Inland Revenue, Sialkot Zone, Regional Tax Office, Sialkot vide this office letter No.216 dated 07.11.2018".
13. From the above, it is evident that appeal was filed on 29.10.2018 and application for its withdrawal on 31.10.2018. Order of the CIR (Appeals) (accepting withdrawal) was received by the AR on 01.11.2018. The said order was formally sent to Zonal CIR by the CIR (Appeals) vide letter No.216 dated 07.11.2018. Draft order under Section 122A of the Ordinance, was prepared on 31.10.2018 when even the Complainant had not received the order of CIR (Appeals). This indicates some collusive arrangement amongst the Complainant and the Zonal CIR.
14. While passing order under Section 122A of the Ordinance, following footnote is given by the CIR:- "Foot Note (Not for the taxpayer):- The order of revision U/S-122A of the Income Tax Ordinance, 2001 has been passed under the directions and guidance of the Worthy Chief Commissioner, Inland Revenue, RTO, Sialkot". 15 The Chief Commissioner was confronted who denied of having issued any directions regarding initiation of action under Section 122A of the Ordinance, and explained that only academic discussion regarding TAS was made. His reply is reproduced as under:- "As regards the foot note inserted in office copy of the order under Section 122A, it is stated that academic discussion was held in the subject case with the concerned Commissioner-IR with reference to various provisions of Voluntary Declaration of Domestic Assets Ordinance, 2018. However, no written directions were issued since the Commissioner-IR is competent to proceed as per law by application of his independent judicious mind".
16. Case was fixed for hearing for 10.01.2019. The Complainant did not appear but filed application for withdrawal of his complaint. The CIR, however, appeared and submitted his written reply vide his letter No.3319 dated 10.02.2018. It was stated that it is option of the taxpayer whether he avails revisional jurisdiction under Section 122A of the Ordinance, or the appellate jurisdiction as per Section 127 of the Ordinance. It was admitted that in appealable cases, provisions of Section 122A of the Ordinance, cannot be invoked by the Zonal CIR, if appeal is pending before the CIR (Appeals) or period of limitation for filing of appeal has not yet expired. In this case, revision application was filed under Section 122A of the Ordinance, on 18.10.2018 whereas time for filing of appeal was available till 01.11.2018. The CIR's stance is that order under section 122A of the Ordinance, was issued on 02.11.2018, after withdrawal of appeal by the Complainant. The fact remains that proceedings under Section 122A of the Ordinance, were initiated on 18.10.2018 when time for filing of appeal had not expired. Moreover, order under section 122A of the Ordinance was passed, when appellate order had formally not been received in the office of CIR. It is also pertinent that while submitting para-wise comments, it was stated by the CIR that the DCIR had framed assessment strictly in accordance with law whereas same was set-aside by the CIR himself by invoking provisions of section 122A of the Ordinance.
17. As per Dept'l practice, action under Section 122A of the Ordinance, is to be taken only in hardship cases like where no appeal lies against the order or order is patently illegal etc. Whereas the order under reference was regular order and normal appellate forum was available, which had also been availed by filing of appeal on 29.10.2018 and its withdrawal or otherwise is immaterial.
18. Order passed by the DCIR under Section 122(1) is appealable under Section 127 of the Ordinance and provisions of Section 122A of the Ordinance, are not attracted. Action of CIR, Sialkot Zone Sialkot set-asiding the assessment by taking action under Section 122A of the Ordinance, is contrary to law. Amendment in assessment was made by DCIR on 29.09.2018 and demand notice was served on the Complainant on 02.10.2018 when the Complainant had sufficient time of filing of appeal before CIR (Appeals) till 01.11.2018 and during this period, no activity under Section 122A of the Ordinance, could be made. Application for revision under Section 122A of the Ordinance, was received on 18.10.2018. Draft order under Section 122A of the Ordinance, was prepared by the SA on the direction of CIR on 31.10.2018. Similarly, on 18.10.2018 an entry was made on the order sheet that appeal filed before CIR (Appeals) and complaint filed before this forum, had been withdrawn, whereas on 18.10.2018 neither any appeal nor any complaint was filed.
19. It is evident that the CIR, Sialkot Zone, Sialkot had gone beyond his jurisdiction, in setting-aside the assessment framed by DCIR under Section 122(1) by invoking provisions of Section 122A of the Ordinance. The CIR has also misstated in the footnote of the order that he had framed assessment, under Section 122A of the Ordinance, under the directions and guidance of the CCIR, Sialkot. This all leads to an irresistible conclusion that the order under section 122A of the Ordinance is not only contrary to law but also involves the exercise of powers for corrupt motives. Findings:
20. The complaint has become infructuous. However, action of the CIR setting-aside the order passed by the DCIR under Section 122(1) by invoking provisions of section 122A of the Ordinance being contrary to law, procedure, established Dept'l: practice and involving exercise of powers for corrupt motives is established, which does tantamount to maladministration as defined in Section (2)(3)(i)(a)&(d) of the FTO Ordinance. Recommendations:
21. FBR to:- (i) direct the Zonal CIR concerned to rectify the order passed under section 122A of the Ordinance, while exercising powers conferred under section 221 of the Ordinance, as per law; (ii) initiate disciplinary proceedings in terms of Section 14(6) of the FTO Ordinance, against the Zonal CIR for passing order under Section 122A of the Ordinance, which was contrary to law, procedure, established Deptt'l practices and exercise of powers for corrupt motives to extend huge illegal benefit to the Complainant and causing substantial loss of revenue to the state; and (iii) report compliance within 45 days. MH/33/FTO Order accordingly.