2013 PLP 350 (PTD)

Muhammad Munir Qureshi, Advisor Dealing Officer. Riaz Ahmad Raja, ITP Authorized Representative. Muhammad Saeed Ansari, DCIR Departmental Representative. FINDINGS/RECOMMENDATIONS DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).

This complaint is against illegal amendment of income under section 121 of the Income Tax Ordinance, 2001 (the Ordinance).

2. The complainant contends that the ex parte action under section 121 was against the law as he was not accorded proper opportunity to explain the issues raised by the Assessing Officer. Moreover, the assessing officer being posted in the Audit Zone of the RTO did not have jurisdiction to amend the deemed assessment. Reliance is placed on ATIR judgment cited as 2012 PTD (Trib.)

170. It is further contended that the information relied on to amend the deemed assessment regarding alleged investment made by him in two motor vehicles valuing Rs.2,375,918 did not qualify as "definite information." The complainant accepts one motor vehicle (Suzuki APV/GC415 Wagon, Model 2010, Registration No.LEB-10-7655) acquired under a Hire Purchase Agreement from Bank Alfalah. (Copy of registration book and authority letter from Bank Alfalah have been filed as supporting documentation.) As regards the other vehicle, also a Suzuki (registration date of 10-9-2009), referred to in the assessment order, the complainant denies any knowledge of the vehicle.

3. When confronted, the Deptt. filed a reply in which a preliminary objection was raised that the matter raised in the complaint pertained to assessment proceedings and involved interpretation of law. It therefore fell outside the Hon'ble FTO's jurisdiction (section 9(2)(b) of the FTO Ordinance). The complainant had also filed an appeal that was pending before the CIR (Appeals), and so the complaint could not be taken up for investigation by the Hon'ble FTO as stipulated in section 9(2)(a) of the FTO Ordinance. On merits the Deptt asserted that the amendment of income was based on definite information received from the Chief Commissioner, RTO, Multan. However, when formally confronted, the complainant did not respond despite opportunity accorded to him. Adverse inference was therefore rightly drawn against him. The Deptt has referred to the decision of the President (No. 178/ 2005-Law(FTO) dated 26-5-2006), disposing of Representation in Complaint No.1096-L/2005, that the FTO did not have jurisdiction to hear the complaint.

4. Both sides have been heard, record examined and cited case-law perused.

5. The preliminary objections raised by Deptt have been considered. The Departmental contention that the provisions of section 9(2)(a) were applicable has been looked into and found to be misconceived as the complainant filed the complaint before the Hon'ble FTO on 3-4-2012 whereas he approached the CIR (Appeals) on 9-4-2012. No appeal before the CIR (Appeals) was thus pending on the day the complaint was filed before the Hon'ble FTO. As for the Departmental reference to the bar laid down in section 9(2)(b) of the FTO Ordinance, the assessment per se is not the moot point before the Hon'ble FTO. Nor is any interpretation of law involved in the complaint, as was the case in the cited decision of the Hon'ble President. Here it is ex parte assessment and misplaced reliance on patently defective information as the complainant did not own either of the two motor vehicles in question. Only one motor vehicle had been acquired on lease under a Hire Purchase Agreement with a bank and the complainant had debited his profit and loss account appended with the Return for Tax Year 2010 with the expenses incidental to the arrangement. Evidently neither of the two motor vehicles referred to by the Deptt. in the assessment order dated 22-2-2012 passed under section 121 constitutes his property in Tax Year 2010. The Deptt has brought forth no evidence to establish his ownership of the other vehicle cited in the assessment order. These are the core issues raised before the Hon'ble FTO and they all relate to maladministration as defined in Section 2(3) of the FTO Ordinance. Findings:

6. The decision to consider a Hire Purchase Agreement as purchase of a vehicle, and treat the purchase of second vehicle as such, without any documentary basis, is perverse, arbitrary and unreasonable. This is thus tantamount to maladministration as defined in Section 2(3) of the FTO Ordinance, 2000. Recommendations:--

7. FBR to direct the Commissioner to- (i) revise the assessment order, as per law, invoking section 122A of the Ordinance; and (ii) report compliance within 30 days. CMA/193/FTO Order accordingly.