2004 PLP 1750 (PTD)
FATEH TEXTILE INDUSTRY (PVT.) LTD., FAISALABAD Versus SECRETARY, REVENUE DIVISION, ISLAMABAD
| Citation | 2004 PLP 1750 (PTD) |
| Forum / Court | Federal Tax Ombudsman |
| Bench Members | Justice (Recd.) Saleem Akhtar, Federal Tax Ombudsman |
| Parties | FATEH TEXTILE INDUSTRY (PVT.) LTD., FAISALABAD Versus SECRETARY, REVENUE DIVISION, ISLAMABAD |
| Primary Law | Income Tax Ordinance (XXXI of 1979)‑‑‑ |
Q1: What are the key laws and sections cited in 2004 PLP 1750 (PTD)?
This judgment primarily cites: Income Tax Ordinance (XXXI of 1979)‑‑‑ as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2004 PLP 1750 (PTD)?
The case was heard and decided by the Federal Tax Ombudsman bench comprising: Justice (Recd.) Saleem Akhtar, Federal Tax Ombudsman.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2004 PLP 1750 (PTD) (FATEH TEXTILE INDUSTRY (PVT.) LTD., FAISALABAD Versus SECRETARY, REVENUE DIVISION, ISLAMABAD). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
‑‑‑‑Ss. 138‑E(4)(5), 89 & 85‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)‑‑‑Disposal of application by the Settlement Commission ‑‑‑Maladministration‑‑‑After settlement of disputed issues by the Settlement Commission, Complainant/assessee withdrew appeal but did not pay tax on the ground that Assessing Officer did not give effect to the order of Settlement Commission and issued demand notice and challan on the basis of Income determined by the Commission and committed serious malad ministration as Assessing Officer was duty bound to issue demand notice on the basis of order of Settlement Commission as envisaged under S.85 of the Income Tax Ordinance, 1979‑‑‑Assessing Officer on the contrary, levied additional tax under. S.89 of the Income Tax Ordinance, 1979 on the original demand on the basis of income assessed by the Assessing Officer, completely ignoring the order of Income Tax Settlement Commission‑‑‑Department contended that since the Complainant/assessee did not fulfill the necessary condition of payment of tax on the basis of income settled by the Settlement Commissioner by the date prescribed in the order of Settlement Commission the order of Settlement Commission stood automatically cancelled and that of Assessing Officer restored‑‑ Val.idity‑‑‑S.138‑E(5) of the Income Tax Ordinance, 1979 made it mandatory that‑ the order passed under S.138‑E(4) of the Income Tax Ordinance, 1979 shall provide for the terms of settlement including any demand of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective‑‑‑Commission did not state the tax to be paid by the Complainant/assessee‑‑‑Was not possible for the complainant to calculate and pay the tax on his own‑‑‑As the copy of order was sent to Assessing officer it was his duty to follow up the matter by issuing demand notice but it was not done‑‑‑Assessing Officer instead of calculating tax on the income determined by the Commission and issuing demand notice wrote to the Complainant/assessee that since it had not made payment of tax on income determined by the Commission, the order of Settlement Commission stood automatically vacated‑‑‑This communication was contrary to law‑‑‑Assessing Officer did not take any action for notifying the tax due and its recovery and thus committed serious `maladministration'‑‑‑Assessing Officer committed negligence and issued illegal order under S.59 of the Income Tax Ordinance, 1979 charging additional tax on income assessed by the Assessing Officer instead of income settled by the Commission and by refusing to give effect to the order of Settlement Commission‑‑‑Order of Assessing Officer was illegal, unjust, arbitrary and perverse which fell under mal administration‑‑‑Federal Tax Ombudsman recommended that the Commissioner of Income Tax cancels the order under S.89 of the Income Tax Ordinance, 1979 made by the Assessing Officer on 8‑6‑2001; give effect to the order of Income Tax Settlement Commission and get the demand notice issued and challan on the basis of income determined by the Settlement Commission vide its order, dated 13‑11‑1999. 2002 PTD 1918 and Complaint No. 1438 of 2002 ref. Ch. Manzoor Ahmad for the Complainant. Mehmood Jaffari, D.‑C.I.T. for the Revenue.
Judgment & Decree
6. Now coming to the facts of the case, the Commission vide its order, dated 13‑11‑1999 determined the income at Rs. 1,750,
000. The operative part of the order of Commission is reproduced as under:‑‑ "After discussion with the assessee the disputed issues are settled as under:‑‑ (i) Total income is fixed at Rs.1,750,000. (ii) Appeal filed by the assessee before the learned CIT(A) shall be withdrawn. The assessee has agreed to above. The above settlement is subject to following conditions:‑‑ (a) Income Tax, if any, on the basis of above settlement will be paid by the assessee and a copy of the challan shall be furnished in the Regional Office of I.T.S.C. by 27‑11‑1999. (b) A letter addressed to the learned CIT(A) for withdrawal of appeal filed by the assessee will be furnished in the Regional Office of the I.T.S.C. Lahore by 27‑11‑1999. This order however will not be made precedent for any subsequent order in this case or an order in any other case. If any or all of the, above terms is not complied with by the assessee the I.T.S.C. reserved the right to take appropriate
7. From the above order it is quite evident that in case of non fulfillment of conditions of settlement the Income Tax Settlement Commission had reserved the right to take action. It is pertinent to note that section 138(5) makes it mandatory that the order passed under section 138(4) shall provide for the terms of settlement including any demand of tax, penalty or interest,, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective. The Commission did not state the tax to be paid by the complainant. It was therefore, not possible for the complainant to calculate and pay the tax at his own. As the copy of the order was sent to DCIT it was his duty to follow up the matter by issuing demand notice. But it was not done.
8. The Taxation Officer instead of calculating tax on the income determined by the Commission and issuing demand notice wrote to the complainant that since it had not made payment of tax on income determined by the Commission, the order of Settlement Commission stood automatically vacated. This communication was contrary to law. The concerned Taxation Officer did not take any action from 28‑11‑1999 to 8‑6‑2002 for notifying the to due and its recovery and thus committed serious maladministration. 9 It is quite evident that DCIT committed negligence as discussed above and issued illegal order under section 89, dated 8‑6‑2001 charging additional tax on income assessed by the DCIT instead of income settled by the Commission and by refusing to give effect to the order of Settlement Commission. The action of DCIT is illegal, unjust, arbitrary and perverse which falls under maladministration.
10. It is recommended. (i) The Commissioner of Income Tax cancels the order under section 89 of the Repealed Ordinance made by DCIT on 8‑6‑2001. (ii) Give effect to the order of Income Tax Ordinance Settlement Commission and get the demand notice issued and challan on the basis of Income determined by the Settlement Commission vide its order, dated 13‑11‑1999, (iii) Compliance report be furnished within 45 days of receipt of these recommendations by Revenue Division. C.M.A./4/FTO Order accordingly.