2008 PLP 1199 (PTD)

(vi) The proceedings were joined by the complainant through his A.R. and it was well within the knowledge of the Assessing Officer that service of notices, order etc. could be made on the A.R. while the complainant was away at Rahim Yar Khan for harvesting the Rabi Crop. (vii) The complainant was condemned unheard and was not provided opportunity to furnish evidence of source of investment in the purchase of the motor car. It has been prayed that directions be issued for the cancellation of the assessment order and for re-framing it after allowing the complainant proper opportunity of being heard.

2. The respondent's reply consists of the comments of the Regional Commissioner of Income Tax, Central Region, Multan forwarded by the Revenue Division. It contains the preliminary contention that since the matter relates to assessment of income and determination of tax liability it falls within the ambit of section 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. On facts the main points in the reply are as follows:

(i) Proceedings in the case were initiated on the basis of information that the complainant had purchased a Nissan Sunny motorcar 1992 model for Rs.505,172 from the Customs Authorities. (ii) Since the complainant was not borne on the tax records he was booked on Trial Register and in response to notice under section 56 of the repealed Ordinance he filed income tax return indicating that he had no taxable income and had income only from 12.5 acres of agricultural land. (iii) The complainant was asked to explain the source of investment in the purchase of the motorcar but there was no reply. A notice under section 13(1)(aa) of the repealed Income Tax Ordinance, 1979 was, therefore, issued on 25-5-2001 whereby he was again asked to explain the source of investment. (iv) Despite proper service of the notice, the complainant did not file any reply to the show-cause notice. (v) The assessment was, therefore, finalized ex parte under section 63 of the repealed Ordinance and the value of the motorcar amounting to Rs.505,172 was assessed in the hands of the complainant under section 13(1)(aa) of the repealed Ordinance. (vi) The following statutory notices were reportedly issued to the complainant prior to the completion of assessment: (a) Notice under section 61 dated 24-1-2001 for hearing on 10-4-2001, received back unserved. (b) Notice under section 61 dated 19-4-2001 for hearing on 3-5-2001 served through registered post. (c) Notice under sections 61/62/13(1)(aa) dated 25-5-2001 for hearing on 14-6-2001 served upon the taxpayer. (vii) As mentioned above, proper opportunity of being heard was provided to the complainant before the completion of assessment.

3. On the date of hearing the representative of the respondent attended with the complainant's tax records. An application was, however, received from the learned Advocate of the complainant requesting that the hearing may be adjourned because he had to attend the case of his senior at Lahore on the same date. Copy of a notice of hearing from the C.I.T.(Appeals) Zone-III, Lahore was attached with the adjournment application. A hearing before the C.I.T.(Appeals) can however, not be considered as a valid reason for seeking an adjournment from this office. Even otherwise the relevant tax records have been furnished by the representative of the respondent and no specific assistance is necessary from the learned Advocate. The adjournment application is, therefore, not accepted.

4. As is evident from the complaint and the respondent's reply, the complainant's main grievance is that he had not been given proper opportunity to explain the source of investment in the purchase of the motor-car and had thus been condemned unheard. The department, on the other hand, maintains that opportunity was duly provided. In this regard it is evident from the notices listed in the parawise comments of the respondent referred to in para.2(vi) above that, the notice under section 61 dated 24-1-2001 was received back unserved while the notice under section 61 dated 19-4-2001 for hearing on 3-5-2001 was served through registered posts. No postal receipt of any, registered letter was however, available on file and it was admitted by the representative of the respondent and there was no proof that the notice had actually been dispatched. A notice under sections 61/62/13(1)(aa) of the repealed Income Tax Ordinance, 1979 dated 25-5-2001 for hearing on 14-6-2001 was then statedly served on the complainant himself. The signatures in acknowledgment of this notice statedly served on 10-6-2001 were however, found to be different from the complainant's signatures on other documents/returns. In view of the foregoing the ex parte assessment is quite illegal as there is no evidence of proper service of any statutory notice prior to its completion. The framing of the ex parte assessment involving addition under section 13(1)(aa) of the repealed Ordinance, thus constitutes "maladministration" as defined in section 2(3)(i)(a) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 and the matter falls within the jurisdiction of this Office.

5. In the light of the above, it is recommended that -- (i) Action be taken under section 122A of the Income Tax Ordinance, 2001 to cancel the ex parte assessment for the year 1998-99 and to reframe the assessment after allowing the complainant a proper opportunity of being heard. (ii) Compliance be reported within 45 days. C.M.A./75/FTO Order accordingly.