Pakistan Case LawMUHAMMAD SALEEM Versus The SECRETARY, REVENUE DIVISION, ISLAMABAD
This matter involves a complaint filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 against the rejection of a taxpayer's request for revision of an amended assessment order. The core legal question was whether the Commissioner of Inland Revenue can exercise suo motu revisionary powers under Section 122A of the Income Tax Ordinance, 2001 upon receiving an application or information provided by a taxpayer pointing out illegalities in an assessment. The Federal Tax Ombudsman held that an application from a taxpayer can serve as information to set suo motu proceedings in motion under Section 122A, and refusing to examine the merits on the ground that an application cannot trigger such action constitutes maladministration. The Federal Tax Ombudsman recommended that the Federal Board of Revenue direct the Commissioner to revisit the order under Section 122A of the Income Tax Ordinance, 2001, decide the case afresh after affording a proper hearing to the complainant, and report compliance within thirty days. The Ombudsman established the principle that information provided through a taxpayer's application is sufficient to initiate suo motu revision proceedings under Section 122A of the Income Tax Ordinance, 2001.
- Whether the Commissioner of Inland Revenue can invoke suo motu powers under Section 122A of the Income Tax Ordinance, 2001 based on an application filed by a taxpayer?
- Does the refusal of the Commissioner to examine a taxpayer's revision application on the ground that it was initiated by the taxpayer constitute maladministration under the Federal Tax Ombudsman Ordinance, 2000?
FINDINGS/RECOMMENDATIONS
The complaint is filed in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against the rejection of request for revision of order for the tax year 2010 passed under Section 122(1)(5) in terms of Section 122A of the Income Tax Ordinance, 2001 (the Ordinance).
2.Brief facts of the case are that the Complainant, a proprietary concern, filed return of income for tax year 2010 under Clause 87/88 of Part-IV of 2nd Schedule of the Ordinance, which was deemed assessment order in terms of Section 120(1)(b). This order was however, amended under section 122(1)(5) of the Ordinance vide order dated 30.6.2015. According to the AR, the above order suffered from legal as well as factual infirmities as it was passed ex parte without providing opportunity of hearing and considering facts of the case. The Complainant approached the Commissioner-IR (CIR) vide letter dated 20.08.2015 to revisit the order by invoking Section 122A of the Ordinance. Without considering merits of the case and passing formal order, request of the complainant was regretted vide letter dated 29.12.2015 on the ground that section 122A of the Ordinance vested only suo motu powers to the CIR and action could not be taken on the application of the complainant.
3.In response to the notice of complaint issued to the Secretary, Revenue Division FBR vide letter C.No.4(21)TO-1/2016 dated 27.01.2016 submitted comments of the CIR, Zone-I, RTO , Hyderabad dated 22.01.2016. It was contended that the Complainant filed return of income for tax year 2010 under Clauses 87/88 of Part-IV 2nd Schedule to the Ordinance. It was further contended that the return for tax year 2010 was not filed voluntarily but the same was furnished subsequent to cognizance on a complaint of tax evasion taken by the Department (Deptt.) and in response to notice issued under Section 114 of the Ordinance. It was averred that the word 'suo-motu' is a Latin legal term defined as 'on its own motion', as distinct from action taken or powers exercised on pointation. Reliance was placed on reported judgments captioned as Haji Rehm Dil v. The Province of Balochistan and others (1999 SCMR 1060) and Mst. Mubarak Salman and others v. The State (PLD 2006 Karachi 678). It was concluded that the CIR could not assume jurisdiction under Section 122A on application of the Complainant due to restricted scope of said Section. So the question of passing order discussing merits of the proceedings did not arise.
4.During the hearing, the AR reiterated that as the amended order for tax year 2010 dated 30.6.2015 suffered serious legal infirmities as well as factual lapses, the Complainant moved an application requesting indulgence of the CIR in terms of Section 122A of the Ordinance. The CIR without hearing the Complainant regretted his request vide letter dated 29.12.2015. He further contended that in terms of Section 122A of the Ordinance the CIR was required to pass formal order after hearing the Complainant as held in the complaint No.147/KHI/IT(38)/512/2015 decided on 30.06.2015 and that CIR rejected the application without appreciation of legal provisions.
5.The arguments of both the parties have been given due consideration and record perused. The record shows that earlier the Complainant had lodged complaint No. 368/KHI/IT(123)/1202/2015, which was closed as withdrawn vide order dated 18.11.2015 as the complainant had already invoked jurisdiction of the CIR in terms of section 122A of the Ordinance.
The CIR, however, without considering merits of the case rejected the complainant's request on the following ground:--
" the CIR has only suo motu powers in matters requiring intervention under section 122A of the Ordinance. Action cannot be taken on application by the taxpayer".
6.It is a well established legal principle that suo motu action requires some information for initiation of action to examine the record, without which how the CIR can come to know about any irregularly or illegality in an assessment order. Interestingly, both the reported judgments relied upon by the Deptt:, in the parawise comments support contention of the complainant rather than that of the Deptt:. The said judgments elaborate powers of superior courts regarding exercise of inherent Suo Motu Jurisdiction, on the basis of some information. This means that for exercise of Suo Motu jurisdiction, some information in any form in essential. There is no second view that the CIR received the information highlighting irregularities and serious legal flaws in the impugned order through an application filed by the complainant but failed to exercise this jurisdiction on an irrelevant ground referred to in Para-5 supra. The application moved by the complainant was, therefore, enough to set in motion the proceedings of section 122A of the Ordinance. The CIR has posited negative meanings to suo motu action under section 122A, as otherwise he can never even invoke provisions of this section in practical terms. Rejection of application of the complainant arbitrarily is against the spirit of law which required the Commissioner to correct the illegality committed by his subordinates to avoid prolonged litigation. Similar view was taken by this office in C.No. 147/KHI/IT(38)/512/2015. During the hearing the department relied upon another reported judgment captioned as Muhammad Mubeen-us-Salam and others v. Federation of Pakistan through Secretary Ministry of Defence and others (PLD 2006 Supreme Court 602) which has no relevance with the issue in hand. In this judgment the Apex Court has decided the questions whether the employees/teachers of PAF educational institutions were Civil Servants under section (1)(b) of the Civil Servant Act, 1973 or for the purpose of section 2-A of the Service Tribunals Act, 1973 and whether the employees/teachers of above institutions could invoke the jurisdiction of the Service Tribunal as well as the Apex Court.
Findings.
7.Failure to revisit the order dated 09.05.2014 in terms of section 122A of the Ordinance is tantamount to maladministration in terms of section 2(3)(b)(c)(d) of the FTO Ordinance.
Recommendation:--
8.FBR to--
KMZ/38/FTO Order accordingly.
Judges on this bench
- Abdur Rauf Chaudhary78 judgments
- Federal Tax Ombudsman30 judgments