Assessment order held vindictive & biased: FTO spells out law to initiate disciplinary action

Federal Tax Ombudsman (FTO) rules that Section 2(3) (VII) of FTO Ordinance, 2000 provides disciplinary action against an officer whose order of assessment is held by a competent appellate authority to be vindictive, capricious, biased or patently illegal.
The FTO in a recently issued order observed that supervisory officers in the Deptt (Addl CIR, CIR and CCIR) also bear a heavy responsibility for exercising effective oversight over the work done by the assessing officers. They are required to inspect their work on a regular basis and comment on their work so as to guide them and also deter them from acting rashly or irresponsibly in a manner that is contrary to law. Promotion and posting of the assessing officers depend on the evaluation of their performance by the supervisory officers.
When contacted, complainant Waheed Shahzad Butt told Business Recorder that a taxpayer is not to be put under fear that he has to remember scenario of each and every entry at the end of a year. Such like attitude of Tax department to show the muscle neither serves the public exchequer nor the economy of the country.
Sources further told that in this case of its first kind against three FBR officials, Dr Akram Khan, CIR, Waqar Ahmad, CCIR and Muhammad Nadeem, IRAO, FTO Abdur Rauf Chaudhry recommended the FBR to ensure that the IRAO attends and successfully completes a course of compulsory training in Income Tax Law and Accounts at Directorate of Training (IR). His retention in service and payment of Additional Allowance to be made contingent to appropriate certification of professional competence by the training institution and appropriate observations are recorded in the PERs of the IRAO and his supervisory officers, ie the CIR and the CCIR.
The FTO order states "Own Motion Complaint taken up for investigation to take cognizance of the matter brought to our notice by a taxpayer citizen of Pakistan, admittedly not personally aggrieved, pertaining to gross professional incompetence, inefficiency and mollified of three FBR functionaries. The relevant facts in this case are that IRAO (Muhammad Nadeem) finalised an amended income tax assessment in the case of a private company in which, interalia, he made additions under Sections 111 of the aggregating to Rs 83,658,663/-. CIR (A) deleted both additions. The ATIR upheld into the treatment as accorded by the CIR (A). The Dept then filed a Reference. This reference was rejected by the Court vide Judgement in PTR No 214/2014. Waheed Shahzad Butt, Advocate, the Complainant, contends that as a consequence of the above cited High Court Judgement, the factual as well as legal determination have attained finality and the Dept having made no further attempt to contest the same has accepted the adjudication as made by the first appellate authority. That being so, it is contended that the Dept was bound to take strict notice of the observations as recorded by the CIR (A) as well as by the ATIR and take action against the three FBR officials for their gross professional incompetence, negligence, inefficiency and, in the case of the IRAO, also his alleged mollified in deliberately applying provisions of law and principles of accountancy in a whimsical manner, with ulterior motive. The following observations recorded in 110 TAX 41 = 2015 PTD 906, in particular serve to display the objectionable conduct and professional incompetence of the assessing officer: "Taxpayer is not to be put under fear that he has to remember scenario of each and every entry at the end of a year. Such like attitude of Tax department to show the muscle neither serves the public exchequer nor the economy of the country". "Strange enough that without considering the clearly worded order issued by the Honourable High Court a huge amount of Rs 81,684,612/- has been taxed as deemed income solely by misapplying the provisions of the Ordinance which is patently illegal." "IRAO miserably failed to identify the nature of investment by misconstruing the law and has proceeded to add the said amount into taxable income u/s 111(1)(b)."
"It is a transgression which cannot be approved. This bent of mind at the part of IRAO reflects poor appreciation of law and facts." ..."IRAO does not know the basic accounting principles"..."it appears that IRAO has his own accounting principles and interpretation of fiscal laws like the Ordinance. Additions u/s 111 made by the IRAO are not only vindictive, capricious, biased but also patently illegal and nullity in the eyes of law."
The assessing and supervisory officers' lapses, tantamount to maladministration as defined in section 2(3) of the FTO Ordinance. FBR to ensure that the IRAO attends and successfully completes a course of compulsory training in Income Tax Law and Accounts at DOT(IR). His retention in service and payment of Additional Allowance to be made contingent to appropriate certification of professional competence by the training institution; appropriate observations are recorded in the PERs of the IRAO and his supervisory officers, ie the CIR and the CCIR; senior officers in field formations exercise regular supervisory oversight of work done by the subordinate assessing officers and take prompt cognizance of all whimsical and arbitrary actions: FTO order added.