Assessment under section 122(5A) of IT Ordinance: FTO says provisions allow multiple Amendments

Giving an order in favour of Federal Board of Revenue (FBR), Federal Tax Ombudsman Dr Muhammad Shoaib Suddle has observed that the provisions of section 122(5A) of the Income Tax Ordinance 2001 permit multiple amendments to an assessment in case of concealment.
Sources told Business Recorder here on Thursday that in a recent order passed by FTO it was ruled, the provisions of Section 122(5A) of the Ordinance permit multiple amendments to an assessment. This is not a case of ''double jeopardy'' and the passage of an order under Section 122(5A) of the Ordinance on the basis of concealment of sales/turnover is, prima facie, well within the legal framework and does not suffer from any defect.
The original record is missing and reportedly misplaced, there is no entry in the Return Receipt Register, Daily Dak Register or Refund Register pertaining to the Complainant. The order under section 122(5A) is well within the legal framework, Federal Tax Ombudsman (FTO) conveyed to the tax authorities while disposing of a complaint.
The FTO stated that delegation of authority by the Commissioner IR to the Addl CIR to exercise revisionary jurisdiction under Section 122(5A) is within legal framework and all authorities placed in the charge of the Commissioner IR stand empowered to exercise their delegated authority in accordance with law and no fatal defect of jurisdiction in the case of any authority has been established by the Complainant.
According to the findings of the FTO in C.No 757/ LHR/IT(563)/1316/2012 issued on Thursday, complainant, a manufacturer/supplier of commercial billboards, hoardings and signboards and related services, has been assessed for Tax Year 2009 under Section 122(5A) of the Ordinance vide order dated 07-08-2012, creating a tax demand of Rs 7,252,701. Besides, a penalty of Rs 7,044,701 under Section 182(2) of the Ordinance was also imposed for concealment of sales. The Complainant points out that an earlier attempt to invoke the provisions of Section 122(5A) of the Ordinance for Tax Year 2009 vide Show Cause Notice dated 27.05.2011 was abandoned when the assessing officer accepted the reply filed by him. That being so the assessment made under Section 122(5A) of the Ordinance vide order dated 07.08.2012 is nothing more than brazen victimisation of the Complainant.
The FTO ruled that the complainant''s entire case against the Dept is made out largely on a legal plane and not a single word has been said against the concealment of sales. The argument is made that having once dropped proceedings initiated under Section 122(5A) of the Ordinance it was now legally possible for the Addl Commissioner IR to invoke revisionary jurisdiction a second time. This was because when the first Show Cause Notice was issued by the predecessor Additional CIR, the deemed assessment order under Section 120(1) of the Ordinance then in the field had merged into the 122(5A) proceedings underway at that time. Subsequently, there was no deemed assessment order in the field for the successor Addl CIR to act upon by invoking revisionary jurisdiction for a second time.
The argument of the Complainant has been considered and found to be misconceived for the reason that when the first show cause notice was issued, the Complainant filed a reply that was accepted by the Addl CIR on the issue of nature of business and he dropped the proceedings thereby restoring the earlier position (status quo ante). The question of any ''merger'' thus did not arise. Furthermore, the objective basis for invocation of the provisions of Section 122(5A) of the Ordinance was quite different on the two occasions. In the first instance, the moot point was the Complainant''s status as manufacturer. In the second instance, the Addl CIR did so to take cognisance of suppression/concealment of sales/turnover by the Complainant that rendered the deemed assessment ''erroneous and prejudicial to the interest of revenue.'' Under the circumstances, the provisions of Section 122(5A) of the Ordinance permit multiple amendments to an assessment. This is thus not a case of ''double jeopardy'' and the passage of an order under Section 122(5A) of the Ordinance on the basis of concealment of sales/turnover is, prima facie, well within the legal framework and does not suffer from any defect.
The Complainant''s allegation of mala fide against the Dept has also been looked into. According to the Complainant, the proceedings initiated under Section 122(5A) of the Ordinance are a reaction to the complaint filed by him before the Hon''ble FTO. Examination of the record however reveals that the complaint was filed before the FTO on 27.09.2012 whereas the SCN under Section 122(5A) of the Ordinance was issued much earlier, ie on 27.06.2012. Moreover, the Dept had good reason to resort to the provisions of Section 122(5A) when on scrutiny of the tax deduction data under Section 153(1)(b) of the Ordinance for Tax Year 2009, it found out that the Complainant had suppressed turnover significantly. Thus, it is not evident that the invocation of revisionary jurisdiction by the Addl CIR was artificially contrived to settle scores with the Complainant. The Complainant has also raised issues pertaining to delegation of authority by the Commissioner IR to the Addl CIR to exercise revisionary jurisdiction under Section 122(5A). He is of the opinion that in the facts and circumstances of the case the Addl CIR did not have jurisdiction under the law to exercise revisionary jurisdiction in the manner done by him. The objection raised has been considered and found to be misconceived. All the authorities placed in the charge of the Commissioner IR stand empowered to exercise their delegated authority in accordance with law and no fatal defect of jurisdiction in the case of any authority has been established by the Complainant.
The Complainant''s reference to proceedings relevant to earlier complaint No 2004-L/2008 in which the Appellate Tribunal ruled in the Complainant''s favour is irrelevant as these were placed on a different plane altogether. It is obvious that by so doing the Complainant seeks to derive unwarranted mileage in the current complaint before the FTO. The case law cited has been considered and is not found to be on all fours with the facts and circumstances relevant to the complaint currently before the FTO. No maladministration in the matter pertaining to exercise of revisionary jurisdiction in Tax Year 2009 under Section 122(5A) of the Ordinance is established, the FTO order added.