The Federal Tax Ombudsman (FTO), Munir A Sheikh, has said that FTO Ordinance is in the nature of a welfare legislation introducing accountability in tax administration for achieving good governance and healthy tax culture and providing clear and friendly atmosphere which may restore trust of taxpayers and investors. He said the office of the FTO was created to grant relief to the aggrieved parties. The FTO made these observations while deciding a complaint of Khalid Construction Company (Pvt) Ltd and objections raised by CBR officials questioning jurisdiction of FTO in certain matters.
The complainant had lodged a petition against the assessment u/s 62/132 of the Repealed Ordinance for the assessment year 1997-98 on the ground that (a) there was no justification for the Deputy Commissioner Income Tax(DCIT) to make additions u/s 13 of the R.O when the only source of income of the complainant was rental income; (b) DCIT ignored the orders of his higher appellate authorities, Commissioner Income (Appeal) and Income Tax Appellate Tribunal (ITAT) who had allowed the project operating expenses but were disallowed by the DCIT which was tantamount to maladministration.
In his reply, Regional Commissioner Income Tax Northern Region denied any maladministration and took the plea that since legal remedy of appeal was available to the complainant, it was outside the jurisdiction of the FTO.
After considering the rival arguments, both verbal and written, and perusing the record, the FTO observed that the re-assessment order clearly shows that no judicious effort was made to examine the case of the complainant with regard to the various additions made under u/s 13 of the RO.
Further, the FTO noted, the partiality and mala fides were obvious when considered in the background that the DCIT in his reassessment order did not follow the orders of the highest appellate authority on issues of fact ie ITAT.
The FTO said that while making the reassessment, the DCIT ought to have considered the fact that the ITAT had set the assessment aside on point of limitation.
The FTO observed that the definition of misadministration is wide and inclusive in nature and includes decisions, processes, act of omission or commission which are contrary to law, rules and regulations and are perverse, arbitrary or unreasonable, unjust, biased, oppressive or discriminatory.
The FTO said the acts of DCIT in this case clearly fall in the definition of maladministration under section 2(3)(I)(a) , (b), c & (d) of the FTO Ordinance.
Accepting the complaint of Khalid Construction Company, the FTO directed the Secretary, Revenue Division, CBR, to counsel the DCIT, who passed the impugned order (Mohammad Iqbal), for his lack of knowledge of accountancy and law and for showing disregard for the orders of higher appellate forums.