The Federal Tax Ombudsman (FTO) has held that passing of non- speaking order by the Commissioner (Appeals) was considered maladministration under the FTO Ordinance, as FTO had jurisdiction to entertain complaints of maladministration at any level of the hierarchy constituted under Income Tax Ordinance, 2001 including Commissioner Appeals. Sources told fbr times here on Monday that the FTO annual report-2013 has highlighted the case in the performance review of FTO office wherein it is held that FTO had jurisdiction to entertain complaints of maladministration at any level of the hierarchy constituted under Section 207 of the Ordinance. The passing of non speaking order by the Commissioner (Appeals) ignoring the grounds of appeal was considered maladministration under Section 2(3) of the FTO Ordinance and the Commissioner was directed to pass a speaking order, as per law, invoking jurisdiction u/s 221 of the Ordinance. When contacted, a Lahore based tax lawyer Waheed Shahzad Butt told this correspondent an officer of Inland Revenue Service working as Commissioner (Appeals) or as an Accountant Member in the Appellate Tribunal falls under the broad definition of Tax Employee as per provisions of FTO Ordinance, 2000 and in case the FTO has reason to believe that any Tax Employee has acted in a manner warranting criminal or disciplinary proceedings against him, he may refer the matter to the appropriate authority for necessary action. Furthermore law empowers the FTO to entertain complaints against all Tax Employees including Chief-Commissioner, Commissioner-IR and Commissioner (Appeals) administering fiscal laws because of the reason the FTO is mandated to identify and review systemic issues and maladministration that relates to problems within the Revenue Division and its field formations, Waheed added. The FTO annual report states, a complaint was filed against maladministration in Commissioner Inland Revenue (Appeals) order. Briefly stated, the Deptt initiated proceedings to probe the investment in vehicle and asked the Complainant to file wealth statement u/s 116 of the Ordinance. In response, the Complainant submitted that the vehicle was purchased out of lifelong savings and sale of golden ornaments. Being dissatisfied with the explanation, the assessment was made u/s 122(1) of the Ordinance and the unexplained investment was assessed to tax. Feeling aggrieved, the taxpayer filed an appeal before the CIR (Appeals) who rejected the same with the observation that addition on account of unexplained investment u/s 111(b) was made after considering the facts of the case. The taxpayer contended in the complaint before the FTO that Commissioner (Appeals) upheld the assessment without considering the points of law and the grounds of appeal. The amendment of assessment, if at all, could be made in the Tax Year 2010, as law with regard to unexplained income or assets, as per Section 111 of the Ordinance, was amended through Finance Act, 2010. The amendment being substantive in nature is adversely affecting the rights of the Complainant and was not applicable retrospectively. Furthermore, a reasonable opportunity of hearing was not provided by the CIR. The addition was made u/s 111(b) as unexplained investment, whereas under the law the addition could be made, if at all, u/s 111(c) in the category of an unexplained expenditure. This was contested through grounds of appeal, but the CIR (Appeals) ignored the same and did not pass a speaking order. On the contrary, the CIR (Appeals) and the Chief Commissioner, RTO, Gujranwala contended that the FTO had no jurisdiction to entertain the complaint against the order of appeal, and also the order involving examination of statutory provisions governing assessment of tax. As the FTO has jurisdiction to entertain complaints of maladministration at any level of the hierarchy, constituted under Section 207 of the Ordinance, the jurisdiction related objection was considered misconceived. A question that had arisen in this case was whether all the grounds of appeal were adjudicated and a speaking order passed or not. The record showed that nine grounds of appeal were submitted to the CIR (Appeals) which had been reproduced in the Order-in-Appeal. Apart from that additional grounds and revised grounds were also submitted. Though, the CIR (Appeals) briefly referred to the grounds, but he did not adjudicate the issue with regard to the application of provisions of section 111(b) or 111(c). Moreover, no speaking order was passed with regard to the retrospective application of the amendment made vide Finance Act, 2010. The passing of non speaking order by the Commissioner (Appeals) ignoring the grounds of appeal was considered maladministration under Section 2(3) of the FTO Ordinance and the Commissioner was directed to pass a speaking order, as per law, invoking jurisdiction u/s 221 of the Ordinance, the FTO report added. On receipt of the Recommendations, the Commissioner (Appeals) passed rectification order as neither any review has been preferred before the FTO nor any representation has been filed before the President.
Posted on: Fri, 01 Aug 2014 12:56:43 +0000
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