| Case ID |
4676b57b-54b1-45e4-9a85-987ebfaa6a55 |
| Body |
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| Case Number |
5424/KHI/IT/2022 |
| Decision Date |
Jan 04, 2023 |
| Hearing Date |
Apr 13, 2021 |
| Decision |
The Federal Tax Ombudsman adjudicated in favor of the complainant, Ms. Rifat Usto, determining that the assessment order dated June 30, 2022, for the tax year 2016, was unlawfully issued. The Department of Income Revenue (DCIR) failed to provide adequate opportunity for hearing and violated the instructions of the Federal Board of Revenue (FBR) as outlined in letter no. 2(22)Rev.Bud./2020 dated May 25, 2021. The Ombudsman concluded that the entire process breached legal procedures, principles of natural justice, and the doctrine of audialterampartem, rendering the order unlawful per se. Consequently, the Commissioner-IR, Zone-II, RTO-I Karachi, was directed to revisit the impugned order in accordance with Section 122A of the Ordinance, ensuring proper hearing opportunities for the complainant. Additionally, the FBR was instructed to report compliance within 45 days, highlighting the commitment to fair taxation practices and administrative accountability. |
| Summary |
In the landmark case No. 5424/KHI/IT/2022, adjudicated by the Federal Tax Ombudsman in Karachi and decided on January 4, 2023, the petitioner, Ms. Rifat Usto, challenged the legality of an assessment order issued by the Department of Income Revenue (DCIR) for the tax year 2016. The case, cited as 2023 SLD 389 and 2023 PTCL 337, revolves around alleged procedural irregularities and administrative excesses in the tax assessment process. The central contention was the issuance of the assessment order dated June 30, 2022, based on discrepancies in net asset declarations, which the petitioner argued were founded on mere audit suspicions rather than definite information as mandated by Section 122(8) of the Income Tax Ordinance, 2001.
Represented by esteemed legal advocates, including Mr. Badruddin Ahmad Quraishi and Mr. Muhammad Tanvir Akhtar, Ms. Usto asserted that the DCIR neglected to provide a fair opportunity for hearing, thereby violating the principles of natural justice and the Federal Board of Revenue's (FBR) directives. The FBR's letter no. 2(22)Rev.Bud./2020 dated May 25, 2021, explicitly instructed that amendment proceedings under Section 122(5) should not be initiated based solely on internal audit suspicions. However, the Ombudsman found that the DCIR's actions were in blatant disregard of these instructions, constituting maladministration under the Federal Tax Ombudsman Ordinance, 2000.
The Ombudsman's comprehensive review highlighted several critical failures, including the improper service of notices through the IRIS system without adequate alerts via SMS or email, which contravenes Section 218(1)(d) and Rule 74 of the Income Tax Rules, 2002. This oversight further exacerbated the lack of due process, ultimately leading to an unlawful tax liability imposed on Ms. Usto.
Judged by Dr. Asif Mahmood Jah, the case underscores the pivotal role of the Federal Tax Ombudsman in ensuring accountability and fairness within the tax administration framework. The decision mandates the DCIR to revisit the impugned order in compliance with Section 122A, ensuring that taxpayers receive proper hearing opportunities. Additionally, the FBR is instructed to report compliance within 45 days, reinforcing the commitment to transparent and just tax practices.
This case is a significant precedent in tax law, emphasizing the necessity for tax authorities to adhere strictly to legal provisions and procedural fairness. It serves as a crucial reminder to both taxpayers and tax officials of the importance of maintaining integrity and justice in financial assessments and administrative actions. The ruling not only vindicates the rights of the taxpayer but also reinforces the institutional mechanisms designed to prevent administrative overreach and ensure equitable taxation policies. |
| Court |
Federal Tax Ombudsman
|
| Entities Involved |
Federal Tax Ombudsman,
FBR,
DCIR,
DOR
|
| Judges |
DR. ASIF MAHMOOD JAH
|
| Lawyers |
Mr. Badruddin Ahmad Quraishi,
Mr. Muhammad Tanvir Akhtar,
Nemo,
Mr. Hamid Mukhtiar
|
| Petitioners |
MS. RIFAT USTO
|
| Respondents |
THE SECRETARY, REVENUE DIVISION, ISLAMABAD
|
| Citations |
2023 SLD 389,
2023 PTCL 337
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Ordinance, 2001
|
| Sections |
122
|