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The Secretary,

Revenue Division,

Government of Pakistan,

Islamabad. …Respondent

Dealing officer: …Mr.Asad Arif, Advisor


M/s. Muhammad Idrees Memon & Amiruddin Shaikh for the Complainant.

Pir Khalid Ahmed, DCIT, Hyderabad Zone for the Respondent.

The complainant, an Individual, is aggrieved by the ex-parte orders passed for the assessment years 1993-94, 1994-95 & 1995-96 by the Deputy Commissioner of Income Tax.

2. It is stated that the complainant was an employee (Manager) and an attorney appointed by Ms. Mumtaz Haroon, proprietor of M/s. Salim Corporation the business of which was started in the year 1993 and a power of attorney was executed by the proprietor in his favour on 26.09.1993. The Assessing Officer finalized the assessments for the years 1993-94 to 1995-96 creating a tax department of Rs.773,473 and treated the complainant as sole proprietor of the business instead of the real proprietor, Ms. Mumtaz Haroon. These assessments were completed ex-parte under section 63 of the repealed Income Tax Ordinance, 1979. The complainant, feeling aggrieved by such assessments, filed appeals before the Commissioner of Income Tax (Appeals) who, vide his order dated 12.11.1997, set aside the assessments for denove proceedings with the following remarks:

“There is force in the contentions. The assertion of the assessing officer regarding the appellant being the sole proprietor is belied from the fact brought on record. The Assessing Officer has jumped to hasty conclusions without proper appraisal of facts. The three assessments are, therefore, set aside for denove hearing in order to verify the factual position of the ownership of M/s. Salim Corporation and to dispose of the pending assessments in accordance with the law.”

3. Pursuant to the above order, the Assessing Officer again initiated the assessment proceedings during which he inquired from M/s. Roche Pakistan Limited with whom M/s. Salim Corporation had business dealing, as to who was the proprietor of the said Salim Corporation. In response thereto, M/s. Roche Pakistan Limited informed the Assessing Officer that the contact person of Salim Corporation is Mr. Idris, the complainant. On the basis of this information, the Assessing Officer again completed the assessments for the years under review by treating Mr. Idris as the proprietor and thus repeated the earlier treatment. The complainant then filed appeals before the Commissioner (Appeals) who again set aside the assessments for denove proceedings after giving due opportunity of being heard to the complainant. The Assessing Officer, however, again completed the assessments ex-parte by repeating the same treatment as was given on the earlier occasions by which the complainant has felt aggrieved and hence the present complaint.

4. The learned A.R of the complainant has contended that the fact that the complainant was not the owner of M/s. Salim Corporation is evident from the power of attorney which was executed on 26.09.1993 by the owner namely Mst. Mumtaz Salman W/o Muhammad Haroon in favour of the complainant appointing him as her Manager and attorney in respect of the firm M/s Salim Corporation. It is stated that in this power of attorney, the executant has herself admitted the complainant namely Muhammad Idris as her Manager and, as such, he cannot be treated as the proprietor of Salim Corporation. It is further contended that the Assessing Officer was not justified to rely upon the certificate issued by M/s Roche Pakistan Limited as this was never confronted to the complainant for his rebuttal. Moreover, in this certificate the complainant has never been identified as a proprietor but has been termed as contactable person and, therefore, the same cannot be used to treat the complainant as the actual owner of business. It is further stated that the ex-parte assessments completed were not legal and judicious as the complainant was not provided sufficient opportunity of being heard and the Assessing Officer never made an inquiry to ascertain the factual position regarding proprietorship of M/s. Salim Corporation. It is further contended that even the Manager, Muslim Commercial Bank of Pakistan, Market Chowk Hyderabad, where the account of the business was maintained, has confirmed that Ms. Mumtaz Haroon is the proprietor of M/s. Bio Nat Laboratories and Salim Corporation having bank A/c No.4823 – 2 which was opened on 24.09.1995.

5. In view of these facts it is contended that the orders passed by the Assessing Officer treating the complainant as a proprietor of Salim Corporation, Hyderabad are not valid as the complainant was only an employee and not the proprietor of the above firm and that such orders need to be cancelled.

6. In his written report, the Regional Commissioner has stated that in the light of the last appellate order, notices under section 61, 148 and letter No.841 dated 26.05.2001 were sent through registered A/D and the compliance was requested within 07 days of the receipt of the notice but on the date of hearing, neither the tax payer nor his authorized representative attended the proceedings which led the Assessing Officer to finalize the assessments for assessment years 1993-94, 1994-95 and 1995-96 ex-parte under section 63 of the repealed Income Tax Ordinance, 1979 and resultantly a tax demand of Rs.773,473 was created. It is contended that the assessments were finalized after giving reasonable opportunity of hearing to the complainant who failed to prove that the business under the name and style of M/s. Salim Corporation was not owned by him. It is further stated that the Manager, MCB vide his letter dated 26.11.1998 did not confirm that Salim Corporation was owned by Ms. Mumtaz Haroon and that the power of attorney in favour of the complainant alleged to have been cancelled by the proprietor on 29.09.1995 was not produced before the Assessing Officer and, as such, the assessments completed were in accordance with law and that, therefore, the complaint in question has no merit.

7. Parties have been heard and the record produced has been examined.

8. On quarry, the Deputy Commissioner appearing for the Department has stated that the returns of income were never filed in this case. It is also observed that the assessment orders for all the three years show that only once notices under section 61, 148 and a letter No.841 dated 26.05.2001 were issued which allegedly were not complied with by the complainant which consequently resulted in ex-parte assessments. During the course of hearing, the Deputy Collector appearing for the Department was asked to show the service of this notice. It has transpired from record that although the notices/letter were prepared and sent through registered post but these were never served on the complainant as the postal authorities sent back the notices/letter with the following remarks:

Even on the envelope containing these notices, there is a noting that “Registered A.D Return Back on 31.05.2001” but inspite of this, the Assessing Officer proceeded to complete the assessments.

9. The above would show that the assessments have been completed without any notice to the complainant and without ascertaining the factual position regarding ownership of business. The Assessments so completed are not sustainable in the eye of law as the complainant has been condemned unheard which is a violation of the principle of audi alteram partem. It is an old maxim of law that no one should be condemned unheard. The principle of natural justice require that hearing be granted to a person being condemned and since the impugned orders have been passed without providing opportunity of hearing to the complainant as required by law, therefore, these are not sustainable. Such orders being contrary to law and principle of natural justice tantamount to maladministration. In the circumstances it is recommended that:

  1. The concerned Commissioner of Income Tax should take action under section 122A of the Income Tax Ordinance, 2001 in respect of assessments for the charge years 1993-94 to 1995-96 and ensure that assessments are framed in accordance with law and facts of the case after ascertaining the real ownership of business and after providing a reasonable opportunity of hearing to the complainant.

ii). The Commissioner, Hyderabad Zone undertakes written counseling of the assessing officer who completed the assessments contrary to law and equity.

iii). Action in terms of recommendation (i) above should be completed within 45 days.

iv). Compliance be reported within one week of the completion of above action.

(Justice (R) Munir A. Sheikh)

Federal Tax Ombudsman

Dated: 2006



COMPLAINT NO.1368/2005

Allied Flour Mills (Pvt) Ltd.,

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