KARACHI: While disposing of a complaint, Tax Ombudsman Asif Jah has termed slacked audits as violative of FBR’s own policy. FTO has further remarked that issuance of non-speaking rejection orders in the trail of audit proceedings is an evident maladministration.
The subject complaint was filed against the Commissioner-IR Appeal and Assistant Commissioner-IR Audit for passing arbitrary, harsh order ex-parte and ignoring all the grounds of appeal. Briefly, the complainant is an individual engaged in textile manufacturing. The complainant’s case for Tax Year 2015 was selected for audit by the Board. Due to non-compliance, final show case notice , ex-parte order were passed, creating demand of Rs. 3.2(M). Bank accounts were attached & recovery of tax was also made through attachment. Being aggrieved, complainant filed appeal to Commissioner IR Appeals-VII, who vide his order dated 7thJune 2022 rejected the appeal on the ground of non-availing opportunity of hearing given by the department. As no other grounds were adjudicated by Commissioner-IR Appeal, the instant complaint has been filed.
While concluding the investigation ,FTO observed that the case was selected for audit of Tax Year 2015 in the year 2017. Order has been finalized on 28.6.2021 on the basis of a hurriedly issued show cause issued on 20.6.2021 when case was getting time barred. The passing of order / conducting of audit spanning over a period of four years from the year of selection without approval of the Board is clear cut violation of Audit Policy for 2015, Supreme Court judgment on CP No. 2370-L and pursuant guidelines of the Board issued vide letter dated. C.No.I(I)Chief(Legal-I) 2018, issued specifically for audit of cases of Tax Year 2015. It is directed through the above letter to take approval from Board for conducting audit which was not finalized within one year from the date of selection.
Commissioner-IR Appeal accepted the plea of complainant regarding non-receipt of order which was merely placed in IRIS and not served through post, when he allowed condonation of time under Section 127(6) on application filed by the appellant. On the other hand he rejected the appeal with the sole remark that sufficient opportunity was provided by the officer before passing ex-parte order. Whereas the notice were also not properly served & merely placed on IRIS. The Commissioner-IR Appeal cannot blow hot and cold at the same breath.
Commissioner-IR Appeals contended that no sufficient cause for non-compliance was taken up in grounds of appeal which prevented appellant from filing evidence to the officer. However, grounds No. 3 to 5 of appeal are clearly stating that the notices were never served on the complainant. If notices were not served then there is no question of submission of any details or evidence.
Whereas the Commissioner-IR (Appeal) not considered that non-receipt of notice is sufficient cause which prevented the appellant from furnishing the evidence. Additionally the order of Commissioner-IR Appeal does not indicate that the issue of ‘sufficient cause’ within the meaning of Section 128(5) was taken up during appeal proceedings. Nor is there any finding regarding the same in his order which the complainant can assail in of appeal to ATIR.
The argument is therefore not only perverse, arbitrary& not in accordance with principles of natural justice but also neither confronted to the appellant nor incorporated in appeal order. FTO has further observed that the Commissioner-Appeal should have either examined the evidence as per law or if it was evident that the notice were not validly served, the order could have been remanded back to the officer for denovo proceedings after providing proper opportunity of hearing, which was not done. Ex-parte orders are invariably passed due to non-availability of record / evidence.
If the contention of Commissioner-IR (Appeals) is accepted then no ex-parte order can be assailed / adjudicated in appeal on merits of the case as the appellate authority would not accept any evidence which was not produced before the officer, even if the notice was not properly served. The act of non-consideration of all grounds of appeal by the Commissioner-IR (Appeals) tantamount to maladministration.
Accordingly FTO has recommended FBR to direct the Commissioner-IR Appeal-VII, Karachi to rectify the order on his own motion or an application filed by complainant & consider all grounds of appeal as per law & after providing opportunity of hearing.