Law: Income Tax Ordinance, 1979

Section: 59(1)

Law: Federal Tax Ombudsman Ordinance, 2000

Section: 2(3)

Income Tax Ordinance (XXXI of 1979)----S. 59(1)---C.B.R. Circular No. 7 of 2002, dated 15-6-2002, para. 9(a)(ii) [Self-Assessment Scheme] ---C.B.R. CircularNo.7(7)/ S.Asst/2002 dated 17-12-2002---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Self-assessment--Setting apart---Assessment yeas 2002-2003---Setting apart of case on the ground that gross profit rate was low as compared to identical cases and turnover was not adequate from four outlets---Validity---Regional Commissioners of Income Tax were to determine whether the returns represented "revenue potential" and were further expected to be in possession of "evidence, information or reason to believe" that particulars of income had been suppressed-.--None of the criterion was followed when return was set apart---Selection was to be based on material evidence and not on frivolous grounds---Maladministration was glaring as guidelines prescribed by the Central Board of Revenue were not faithfully adhered to---Federal Tax Ombudsman recommended that order for setting apart passed by the Regional Commissioner of Income Tax be withdrawn and the return of the complainant for the assessment year 2002-2003 be accepted under Self-Assessment Scheme. 2002 PTD 1895 ref. DECISION/FINDINGS The complaint agitates against `set apart of the Return for the year 2002-2003 for Total Audit by resort to para 9(a) of the SAS. 2. The facts in brief are that the complainant AOP who is a manufacturer and vendor of sweets filed Return for the year 2002-2003 declaring Income at Rs.905,000. It was not selected for Total Audit by the random computer ballot. However, on 7-1-2003 they were issued a show-cause notice by the R-CIT expressing intention to set apart the case for Total Audit for the following reasons:-- (i) The declared GP rate at 23 % was low as compared with other parallel cases, (ii) Daily sales were grossly understated. (iii) Personal expenses were deliberately concealed. The reply dated 22-1-2003 failed to satisfy the R-CIT who finally set apart the Return, vide order dated 13-3-2003, for the same reasons as conveyed in the show-cause notice. This is the cause of grievances. 3. Parawise…

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