Law: Income Tax Ordinance, 1979

Section: 62

Law: Federal Tax Ombudsman Ordinance, 2000

Section: 9

Income Tax Ordinance (XXXI of 1979)----S. 62---Establishment of Office of Federal Tax Ombudsman Ordinance (XXV of 2000), S.9---Assessment---Complainant/assessee leased out its flour mill---Lease Agreement---Authenticity of the lease agreement was rejected by the Assessing Officer on the ground that agreements for purchase of wheat with District Food Controller were executed by the complainant Company itself through its Managing Director in spite of explanation that under lease agreement, the lessee was permitted to use the name of the complainant/assessee for the purpose of obtaining wheat quota etc. and assessment proceedings had also been completed under section 62 in the hands of lessee in which the same basis for determination of income (viz. production per electricity units consumed) was being adopted as in the case of the complainant--­Validity---Genuineness of a lease arrangement was a question of fact which had to be verified with reference to the situation on the ground--­Assessment order for the two years showed no mention anywhere that the Assessing Officer had made any inquiries to ascertain whether the lease arrangement was genuine and whether the business was in fact being carried on by the complainant Company or by the lessee--­Assessing Officer had, on the other hand, based the assessments entirely on the inference drawn from the fact that the wheat purchase agreements had been signed by the complainant Company although the complainant had pointed out that such an arrangement was quite in accordance with the terms of the lease agreements---Assessments based on a mere inference could not be considered as valid---Federal Tax Ombudsman recommended. that the income tax assessment for the years 1999-2000 and 2000-2001 be set aside by the Commissioner under S. 138 of the Income Tax Ordinance, 1979 with the directions that fresh assessments be made after making proper inquiries in the case, particularly with regard to the leasing arrangement and after confronting the complainant with the result of the inquiries. FINDINGS/DECISION This is a complaint relating to income tax assessment proceedings in the complainant's case for the assessment years…

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