KARACHI, Dec 24: The Federal Tax Ombudsman, Justice Saleem Akhtar, has directed that the notice issued for freezing the assets of complainant the late Masood Shaikh be withdrawn.
He also ordered that the notice served on the tenants of property No 4-C Commercial Area also be vacated and withdrawn.
M. Zia Kayani represented the complainant, and Hira Khan Choudhary, Deputy Commissioner of Income Tax Circle C-17, Zone-C, Karachi, the respondent.
Complainant Masood Akhter had filed a complaint that the assistant commissioner of Income Tax Circle, C-17, Zone C, Karachi, had attached the properties of the late Masood Shaikh in complete disregard of the provisions of law.
Although efforts were made to clarify the position of the properties in question, the department did not take corrective action.
The case was fixed for final hearing on 9-08-2001, attended by Zia Kayani, representing the complainant. The department was represented by Hira Khan Chaudhry, ACIT, Circle C-17, Zone-C along with Ms Naheed Azhar, DCIT Circle-8, Zone-C.
The complainant is the younger brother of the late Masood Shaikh who died at Karachi on June 14, 1998. It was contended that the deceased, at the time of death, left some immovable properties.
The properties were bought by Masood Shaikh on August 26, 1989 and May 20, 1989 and mutation had been confirmed by the DHA in his name. After the death of Masood Shaikh, the above two properties, along with other properties, devolved on his legal heirs, including the complainant.
On June 11, 1999 the ACIT Circle C-17, one-C, Karachi, without verifying the ownership of the plots, published a notice in an Urdu daily to recover income tax/wealth tax arrears of Shaista Shaikh amounting to Rs7,400,000, attached the said properties under section 93 (3). The complainant addressed a letter to the ACIT, Circle C-17 on 16-06-1999 that the properties in question belonged to the late Masood Shaikh and after his death these properties had devolved on the legal heirs. Another letter on 18-06-1999 was sent to the ACIT, Circle C-17 in response to a notice under section 92 of the Income Tax Ordinance 1979, issued to the tenants of commercial building No 4-C, Phase II, DHA, mentioning that these properties exclusively belonged to the late Masood Shaikh and were not liable to be attached for tax liability of Shaista Shaikh, who was being assessed separately and borne on NTN of Circle C-17.
It was alleged by the complainant that the matter was brought to the knowledge of the income tax authorities about the actual ownership of the said properties even then the ACIT, Circle C-17 addressed a letter to the DHA to free the files of the properties in question which were still frozen, which in no case belonged to Mrs Shaista Shaikh.
The financial Ombudsman held that the ACIT, Circle C-17, acted beyond his jurisdiction and initiated recovery proceedings under section 93(3) against the property of the late Masood Shaikh who was neither his assessee nor any tax demand was outstanding against him. He was an assessee of Circle C-7 bearing NTN 11-07-0287115 and not assessed to tax in Circle C-17. The ACIT, Circle C-17 was not competent under the law to attach the properties under section 93 (3) which were not in the name of the tax defaulter. The department had failed to establish that the properties belonged to Shaista Shaikh. The proceedings initiated were thus unlawful, illegal and uncalled for within the meaning of clause (ii) of sub-section (3) of section 2 of the Establishment of the Office of Federal Tax Ombudsman Ordinance of 2000.
