ISLAMABAD: The Islamabad High Court (IHC) has set aside the findings of the Federal Tax Ombudsman (FTO) regarding disciplinary action against a tax official who issued notices to taxpayers under Section 176 of the Income Tax Ordinance.
In this regard, the IHC has issued a judgment in a W.P.NO.3402 of 2020 (Raashid Mahmood Khan VERSUS President of the Islamic Republic of Pakistan and others).
The IHC judgement said the primary question requiring determination is whether the FTO was justified in recommending disciplinary action against the petitioner in the exercise of its jurisdiction under Section 9 of the Federal Tax Ombudsman Ordinance, 2000.
Before proceeding further, it would be appropriate to reproduce the recommendations made by the FTO, which read as follows:
The FBR to take appropriate disciplinary action against the Officer who had issued notices dated 12.03.2019 and 18.03.2019 under Section 176 of the Ordinance, without lawful authorities.
The FBR will direct the Commissioner-IR to transfer jurisdiction of the Complainant’s case, to some other Unit Officer, enjoying impeccable reputation. The FBR to ensure that proceedings for Tax Year 2013 initiated under Section 122(9) of the Ordinance, are completed in transparent manner and after affording adequate opportunity of hearing to the Complainant, as per law.
The IHC said the FTO is empowered to investigate complaints of maladministration, including misuse of authority, discrimination, undue delay and actions taken in bad faith. However, the exercise of such jurisdiction must be founded upon material establishing conduct falling within the scope of the Ordinance.
While the FTO may examine the conduct of tax officials in the discharge of their official functions, the mere issuance of a notice in the course of official duties, or a dispute regarding the exercise of statutory authority, does not, by itself, constitute maladministration unless supported by material demonstrating misuse of authority, bad faith or other conduct falling within the statutory definition thereof.
In the present case, the petitioner obtained bank information and issued notices in connection with the pending audit proceedings against respondent No.4 (taxpayer).
The record indicates that departmental approval for obtaining the relevant information was available. It is also an admitted position that respondent No.4 subsequently availed the Tax Amnesty Scheme, 2019, and withdrew the allegation of personal malice against the petitioner.
Furthermore, the petitioner sought transfer of jurisdiction on 02.05.2019, which was subsequently effected on 07.05.2019. These circumstances, when considered cumulatively, do not sufficiently support the conclusion that the petitioner acted out of personal hostility or deliberately abused his official authority.
As regards recommendation No (ii), concerning the transfer of jurisdiction, the same had become infructuous upon the transfer of the case to another Unit Officer. Similarly, recommendation No (iii), relating to proceedings for Tax Year 2013, lost its practical efficacy when the proceedings became time-barred on 30.06.2019, as subsequently recognized in the order dated 29.09.2020 passed by the President of Pakistan.
These developments, however, do not independently determine the sustainability of recommendation No (i), which must be examined on its own merits.
The IHC added that it is a settled principle that a public functionary ought not to be subjected to adverse disciplinary recommendations merely because the exercise of statutory powers is questioned or a particular interpretation of law is disputed.
Such recommendations must be supported by cogent material establishing misconduct or maladministration. In the present case, the impugned findings do not disclose sufficient independent material to substantiate the allegation that the petitioner’s conduct amounted to maladministration warranting disciplinary action.
To the extent that the FTO treated the disputed exercise of statutory powers, without adequately establishing the requisite misconduct, as sufficient ground for recommending disciplinary action, its conclusion cannot be sustained. The objection founded upon Section 29 of the Federal Tax Ombudsman Ordinance, 2000, and Section 18 of the Federal Ombudsmen Institutional Reforms Act, 2013, does not, by itself, bar this Court from exercising its constitutional jurisdiction under Article 199 of the Constitution to examine the legality of an order impugned before it.
For the foregoing reasons, this Court finds that recommendation No (i), concerning disciplinary action against the petitioner, is not sustainable on the material available on record.
Consequently, the instant constitutional petition is allowed. The findings and recommendations dated 02.12.2019 issued by the FTO/respondent No.2, to the extent of recommendation No (i), and the order dated 29.09.2020 passed by the President of Pakistan, insofar as it rejected the challenge to the said recommendation, are hereby set aside. The remaining recommendations, having been declared infructuous by the President of Pakistan, shall remain unaffected. There shall be no order as to costs, the IHC added.
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