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Best judgment assessment scheme in the income tax ordinance of 1984 by Dr.Gazi Sirazul Islam

Best judgment assessment is a way of assessment by the Deputy Commissioner of Taxes (DCT) (hereinafter referred to as the DCT) of any category of Tax Payee (s) who fails to appear for a hearing on a fixed date (s) as determined by the DCT. Generally, the DCT serves a notice to the assessee beforehand to appear the Tax Payee or his/her nominated person and/or the Lawyer authorized by the assessee. The DCT at least serves 03 (three) notices to the assessee at his/her given addresses which are available on the face of the Tax Files preserved in the concerned Tax Files.

However, it happens, (1). When the assessee fails � To file the Tax Return required by a notice U/S 77 and has not filed a return or revised return U/S 78; To comply with the requirements of a notice U/S 79 or 80; To comply with the requirements of a notice U/S 83(1);

According to section 84 of the Income Tax Ordinance 1984:

The DCT shall, by an order in writing, assess the total income of the assessee to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment; and in the case of a firm, may refuse to register it or may cancel its registration if it is already registered, and communicate such order to the assessee within 30 (thirty) days next following.

(2). Where in the opinion of the Board of the best judgment assessment made by a Deputy Commissioner of Taxes under sub-section (1) shows a lack of proper evaluation of legal and factual aspects of the case which has resulted in an arbitrary and injudicious assessment, the action leading to the such assessment made by the said DCT shall be construed as misconduct.

That as per the real scenario, there are some more reasons which the assessee may not receive the notice sent by the DCT and as such he /she /they fail to appear for a hearing on fixed dates which are mentioned below:
That the DCTs generally do not make any mistake to send and/or serving any notice lawfully for hearing in advance. However, the assessee either —  do not inform them in writing to the DCT in time that their mailing address has been changed and/or they have shifted somewhere; do not instruct their concerned person and/or lawyer in time and/or do not provide their nominated person with all required papers which may enable them to prepare all relevant papers to submit their Tax Return; do not communicate with the concerned person (s) that are been noticed by the Tax Authority. In that event, their nominated person (s) fail to appear on the fixed date of hearing; the DCT sometimes serve notice for hearing which reaches the hands of the taxpayers once the date of hearings is already over. In such cases, necessary steps are to be taken by the lawyers/advisors which they do not take; sometimes the responsible persons on behalf of the Tax Payees decline to receive any notice by the DCT concerned; lack of awareness on part of the Tax Payees.

The DCTs generally post their notices and serve them with the help of Governmental Post Offices vide registered with an A/D slip. As such, if the DCT fails to serve their notices to their desired Tax Payees (addressees) by default caused by the Tax Payees then the notices are returned to the senders.

That the Tax Authorities are regarded as �quasi Judiciary � but they (DCTs) hold a lot of powers in their hands which are completely discretionary powers which they may apply since they are given these powers as per the Income Tax provision in order to collect government revenue.

Nonetheless, it is observed that among @ 100% of Tax cases (in most of the cases) when someone (assessee) is not represented to explain his/her/their submitted Tax Return within the time limit, then the assessee (s) are at the threshold of the first appeal. If the assessee fails to achieve any relief as desired then they need to proceed to the Second Appeal (which is known as the Income Tax Appellate Tribunal).

That there are some issues for which the assessee (s) need to go to the Honorable High Court Division (the superior courts) for justice. in view, the assessee (s) need to maintain certain formalities to proceed to the first appeal. Once they (the assessees) do not get relief as per their desired level then they need to proceed with the Second Appeal. In the case of a Second Appeal, a lot of formalities are to be maintained by the appellant. Not only that, the assessee (s) need to pay a certain amount of Tax on the demanded Tax as ascertained by the DCT during the time of best Judgment. 

Conclusively, it can be firmly stated that once there is any assessment in absence of the assessee and/or his nominated person/ lawyer, almost in @99% of cases the result of the best assessment derives at a very unusual (unpredictable) claim of Tax to be paid. While the DCT proceeds for the best assessment then in general they estimate everything totally adverse to the assessee and estimate in most cases absolutely absurd. On the contrary, it is also observed that after the first appeal or even after the second appeal the assessee (s) gets their lawful desired result. In view, it is observed that the same view could be approached towards the time of best assessment (in fact this is not at all friendly for the Tax Payees). Rather it brings an undesired hassle for those whose Tax File is assessed by way of best assessment.

In order to come out of this periphery, the way Income Tax Authorities put their view during the best assessment is entirely adverse to the Tax Payees.  In the same way, the assessee (s) and/or their nominated person or lawyer should be more responsible and they should assist the Tax Authority as and when it deserves.

–    Dr Gazi Sirazul Islam, Ph.D in Law,  Advocate

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