Messrs CHENAB FIBRES LTD., FAISALABAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2002 P T D 2776
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Messrs CHENAB FIBRES LTD., FAISALABAD
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 1748 of 2001, decided on /01/.
th
February, 2002. Income Tax Ordinance (XXXI of 1979) ‑‑-
‑‑‑‑Ss. 96,50,156 & 102‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑-Refund‑‑‑Claim, that nil tax demand was shown after giving credit of tax payable out of total tax payments and credit of remaining amount was not given deliberately to avoid creation of refund whereas neither the evidence of tax payment or tax deduction was furnished by the complainant with the return nor was furnished during the hearing‑‑‑Validity‑‑‑Was not possible to recommend immediate issuance of refund since there was no evidence of any tax deduction or payment available on record nor had such evidence been provided by the complainant‑‑‑No verification appeared to be available from the department record also‑‑‑Matter of evolving a system through which it was ensured that all tax‑ payments, whether through deduction or otherwise, were duly reflected in the taxpayer's records had been taken up separately with the Revenue Division, but in the present case Federal Tax Ombudsman recommended that the Assessing Officer should verify the payments claimed by the complainant from ail relevant sources, including the deducting entities and also with the help of any evidence available with the complainant, refund, if any, should be, paid immediately after verification the explanation of She officer who passed the order for the year 1999‑2000, dated 30‑6‑2000 and gave credit of Rs.2,837,604 apparently without verification be called and furnished with the comments of the Revenue Division and the Assessing Officer should explain as to why the credit for Rs.5,086,230 was not given if the payment was considered as verified or why credit of Rs.2,837,604 was allowed if the payment was not considered as verified.
Hamid Masood, F.C.A. for the Complainant.
Muhammad Shahid Zaheer, Inspecting Additional Commissioner, Special Zone, Lahore for Respondent.
FINDINGS/DECISION
This is a complaint by a limited company running a spinning unit which was previously being assessed at Faisalabad but at present the jurisdiction in the case is with the Special Zone, Lahore. The main points in the complaint are as under:
(i)Income Tax Return for the assessment year 1999‑2000 was filed in Company Circle 08, Faisalabad showing deposit of tax at Rs.5,086,230.
(ii)Assessment for the year was made on 30‑6‑2000 and in the IT‑30 Form, Nil tax, demand was shown after giving credit of only Rs.2,837,604 out of total tax payment of Rs.5,086,230 deposited by the complainant.
(iii)Credit of remaining amount of Rs.2,248,626 was not given deliberately to avoid creation of refund.
(iv)The action of the Assessing Officer amounted to mal administration since it was obligatory for him to give credit for. the entire tax paid by the complainant.
(v)The Officers of the Tax Department have been approached in this regard and an application for rectification has also been made on 31‑7‑2001 but there has been no response.
In the light of the above, it has been prayed as follows:
(i)Instructions be given to fhb respondent to issue revised assessment order, IT‑30 and demand notice creating a tax refund of Rs.2,248,626 paid in excess
(ii)Directions be given to issue refund voucher together with compensation under section 102 of the Income Tax Ordinance
(iii)Original assessment depriving the complainant of full tax credit was made on 30‑6 2000 and in the light of this Office's decision in Complaint No.224/2001 compensation would be due to the complainant from 1‑10-2000 till the date of payment of refund.
2. The respondent's reply has been received and the representative of the complainant and the respondent have attended and have been heard. The main points in the respondent's reply are as follows: ‑‑‑
(i)The complainant had revised the return for the year 1999‑2000 on 22‑5‑2000 in which the deduction claim under section 50 was Rs. 4,805,562 against Rs.5,086,230 shown in the original return.
(ii)Assessment for the year 1999‑2000 was finalized on 30‑6‑2000 and credit of tax payment of Rs. 2,837,604 was given "to avoid creation of bogus demand". Scrutiny of record does not prove the complainant s contention that challans of Rs.5,086,230 were enclosed with the return, in fact evidence of payment of Rs.626,186 was enclosed with the revised return.
(iii)The complainant's application for rectification filed on 31‑7‑2001 will be disposed of as soon as the complainant produces original copies of challan in supports of the tax payment claim.
(iv)The complainant's prayer does not merit acceptance as the matter is still under consideration and no refund has been determined as yet. Question of compensation under section 102 does not arise.
3. The contentions of the two sides were considered and it was noted that in the complaint it is not shown that any evidence of tax payment or tax, deduction was furnished with the return. No such evidence was furnished during the hearing either but it was seen that a list of various tax deductions, mainly at Lahore, was attached with the return. There was, however, no .supporting evidence. It was also not ascertainable from record whether any intimation of tax payment had been received from the Data Processing Centre. It is indeed strange that tax credit of Rs.2,837,604 was allowed to the complainant although statedly there is no proof of payment of this amount. The contention that this was done to avoid "creation of bogus demand" is also a strange assertion as in the alleged absence of evidence of tax payment, the credit could amount to an unwarranted loss to the exchequer.
4. Under the circumstances it is at present not possible to recommend immediate issuance of refund since obviously there is no evidence of any tax deduction or payment available on record nor has such evidence been provided by the complainant. The complainant's representative referred to this Office findings/decision in Complaints No.409/2001 and 428/2001, dated 28‑5‑2001 and 25‑5‑2001 in which it has been observed that it is primarily the responsibility of the departmental functionaries to verify tax payments from their own records. In the instant case however, no verification appears to be available from the departmental records at present. The matter of evolving a system through which it is ensured that all tax payments, whether through deduction or otherwise, are duly reflected in the tax‑payer records has been taken up separately with the Revenue Division, but in the present context it is recommended that:
(i)The Assessing Officer should verify the payments claimed by the complainant from all relevant sources, including the deducting entities and also with the help of any evidence available with the complainant. Refund, if any, should be paid immediately after verification.
(ii)The explanation of the officer who passed the order for the year 1999‑2000, dated 30‑6‑2000 and gave credit of Rs.2,837,604 apparently without verification be called and furnished with the comments of the Revenue Division. The Assessing Officer should explain as to why the credit for Rs.5,086,230 was not given if the payment was considered as verified or why credit of Rs.2,837,604 was allowed if the payment was not considered as verified.
(iii)Action in the/ light of (i) above, be taken within 45 days and compliance report within 15 days thereafter while the explanation as per (ii) above be furnished with comments within 30 days.
C.M.A./M.A.K./412/FTO
Order accordingly.