Income Tax Ordinance (XXXI of 1979)---

----S. 96---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9---Income Tax Ordinance (XLIX of 2001), S.171---Refund---Non-issuance of refund of the assessment year 1980-81 clue to change of status of assessee from registered firm to a company and also for changes of circles due to change in jurisdiction-- Validity---Department agreed to issue refund voucher for Rs.16,502 if the complainant furnished original documents/challan and further promised to release additional payment for delayed refund as per S.171 of the Income Tax Ordinance, 2001---Both the parties had put their signatures on the Order Sheet where the undertaking had been recorded- Federal Tax Ombudsman recommended that Revenue Division should ensure that "Refund Voucher of Rs. 16,520 as per undertaking of the Representative of the respondent, alongwith additional payment for delayed refund' as per S.171 of the Income Tax Ordinance, 2001 was issued promptly.

M. Iqbal Hashmi for the Complainant.

Dr. Ishtiaq Ahmad (DCIT) for Respondent.

DECISION/FINDINGS

The Complainant is aggrieved by non-payment of refund amounting to Rs.16,502 which became due to them on 11-8-1980 for the assessment year 1980-81 as a result of assessment framed under section 59(1) of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance). The refund has allegedly been delayed despite repeated requests since 20-11-1980, the last reminder to R-CIT being on 25-7-2002. It is prayed that the refund be directed to be issued alongwith compensation amounting to Rs.54,457.

2. Briefly the facts are that a Registered Firm carried on business of contractor/suppliers up to 30-6-1980 whereafter it was converted into a private limited company with the same name and style. The last assessment of the defunct RF for the assessment year 1980-81 was completed on 31-8-1980 creating a refund of Rs.16,502. Application for refund was then moved on 20-11-1980 in the relevant Circle "Q" of Zone-A, Lahore. In the meantime the record of the defunct RF .was amalgamated with the newly-framed private limited company and transferred to Circle-3 of Central Zone, Lahore whereas Circle "Q" was redesignated/merged with Circle-16 of Zone-A, Lahore. The Central Zone was redesignated as Companies Zone and, later on, bifurcated into three Companies Zones. The Complainant, however, kept on sending reminders to various authorities in Zone-A, Lahore which remained unattended, hence the complaint.

3. The Respondent has forwarded para-wise comments, dated 26-12-2002 by R-CIT, Lahore which, in addition to the competence of the complaint for admission, due to limitation prescribed in sub section (3) of section 10 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance) denies 'maladministration'. The delay in response by the Department is attributed to approach having been made by the Complainant in a wrong Circle/Zone.

4. The learned counsel for the Complainant explained that the claim was filed by the Managing Partner of the defunct RF as far back as November, 1980 followed by 10 reminders, among others, to R-CIT and CIT, the last one being on 25-7-2000. These were filed in Circle "Q" and request was all along made for early issuance of refund but no response was forthcoming. The representative of the Complainant regretted that no serious effort by way of scrutiny of (a) the relevant Registers of concerned Circles, (b) record of administrative approval of the Commissioner, which was necessary because of the quantum of the claim, or (c) Refund Voucher Books of the Circles, were undertaken so as to find out whether at any stage refund was issued or adjusted.

5. The representative of the Revenue on his turn repeated the arguments as are contained in the report by the R-CIT viz. in case refund had not been issued (or adjusted) the Complainant on conversion from RF to a Company, should have shown the amount as a "receivable asset" in the Balance Sheet as also in the appropriate column of their returns: He again pleaded that the matter being much older than 6 months, fell out of the scope of the jurisdiction of FTO in terms of subsection (3) of section 10 of the FTO Ordinance.

6. The plea about limitation, as per section 10(3) of FTO Ordinance, having run out, is of a no consequence because the matter is alive and neither the refund has been issued/adjusted nor its entitlement disputed/denied.

7. The discus-ion with two representatives and scrutiny of record unfolds that after seeking adjournment at hearing, dated 6-1-2003 effort was mad to trace out the record but the result is that the Department has no direct evidence to establish that the refund was either issued to the Registered Firm or it was ever adjusted against the demand of the succeeding company or the parent RF. Despite being asked, the Department failed to produce the Transfer Memo. which normally contains information concerning (i) outstanding demand, (ii) unadjusted refund (iii) pending assessment, and (iv) details of documents transferred from one Circle to another, in addition to `postings' in .the relevant Demand and Collection Register about the transfer of demand/refund. The argument carries weight that the quantum of refund claim is such as could not be issued by one single officer without the countersignature of the Inspecting Additional Commissioner. For this purpose the relevant documents which needed scrutiny were the R.V. Book, the correspondence between the Assessing Officer and the IAC, and intimation to the State Bank confirming issuance of refund voucher, if ever issued. There is no indication that if "file could not be traced despite effort" whether any endeavour was made to check these records as well.

8. On 16-1-2003, Mr. S.M. Ali (D-CIT) attended and requested more time to trace out and produce the record. Again, on 3-2-2003 Mr. S.M. Ali and Mr. Karamat Ullah (D-CIT) attended but sought adjournment for 19-2-2003. Finally Dr. Ishtiaq Ahmad Khan (D-CIT) and Mr. Iqbal Hashmi (Advocate) attended on 19-2-2003 for the respective parties. Dr. Ishtiaq agreed to issue Refund Voucher for Rs.16,502 if the Complainant furnishes original documents/challan. This, Mr. Hashmi, the AR, readily agreed to do. The D-CIT further promised to release `additional payment for delayed refund" as per section 171 of the Income Tax Ordinance, 2001. Both the parties have put their signatures on the Order Sheet, dated 19-2-2003 where the undertaking has been recorded.

9. In view of the foregoing discussion it is recommended that the Revenue Division should ensure that:--

"Refund voucher for Rs.16,502, as per undertaking of the representative of respondent, alongwith additional payment for delayed refund' as per section 171 of the Income Tax Ordinance, 2001, is issued promptly".

10. Complaisance be reported within 30 days of the receipt of this Order.

C.M.A./779/FTO Order accordingly.