STATE PETROLEUM REFINING AND PETROCHEMICAL, CORPORATION (PVT.) LTD. VS SECRETARY, REVENUE DIVISION, CENTRAL BOARD OF REVENUE, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2725 (2002)

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Second Sched., Part I, Cl. 56(2)(ii), Ss. 96 & 102‑‑‑C.B.R. Letter C. No.44(16)IT‑V/78, dated 17‑7‑1978‑‑‑C.B.R. Letter C.No. ITB‑3(6)/85, dated 27‑3‑1985‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)‑‑‑Exemption‑‑‑Refund‑‑‑Pension fund‑‑‑Deduction of tax from exempt pension fund‑‑‑Claim of refund of the same‑‑‑Department asked the assessee to furnish application under S.99(2)(b) of the Income Tax Ordinance, 1979 on the prescribed form along with evidence of tax deduction for process and issuance of refund‑‑ Validity‑‑‑Question was that when the funds income was exempt why deduction was made‑‑‑Such an action was maladministration on the part of deducting agencies‑‑‑Deduction having been made, it was the duty of the Assessing Officer to verify from the deducting agency about the deduction in respect of which refund was claimed ‑‑‑Complainant/assessee having filed refund application on prescribed format the claim should have been decided on its own merit, by verifying the deduction from the record of the Department‑‑‑Assistance if needed shall be provided by the complainant/assessee‑‑‑Federal Tax Ombudsman recommended that the processing of the application for refund filed by the complainant/ assessee be completed and decided within 15 days.

Haider Naqi for the Complainant.

Umer Farooq, I.A.C. Range‑II, Co. V, Karachi for the Department.

Ch. Muhammad Tarique, DCIT, Circle‑I, Co. V, Karachi.

DECISION/FINDINGS

The complaint in this case is a Pension Fund duly approved by the Central Board of Revenue vide its letter C. No.44 (16)IT‑V/78, dated 17‑7‑1978. The complainant has claimed refund amounting to Rs.408,000 paid as tax on exempt income. The complainant has further claimed additional payment on the amount of refund under section 102 of the Income Tax Ordinance, 1979. However, no calculation for the additional payment has been furnished in support of claim. The contention of the complainant is that the Pension Fund is exempt vide clause 56(2)(ii) of Part I of Second Schedule of the Income Tax Ordinance, 1979.

2. In response to necessary notice, Mr. Haider Naqi, Advocate, appeared on behalf of the complainant and produced papers and documents to support his claim of refund of Rs.408,000 for year 1999‑2000. The Department was represented by Mr. Umer Farooq, IAC Range‑II, Cos. V, Karachi and Mr. Ch. Muhammad Tarique, DCIT, Circle‑I, Cos. V. Karachi. Necessary records and documents were also produced which have been duly examined.

3. No return of income was filed. However, refund application was filed in prescribed format on 11‑6‑2002 which was in time.

4. At the time of hearing of the case, the learned counsel for the complainant did not press his claim of additional payment under section 102 of the Income Tax Ordinance, 1979. The claim is also not entertain able as application for refund for this year has been filed on 11‑6‑2002 and no order on application for refund has been passed by the concerned DCIT.

5. The departmental representative has pointed out during the course of proceedings vide Letter Bearing No.DCIT/Cir: 1/Cos. V/2001‑2002/210, dated 4‑6‑2002 that he had written to the counsel of the complainant to furnish an application for issuance of refund on the prescribed format as required under section 99 of the Income Tax Ordinance, 1979 for the year 1999‑2000 to enable his office to process the claim of refund. The DCIT had further requested the complainant's counsel to furnish complete evidence in support of tax deduction/payments amounting to Rs.408,000 as claimed by him. This letter was duly served on the complainant's counsel on 4‑6‑2002 and presumably it was in compliance to this letter, that refund application was filed in prescribed format on 11‑6‑2002 in the office of the DCIT, Circle‑1, Cos. V, Karachi. However, no order under section 99(3) quantifying the refund has been passed till date.

6. The claim for refund appears to be in time and the concerned DCIT has to pass appropriate order regarding refund.

7. It is an undisputed fact that in the instant case no return of income was required to be filed as the pension Fund is exempt under clause 56(2)(ii) of Part I of Second Schedule of the Income Tax Ordinance, 1979. The respondent vide his report, dated 4‑6‑2002 at para‑6 has commented as under:‑‑

"(6) That the complainant is not under any obligation to file a return of income. It is submitted that as per C.B.R.'s circular letter C. No.ITB‑3 (6)/85, dated 27‑3‑1985, filing of return for the purpose of claiming refund is not required. In such, circumstances, application for refund under section 99 of the Income Tax Ordinance, 1979 can be given without filing a return. The complainant has been requested vide the DCIT's letter No.DCIT/Ci.01/Cos. V/2001‑2002/210, dated 4‑6‑2002 to furnish application under section 99(2)(b) of the Income Tax Ordinance, 1979 on the prescribed format alongwith evidence of tax deduction/payments. As soon as the application is received the refund claim of the assessee will be processed and issued."

8. The question arises that when the funds income is exempt why deduction was made. This clearly establishes maladministration on the part of the deducting agencies. Further as deduction has been made it is the duty of the Assessing Officer to verify from the deducting agency about the deduction in respect of which refund is claimed. Since the complainant has filed refund application on prescribed format for this year the claim be decided on its own merit, by verifying the deduction from the record of the department. Necessary assistance if needed shall, be provided by the complainant.

9. It is, therefore, recommended that:‑‑

(i)The processing of the application for refund filed by the complainant be completed and decided within 15 days.

(ii)Compliance report be sent to this office within 30 days from receipt of this order.

C.M.A./856/FTO.Order accordingly.