Income Tax Ordinance (XXXI of 1979)‑‑‑‑

‑‑‑Ss. 102, 99(3), 100 & 156‑‑‑C.B.R.'s Letter No.ITB 3(5) 86, dated 3‑7‑1994‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Additional payment for delayed refunds‑‑‑Refund was determined under S.156 of the Income Tax Ordinance, 1979‑‑‑Assessee contended that compensation under 5.102 of the Income Tax Ordinance, 1979 became due after the expiration of three months from the date on which the assessment order was rectified under 5.156 of Income Tax Ordinance, 1979 and 'refund was determined‑‑ Department contended that compensation was to be paid after the expiration of three‑months from the date of refund order under S.99(3) read with S.102(2) of the Income Tax Ordinance, 1979‑‑‑Validity‑‑ Section 100 of the Income Tax Ordinance, 1979 had been amended and taxpayers were no longer required to file application for refunds and therefore, the provision of subsection (3) of S.99 was not applicable in the cage of determined refund‑‑‑Assessing Officer had not been following the directions of the Central Board of Revenue issued time and again on the subject which created undue hardship to the taxpayers‑‑‑Federal Tax Ombudsman recommended that compensation under 5.102 of the Income Tax Ordinance, 1979 for the assessment years 1998‑99, 1999‑2000 & 2000‑2001 be calculated from 4‑12‑2001 to the date of payment viz. 18‑4‑2002 and paid to assessee within 30 days of the receipt of this order.

Haider Naqi for the Complainant.

Haider Ali Dharejo, D.C.I.T., Circle E‑16, Zone E, Karachi for Respondent.

DECISION/FINDINGS

Mr. Sameer Hamid Dodhy Proprietor of Messrs Indus Basin Company, is an existing assessee on National Tax Number 26‑16‑0804968, of Circle 16, Zone‑E, Karachi.

2. It is alleged that the refund of the complainant for the assessment years 1998‑99, 1999‑2000 and 2000‑2001 has already been determined under section 156 of the Income Tax Ordinance but despite repeated request in writing, the DCIT has not yet issued refunds. It is further alleged that the letters were also addressed to the higher authorities, IAC, CIT and RCIT, Southern Region, Karachi but none of them has responded to the request of the complainant. The copies of the letters alongwith the evidence of service have also been furnished. The complainant has, therefore, requested to direct the concerned authorities 1o issue the determined refund alongwith compensation as provided by section 102 of the Income Tax Ordinance.

3. The respondents have filed parawise comments vide Letter, No.4015, dated 3‑5‑2002. It was pleaded that, the refunds for assessment years 1998‑99, 1999‑2000 and 2000‑2001 have already been issued vide cheques, dated 18‑4‑2002 i.e. after the ‑complainant addressed a complaint to this forum on 12‑4‑2002. The main grievance of non issuance of refund has been redressed by the department.

4. The respondents have, however, contended in the parawise comments that the compensation is to be paid after the expiration of three months from the date of refund order under section 99(3) read with section 102(2) of the Income Tax Ordinance, 1979. The complainant's Authorised Representative has vehemently contended that compensation under section 102 of the Income Tax Ordinance became due after the expiration of three months from the date on which the assessment order was rectified under section 156 and refund was determined.

5. The perusal of records shows that refund was determined for all the aforesaid three years on 3‑9‑2001 under section 156 of the Income Tax Ordinance and the amounts of determined refund were communicated to the complainant through demand notice on 6‑11‑2001 under section 85 accompanied by the copies of relevant I.T‑30.

6. The contention of the department that since refund order was passed under section 99(3) on 8‑4‑2000 the compensation would become due from 8‑7‑2002 is misconceived. The order under section 99(3) is passed when an application under subsection (1) of section 99 is filed by the claimant. The provision of subsection (3) of section 99 is reproduced hereunder: ‑‑

"When an application for refund is made under subsection (1) the Deputy Commissioner shall, subject to the provisions‑of this Ordinance, determine, by an order in writing, the amount of refund on being satisfied that such amount is due to the assessee, and, where he is not so satisfied, he may, by an order in writing reject the application."

7. It is pertinent to point out that section 100 of the Income Tax Ordinance has been amended and the taxpayers are no longer required to file application for refunds and therefore, the provision of subsection (3) of section 99 is also not applicable in the cases of determined refunds.

8. The C.B.R. has already clarified the position vide C.B.R.'s Letter No.ITB‑3(5) 86, dated July 3, 1994 the relevant extract is reproduced as under:‑‑‑

"Section 100 of the Income Tax Ordinance, 1979 was amended through Finance Act, 1985 whereby the condition of filing refund application was dispensed with in cases where refund is created by the Assessing Officers on IT‑30. Refund Voucher is, therefore, to be issued alongwith the assessment order/demand notice in all such cases."

9. It is distressing to observe that the Assessing Officers have not been following the directions of the C.B.R. issued time and again on the subject creating undue hardship to the taxpayers.

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

(a)Compensation under section 102 of the Income Tax Ordinance for the assessment years 1998‑99, 1999‑2000 and 2000‑2001 be calculated from 4‑12‑2001 to the date of payment viz. 18‑4‑2002 and paid within 30 days of the receipt of this order.

(b)Compliance be reported within one week thereafter.

C.M.A./491/FTOOrder accordingly.