Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑-Ss.120, 59(b), 50(4), 100, 99(1), 62, 63 & 156‑‑‑C. B. R. 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 refund‑‑‑Amount deducted under S.50(4) of the Ordinance was not allowed by the Assessing Officer despite repeated requests in writing letters during the years 1994, 1997 & 1998‑‑‑Refund order was passed on 15‑3‑2002‑‑‑Date for determination of additional payment‑‑‑Department contended that the refund became due on the date on which refund order was passed under S.99(3) of the Income Tax Ordinance, 1979 and since refund order was passed on 15‑3‑2002, the compensation would become due w.e.f. 15‑6‑2002‑‑‑Validity‑‑‑Section 100 of the Income Tax Ordinance, 1979 was amended by Finance Act, 1985, whereby filing of refund application under S.99(1) of the Income Tax Ordinance, 1979 was dispensed with in cases where refund was created on assessments under Ss. 59, 59(a), 62 & 63 of the Income Tax Ordinance, 1979 or by giving appeal effect‑‑‑Imperative on the part of the Assessing Officer to make verification of deductions under S.50 of the Income Tax Ordinance, 1979 promptly ‑‑‑Assessee made a request to the Assessing Officer vide his letter, dated 19‑10‑1994 to allow credit for deduction under S.50(4) of the Income Tax Ordinance, 1979 and issue the resultant refund immediately‑‑‑Departmental representative had conceded that the said application was available on record‑‑‑Since no order was passed on that application within the statutory limit of time as provided in S.156 (3) of the Income Tax Ordinance, 1979 the mistake pointed out by the complainant was deemed to have been rectified w.e.f. 30‑6-1996 and the complainant was, therefore, entitled for compensation under S.102 of the Income Tax Ordinance, 1979, w.e.f. 1‑10‑1996‑‑ kcal‑administration stood established‑‑‑Federal Tax Ombudsman recommended that additional payment under S.102 of the Income Tax Ordinance, 1979 be worked out w.e.f. 1‑10‑1996 till 14‑4‑2002 and paid within 30 days of the receipt of the order.

Haji Yousaf for the Complainant.

Mrs. Shaista Abbas, IAC Range‑III, Zone‑A and Riaz Ali Shah, I.T.O. for Respondent.

DECISION/FINDING

The complainant is an existing Income Tax Assessee of Circle‑A‑25, on National Tax Number 09‑25‑0678009.

2. The return declaring income of Rs. 64,200 was filed by the complainant for the assessment year 1989-90 which was accepted under section 59(b) on 24‑9‑1989. No demand was created as credit of tax deducted under section 50(4) was allowed to the extent of tax payable i.e. Rs.3,420 as against total deduction claimed at Rs.66,048.

3. The assessment order was, however, rectified under section 156 of the Income Tax Ordinance on 15‑3‑2002 creating a refund of Rs. 62,628 for which refund voucher was issued on 14‑4‑2002.

4. In the parawise comments, dated 7‑5‑2002 the respondents have objected to the claim of additional payment under section 102 by referring to clause (C) of subsection (2) of the aforesaid section.

5. It is further, stated that the refund becomes due on the date on which refund order is passed under section 99(3) of the, Income Tax Ordinance and since refund order in this case was passed on 15‑3‑2002 the compensation would become due w.e.f. 15‑6‑2002.

6. It is contended by the complainant's A.R. that the credit for the total amount deducted under section 50(4) was not allowed by the Assessing Officer despite repeated request in writing. He has furnished Photostat copies of his letters dated 19‑10‑1994, 1‑11‑1997, 23‑12‑1997 and 24‑2‑1998, addressed to the D.C.I.T. concerned.

7. The complainant's A.R. vehemently contended that his client was entitled for compensation under section 102 of the Income Tax Ordinance for which directions may be issued to the concerned officer for making the payment without any further, delay.

8. The objections raised by the respondents are misplaced and misconceived. Section 100 of the Income Tax Ordinance was amended by Finance Act, 1985 whereby filing of refund application under section 99(1) was dispensed with in cases where refund was created on assessments under sections 59, 59(a), 62 and 63 or by giving appeal effect. The Central Board of Revenue has already clarified the position vide Board's Letter No.ITB‑3(5)/86 dated 3rd July, 1994 which is reproduced as under:‑‑‑

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

9. Notwithstanding the fact that it is imperative on the part of the Assessing Officer to make verification of deductions under section 50 of the Income Tax Ordinance promptly as already held by the Federal Tax Ombudsman in various complaints. In this case the complainant's A.R. made a request to the D.C.I.T. Circle D‑19, vide his letter dated 19‑10‑1994 to allow credit for deduction under section 50(4) and issue the resultant refund immediately. The Departmental Representative Mr. Riaz Ali Shah, I.T.O. Circle‑A‑25 has conceded that the said application is available on record. Since no order was passed on the application dated 19‑10‑1994 within 'the statutory limit of time as provided in subsection (3) of section 156 the mistake pointed out by the complainant is deemed to have been rectified w.e.f. 30‑6‑1996 and the complainant is, therefore, entitled for compensation under section 102, w.e.f. 1‑10‑1996. The maladministration stands established.

10. In view of the facts stated above it is recommended that:

(i) Additional payment under section 102 of the Income Tax Ordinance be worked out w.e.f. 1‑10‑1996 till 14‑4‑2002 and paid within 30 days of the receipt of this order.

(ii) Compliance be reported within 7 days thereafter.

C.M.A./544/FTO Order accordingly.