Mir AURANGZEB ALAM VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2005 P T D 1066
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Mir AURANGZEB ALAM
versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 255-L of 2004, decided on /01/.
21st July, 2004. (a) Income Tax Ordinance (XXXI of 1979)---
----Ss.100 & 102---C.B.R. Circular No.ITB (3)(5)86 dated 3-7-1994---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Refund---Appeal effect order---Additional payment for delayed refund---Maladministration---Complainant had filed application for refund due to deceased assessee---Refund had resulted from decision of the Appellate Tribunal---Department should have issued refund voucher within three months of the date of receipt of Appellate Tribunal s order---Formal application was not required according to Central Board of Revenue Circular No.ITB(3)(5)/86 dated 3-7-1994---Failure to adhere to the provisions of law, inattention and delay amounted to maladministration---Federal Tax Ombudsman recommend compensation at provided rate from three months after the Appellate order till the date of payment.
(b) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S.2(3)---Maladministration---Failure to adhere to the provisions of law and non-issuance of refund voucher within period prescribed by law andinattention and delay to which refund applications were subjected, amounted to maladministration.
Ahmad Shujah Khan for the Complainant.
Ghulam Nabi Tahir for Respondent.
DECISION/FINDINGS
Facts of the complaint are that the complainant s mother Mst. Ilyas Jan Alam was, as director of Messrs Jan Oriental (Pvt.) Ltd. and income and wealth tax assessee at NTN 22-06-1225568.Shediedon15-10-1995. She had earlier filed an appeal in the Honourable Lahore High Court, Lahore against assessment for the year, 1980-81, which was decided in her favour vide Court s order, dated 10-4-2002. The Income Tax Appellate Tribunal passed a consequential order, dated 25-7-2002. Her husbandin his capacity as her legal heir made an application to the respondents on 16-8-2002 for issuance of appeal-effect order. The appeal-effect was allowed vide assessment order, dated 10-3-2003 resultinginrefundableamountofincometaxatRs. 55,117.On30-6-2003 and then again 9-8-2003 Khurshid Alam, complainant s father, applied for refund of the amount in question after adjustment of wealth tax amounting to Rs.10,467 which was outstanding against the assessee. The respondents did not take any action on the application. Being old, the complainant s father could not pursue the matter. All the legal heirs of complainant s mother authorized the complainant to obtain thesubjectrefundthroughaSpecialPowerofAttorney,dated26-1-2004,whichwassenttothedepartmentthroughletter,dated7-2-2004. The respondents have not settled the claim, which amounts to Maladministration. It is pleaded that the department may be directed to issue the refund voucher for the subject amount along with additional payment for delayed refund under section 102 of the Income Tax Ordinance, 1979 at 15% from the date on which refund became due.
2.In reply the respondents have submitted that refund amounting to Rs.55,117 for Assessment year 1980-81 was created vide order, dated 10-3-2003 issued under section 136 of the Income Tax Ordinance, 1979. Out of this refund an amount of Rs.10,467 was adjustable against demand for other years leaving a refundable balance of Rs.44,650. Mir Khurshid Alam submitted an application for payment refund of Rs.44,650 on behalf of his deceased wife. His application could not be entertained as the power of attorney of other legal heirs of the deceased lady was not available. Later Mir Aurangzeb Alam, son of the deceased lady, filed refund application on 7-2-2004. Being an old case the record could not be traced out to ascertain the position of preceding or succeeding years. There has been a bit of unintentional delay in processing the refund application. However, refund voucher for an amount of Rs.44,650 has since been issued. As the complainant s grievance stands redressed the complaint may be filed.
3.The arguments of the parties and the record of the case have been considered and examined. It is observed that following the Appellate Tribunal s decision the department gave appeal-effect to the decision vide order, dated 10-3-2003. The aforesaid order shows Rs.55,117 as the refundable amount, which after adjustment of wealth tax as mentioned above, left a balance of Rs.44,650 as the refundable amount. IT-30 was also issued on 10-3-2003. The complainant s husband, claiming to be the legal heir applied for the refund in question vide applications, dated 16-8-2002, 30-6-2003 and 16-8-2003, but it was not paid. Subsequently Mir Aurangzeb Alam, son of Mst Ilyas Jan Alam, being one of the legal heirs again applied for refund vide letter,dated7-2-2004 enclosing with the application a special power of attorney authorizing him by the legal heirs to receive the refund voucher from the Income Tax Department. Ordinarily the department should have issued the refund voucher along with IT-30 and the assessment order as per provisions of section 100 of the repealed Ordinance and C.B.R.CircularNo.ITB(3)(5)/86,dated3-7-1994 according to which the condition of filing refund application had been dispensed with and the refund voucher was to be issued along with IT-30. However, since the refund resulted from a decision of the Appellate Tribunal, the department should have issued the refund voucher within three months of the date of receipt of Appellate Tribunal sorder. While refund voucher for the amount in question has since been issued the question that remains to be determined is whether or not the complainant is entitled to compensation being asked for. Department s contention is that three months be calculated from the date on which affidavit of legal heirs was submitted (i.e. from 7-2-2004) and not from the date of IT-30 or date of assessment order or the date on which Tribunal s order was received. Legally speaking the refund voucher should have been issued within three months of the date of receipt of Tribunal s order by the department as it then became due which was not done. The provisions of section 100 of the repealed Ordinance and the Circular referred to above also made it quite clear that the condition for filing of a refund application was dispensed with. Even if the heirship certificate was needed, in response to earlier applications, especially the first application, the respondents should have asked the assessee in writing to provide the list of heirs, which was not done. There is no evidence on record showingthat the respondents had indeed asked the complainant s father, who had applied for refund in the first instance, to produce heirship certificate. The argument that the refund could not be processed and given in the absence of heirship certificate is nothing but an afterthought. The refund became due on expiry of three months from 16-8-2002, the date on which Tribunal s decision, dated25-7-2002 was received. Failure to adhere to the provisions of law and non-issuance of refund voucher within the period as prescribed by law and inattention and delay to which the refund applications were subjected amounts to maladministration within the meaning of section 2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. Accordingly, it is recommended that the C.B.R. direct the competent authority to:
(i)Pay compensation to the complainant w.e.f. 16-11-2002 at the rate provided by law till the date of payment.
(ii)Compliance be reported within 30 days.
M.I./311/FTO??Order accordingly.