Haji MUHAMMAD IKRAM VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2006 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1637 (2004)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 170 & 171---Income Tax Ordinance (XXXI of 1979), Ss. 96, 102, 62/65 & 111---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---Refund---Tax demand and penalties were deleted by the Appellate Tribunal---Request was made to issue refund voucher along with compensation after giving appeal effect--Withholding of such refund on the ground that appeals had been filed before the High Court against the orders of the Appellate Tribunal for cancelling the assessments under Ss.62/65 and deleting the penalties under S.111 of the Income Tax Ordinance, 1979---Validity---No provision existed in the Income Tax Ordinance, 2001 for withholding of a refund on the ground that the order giving rise to the refund had been contested in a higher forum---Commissioner's comments showed that department admitted in principle that refund was due to the complainant subject to verification of payments--Federal Tax Ombudsman recommen ded that the income-tax refund due to the complainant for the assessment year 1987-88 and 1988-89 be paid expeditiously after necessary verification and that the complainant's claim of compensation under S.102 of the repealed Income Tax Ordinance, 1979/S. 171 of the Income Tax Ordinance, 2001 be also decided.

Iftikhar Ahmad Khan, A.R. for the Complainant.

Shahid Irfan Haider, Taxation Officer for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.---The main points in the two complaints are as follows:

(i) The Assessing Officer made assessments for the years 1987-88 and 1988-89 under sections 65/62 of the repealed Income Tax Ordinance, 1979 in the complainant's case at incomes of Rs.1,328,462, and Rs.3,267,368 creating income tax demands of Rs.549,508 and Rs.1,564,218. penalties of Rs.907,332 and Rs.1,473,295 were also imposed.

(ii) The entire tax demand as well as the penalties was later deleted by the Income Tax Appellate Tribunal vide orders, dated 3-9-2002.

(iii) After receiving the ITAT decision the complainant filed an application with the Income Tax Officer on 20-5-2003 requesting that appeal effect be given and a refund voucher be issued along with compensation.

(iv) The complainant did not receive any reply and another application was, therefore, filed on 2-8-2003 copies of which were also sent to the Additional Commissioner and the Commissioner but again no reply was received.

(v) Subsequently the complainant wrote a letter, dated 21-8-2003 to the Regional Commissioner of Income Tax with copy to the Assessing Officer and a reply was then received from the RCIT asking the complainant to first contact the LAC and the Commissioner.

(vi) After receiving the RCIT's letter the complainant again moved an application before the Additional Commissioner on 1-9-2003 in reply to which a letter was received from him stating that the taxation officer had been directed to look into the matter. No intimation or decision has, however, been received since then.

(vii) The details of payments made by the complainant on various dates (annexed with the complaint) show that the complainant is entitled to a refund and compensation amounting to Rs.973,762 and Rs.1,402,612 respectively for the assessment year 1987-88 and to a refund of Rs.1,191,205 and compensation of Rs.1,729,511 respectively for the assessment year 1988-89.

It has been prayed that the concerned Assessing Officer be directed to issue the refunds together with compensation.

2. No timely reply was received from the respondent and the complaint was fixed for hearing. On the date of hearing copy of the comments of the Commissioner of Income Tax, Companies Zone, Faisalabad addressed to the RCIT was furnished. In the said comments it is stated that the department has filed appeals before the Lahore High Court against the orders of the Income Tax Appellate Tribunal cancelling the assessments under section 62/65 and deleting the penalties under section 111. It is further stated that according to the concerned taxation officer only incomplete record was received from the Circle which previously had the jurisdiction in the case. It has been further stated that the refund, if any, shall be created and issued to the complainant after receipt of challans from the complainant and after these have been verified. It is further stated that no compensation is due to the complainant as a refund order has not been passed as yet.

3. The contentions of the two sides have been considered and it is evident that no valid reason has been given by the respondent for failing to give timely effect to the orders of the Tribunal, dated 3-9-2002. It is to be noted that the Income Tax Ordinance, 2001 has no provision for withholding of a refund on the ground that the order giving rise to the refund has been contested in a higher forum. The Commissioner's comments in fact also show that the department admits in principle that refund is due to the complainant subject to verification of payments.

4. In the light of the above it is recommended that---

(i) The income-tax refund due to the complainant for the assessment years 1987-88 and 1988-89 be paid expeditiously after necessary verification.

(ii) The complainant's claim of compensation under section 102 of the repealed Ordinance, 1979/section 171 of the Income Tax Ordinance, 2001 be also decided.

(iii) Compliance report be furnished within 45 days.

C.M.AJ267/FTOOrder accordingly.