ZAFAR IQBAL VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2007 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1222 (2004)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 96, 50(7-E) & 50(7-F)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Refund---Deduction at source---Demand notice conveyed no refund although the same was claimed on Returns---Rectification application was filed but still no refund was issued---On complaint, department replied that refund had been issued, grievance had been redressed and thus complaint be filed-Validity---In rectification order Assessing Officer admitted that "while preparing IT-30 effect of deduction under S.50(7E) was not given", and "on perusal of record claim of the assessee was found genuine"---Department conceded that Returns available on file were accompanied by electricity and telephone bills together with details of month-wise deductions and that subsequent information was neither called for nor submitted voluntarily when seeking rectification---There being no dispute that full particulars justifying refund were furnished with the Returns filed under Self-Assessment Scheme and assessment were framed under S.59 of the Income Tax Ordinance, 1979, no bona fide reason thus existed for not determining refunds and for not dispatching the vouchers along with the notice under S.85 of the Income Tax Ordinance, 1979---Such act of `neglect, incompetence and inaptitude' defined as `maladministration', could not be allowed to deprive the complainant/ taxpayer of his vested right for mandatory "Additional payment for delayed refund"---To validate the already issued refunds and to bring the assessment record in conformity with' law, Federal Tax Ombudsman recommended that the Commissioner, taking cognizance of foregoing facts to undertake written counselling of the concerned Special Officer (the person not the Office) for lapses as pointed out hereinabove and against the Inspecting Additional Commissioner (person not the office) for not having exercised supervisory functions with diligence with a copy endorsed to the Director, Compliance Monitoring Section of Federal Tax Ombudsman Office; the Commissioner ensures either further rectification of the rectified assessment order for 1999-2000 to allow credit for tax collected under S.50(7E) of the Income Tax Ordinance,1979 of which necessary evidence is already on record or considers allowing due relief suo motu under S.122A of the Income Tax Ordinance, 2001 and the Commissioner to order release of Voucher for additional payment for delayed refund, due as per law in respect of all the four years.

Nemo for the Complainant.

Arif Malik, A-CIT for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This complaint points out that refunds for four assessment years 1999-2000 to 2002-2003, aggregating at Rs.24,875 have not been paid despite applications and reminders and even request to the Commissioner.

2. The relevant facts are that the complainant-Individual is a timber merchant and exists on NTN 04-09-Z-2265241. Assessments for the years under consideration were finalized as under:--

The Demand Notices conveyed no refund although the same was claimed on each Return by attaching electricity and telephone bills through which tax was withheld under section 50 of the repealed Ordinance. The complainant, therefore, made request for rectification on. 31-1-2004 which was carried out on 4-5-2004 through a combined order, dated 4-5-2004. Still no refund was issued till 14-6-2004, hence the complaint.

3. The Respondents have forwarded para-wise comments by R-CIT, Central Region, Multan conveying that refund amounting to Rs.24,875 has been issued vide Voucher No.78 Book No.9735, dated 29-6-2004, thus the grievance of the complainant has been redressed and the complaint be filed.

4. None was present for the complainant when called out obviously because the refund has been issued. However, for the Respondents Mr. Arif Malik (A-CIT) attended who was heard and the record examined. Following is an inventory of deficiencies as revealed by the scrutiny of record:---

(i) No separate covers as prescribed for (a) Returns, (b) Assessments, and (c) Miscellaneous correspondence, have been maintained and all papers are lumped together in one cover.

(ii) Order Sheets have not been regularly maintained. Entries were made at random (copy obtained for record).

(iii) For the assessment year 1999-2000 no Order Sheet entry or any other document is available to show when the assessment was made. However, as per para. 12(a) of C.B.R. Circular No.18 of 1999 the Receipt for filing of return was "to constitute the assessment order under section 59(1) .". Since Return was filed on 15-10-1999, Counting from this date rectification became time-barred on 14-10-2003 but the same was made on 4-5-2004 and the order clearly admits that originally assessment was under section 59(1).

(iv) When the refund voucher (together with consolidated rectification order) was submitted to the IAC for countersignature (approved on 30-6-2004), he failed to notice the legal deficiency as respects rectification being barred by time. The IAC should have suggested remedy through the suo motu action under section 122A of the Ordinance for creation and issuance of refund.

(v) Assessments for all the four years were completed before 30-6-2002. Therefore, refund vouchers should have been issued forthwith under section 100 of the repealed Ordinance read with C.B.R. Circular No.ITB-3(5)/86, dated 3-7-2004' of which defiance was to be treated as "misconduct" for action under Efficiency and Discipline Rules.

(vi) The complainant was entitled to mandatory additional payment for delayed refund both as section 102 of the repealed Ordinance and section 171 of the Income Tax Ordinance, 2001 (hereinafter called the Ordinance). This was not allowed although both these sections use the words "there shall be paid" and "theCommissioner shall pay to the taxpayer" a further sum by way of compensation in case refund is delayed.

It is pertinent that in the rectification order, dated 4-5-2004 (copy brought on record) the Assessing Officer clearly admitted; "while preparing IT-30 effect of deduction under section 50(7E) was not given", and "On perusal of record claim of the assessee was found genuine". The DR conceded that Returns' available on file are accompanied by electricity and telephone bills together with details of month-wise deductions and that no subsequent information was either called for or submitted voluntarily when seeking rectification. There being no dispute that (i) full particulars justifying refund were furnished with the Returns filed under SAS, and (ii) assessments were framed under section 59; no bona fide reason existed for not determining refunds and for not dispatching the vouchers along with the notice under section 85. Such acts of `neglect, incompetence and ineptitude', defined as `maladministration' as per Clause 3(ii) of section 2 of the Establishment of the Office of FTO Ordinance, 2000, cannot be allowed to deprive the complainant/taxpayer of his vested right for mandatory `Additional payment for delayed refund'. Therefore, to validate the already issued refunds and to bring the assessment record in conformity with law it is recommended that:--

(i) The Commissioner, taking cognizance of foregoing facts under-takes written counselling of the concerned Special Officer (the person not the Office) or lapses as pointed out hereinabove and against the IAC (person not .the office) for not having exercised supervisory functions with diligence with a copy endorsed to the Director, Compliance Monitoring Section of FTO Office.

(ii) That the Commissioner ensures either further rectification of the rectified assessment order for 1999-2000 to allow credit for tax collected under section 50(7E) of Repealed Ordinance for which necessary evidence is already of record or considers allowing due relief suo motu under section 122A of the Income Tax Ordinance, 2001.

(iii) The Commissioner to order release of Voucher for additional payment for delayed refund, due as per law in respect of all the four years.

(iv) Compliance report be submitted within 30 days of receipt of this order.

C.M.A./292/FTOOrder accordingly.