Ch. BILAL AHMAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2008 PTD 1172
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Ch. BILAL AHMAD
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.116 of 2004 decided on 24/05/2004.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 63, 65 & 100---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9(2)(a) & 2(3)---Ex parte Assessment-Refund-Jurisdiction-Maladministration-Complainant was refused. refund by invoking the provisions of section 100 of Income Tax Ordinance, 1979---Complainant alleged maladministration---Department alleged that the matter was sub judice for all the five years and refund of relevant years was adjusted against the demand for the assessment of succeeding years and refund will be issued if not consumed against the demands created as result of set aside assess ments---Illegality was denied---Validity---Complaint was not filed to contest the sub judice assessment orders passed by the Taxation Officers or the Appellate orders, `nstead it alleged maladministration for failure to issue the refund which had become legally due to the complainant---section 9 subsection (2) Part (b) of the Federal Tax Ombudsman's Ordinance, 2000 related to the matters "in respect of which remedy of appeal, review, revision are available in the Relevant Legislation---No such remedy was provided in respect of process employed in refusing the legal right---When refund became due it had to be issued immediately---Refund could not be withheld against any future demand---Failure to pass order under section 103 of Income Tax Ordinance, 1979 had aggravated maladministration---Federal Tax Ombudsman recommended that refund claimed be issued within 15 days.
2001 PTD 3956 rel.
2003 PTD 2317 quoted.
2003 PTD 1948 cited.
Shamim Ahmad, Advisor, (Dealing Officer)
Sayyid Ali Imran Rizvi for the Complainant.
Faqir Hussain; DCIT for Respondent.
FINDINGS/DECISION
JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The complaint under consideration was filed against the non-issuance of refund of Rs.1,467,089 by the D.C.I.T., Circle 22, Kharian.
2. The facts of the case leading to the complaint are briefly discussed as follows:-
2.1 The assessment for the assessment years 1994-95, 1995-96 and 1996-97 were made under the provisions of section 63 read with section 65 of the Repealed Ordinance (R.0) on 9-12-2000. The aggregate demand for the three assessment years was created at Rs.1,947,254, against which the complainant paid Rs.1,467,089. The complainant went into appeal before the Commissioner of Income Tax (Appeals), Sialkot Zone, Sialkot who cancelled the said assessments vide Order dated 20-5-2002. Thus, according to the complainant, the entire demand stood wiped off and tax already paid became refundable.
2.2 The complainant moved an application requesting for refund. Reminders were also sent to the officer concerned. Instead of getting the refund, the complainant was informed that the assessments for the assessment years 1997-98 and 2001-2002 were finalized and the entire amount of refunds stood adjusted against the demand created. It was contended by the complainant that the illegal demand was raised to defeat the complainant's claim of refund.
2.3 The complainant filed an appeal before the C.I.T. (Appeals) and the assessments for both the assessment years were set aside. When the complainant made a request for the refund, it was claimed by the respondent that the said Appellate Orders setting aside the assessments had not reached him.
2.4 Later on, the complainant was refused the refund by invoking the provisions of section 100 of the R.O as the assessments were set aside. The complainant alleged maladministration due to the non-issuance of the refund mentioned above.
3. The respondent, in its reply dated 9-3-2004, raised the following preliminary objections:---
(a) The department had contested the decision of the Commissioner of Income Tax (Appeals) for the assessment years 1994-95 to 1996-97 before the learned ITAT. For the assessment years 1997-98 and 2001-2002, the complainant himself was in appeal before the learned ITAT. Thus the matter was sub judice for all five years within the meaning of clause (a) of subsection (2) of section 9 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 (the Ordinance).
(b) No maladministration had been established within the meaning of section 2(3) of the Ordinance.
4. Commenting on the facts of the case, the respondent submitted that the refund was not due because the assessments were set aside. It was reiterated that the refund for assessment years 1994-95, 1995-96 and 1996-97 were adjusted against the demand for the assessment years 1997-98 and 2001-2002. Though the assessment for the last two years were also set aside, the refund did not become due under the provisions of section 100 of the R.O. The same would be issued if not consumed against the demand created as a result of completion of set-aside assessments, if was further stated. Any illegality of the action in refusing to issue refund was strongly denied.
5. The two representatives were heard in person. Both the AR and D.R repeated their arguments discussed above. The DR was asked whether any order was passed under section 103 of the repealed Ordinance. It was denied.
6. The arguments of the two sides and the facts of the case were duly considered. The respondent's objection with regard to the jurisdiction of the F.T.O. to entertain the complaint is based on misreading of the provisions of section 9(2) of the said Ordinance. The complaint in question was not filed to contest the subjudice assessment orders passed by the Taxation Officer or the Appellate Orders passed by the Commissioner of Income Tax (Appeals). Instead, it alleged maladministration for the failure to issue the refund which became legally due to the complainant. The non-issuance of the refund is the subject-matter of the complainant; which is not subjudice before any authority mentioned in clause (a) of subsection (2) of section 9 of the Ordinance. The complainant also dealt with the process employed to deny the legal right of the complainant. Clause (b) of subsection (2) of section 9 of the Ordinance relates to the matters "in respect of which remedy of appeal, review or revision are available in the Relevant Legislation." However, no such remedy has been provided in respect of the process employed in refusing the legal right of the complainant in getting a refund when it became due. Therefore, the provisions of section 9(2) of the Ordinance do not stand in the way of the investigation by the F.T.O. The complaint in question is held to be competent for admission and the objection by the respondent is overruled.
7. It has been held in a number of cases both by the superior judiciary and this office that when a refund became due it had to be issued immediately. The reliance is placed on a case quoted as 2001 PTD3956 (Karachi High Court). The Honourable High Court held that the refund should be immediately paid irrespective of whether the assessee has or has not made any claim in this respect.
8. The issue regarding withholding the refund against any future demand has been discussed at length in an order passed by this office and reported as 2003 PTD 2317 (F.T.O.). In the light of the discussion in quoted case, the said refund could not be withheld against any future demand.
9. As pointed out in para. 5 above, the respondent did not pass any order under section 103 of the R.O. The failure to pass the said order not only made the withholding of the refund illegal but also aggravated maladministration as held by this office in a case quoted as 2003 PTD 1948 (F.T.O.).
10. In view of the above discussion, the maladministration is not issuing the refund is proved. It is, therefore, recommended that:
(a) the refund amounting to Rs. 1,467,089 be issued within 15 days of the receipt of this order;
(b) compliance of the above mentioned recommendation be reported within 30 days of the receipt of this order.
M.I./344/F.T.O.Order accordingly.