Rana GHULAM DASTGIR VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1623 (2005)

Income Tax Ordinance (XXXI of 1979)---

----S.96---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)--Refund was adjusted against the demand of next year and against the demand of a partner and balance amount was issued---Assessee contended that at the time of making refund application no demand was pending for the next year and assessment of this year had been set aside by the First Appellate Authority and thus department be directed to pay the refund amount with additional payment for causing delay---Validity---Explanation offered by the department for delay in issuance of refund was not satisfactory---Assessing Officer issued the letter to DPC for cancellation of the adjusted amount aid to date no reply had been received which indicated that he did not pursue the matter diligently---Federal Tax Ombudsman recommended that refund voucher of the amount due should be forthwith issued in favour of the complainant; explanations from Incharge of DPC should be called for the delay in responding to the Taxation Officer's letter and from the Taxa tion Officer for not following up of his letter.

Muhammad Sirjees Nagi, Advisor (Dealing Officer).

Rana Ghulam Dastagir for the Complainant.

Ms. Naureen Yaqoob (DCIT) for Respondent.

DECISION/FINDING

JUSTICE (RETD.) MUNIR A. SHEIKH, (FEDERAL TAX OMBUDSMAN).---The complainant is being assessed by the Income Tax Department, Circle 05, Zone-C, Lahore for the last two decades. He is running the business of manufacturing of auto-parts engine valve at 19 KM Multan Road, Lahore under the name and style "Anwar Auto Industries". He was not satisfied with the assessment made by the Taxation Officer for the years 1992-93, 1997-98 and 2001-02. He filed appeal against the order of the Taxation Officer which was dismissed by the Appellate Additional Commissioner, Lahore. He challenged the order before the ITAT and get relief as a result of which he became entitled to refund of Rs.5,65,531.

2. The complainant on 4-3-2005 filed an application for refund of the aforesaid amount. His A.R. approached the Special Assistant to the CIT for issue of voucher who called for a report in the matter. The concerned Taxation Officer reported that the demand of Rs.4,38,096 for the assessment years 2002-03 was outstanding so the same was adjusted through the DPC, Lahore against the refund of Rs.5,65,531. Further adjustment of Rs.34,936 was made against the demand for the assessment year 1991-92 in the case of a partner Mr. Muhammad Anwar. Refund Voucher amounting of Rs.94,498 had been issued on 5-5-2003. It is contended that at the time of making of refund application no demand was pending for the assessment year 2002-03. The assessment-of this year had been set aside by CIT(A) on 3-1-2005 and the same was, conveyed in the office of CIT, Zone-C, Lahore by letter, dated 19-2-2005. The complainant has requested that the respondent may be directed to pay the refund amount with additional payment for delay @ 15% per annum.

3 In the parawise comments of Regional Commissioner of Income Tax, it was admitted that the complainant was entitled to refund of Rs.5,65,531 but an amount of Rs.4,38,096 was outstanding against him for the assessment year 2002-03 which was adjusted through DPC on 17-2-2005 i.e. before receiving the order of the CIT(A) on 21-2-2005 who set aside the assessment with the direction that assessment be completed after obtaining complete books of account and necessary documents. Notice under sections 61 and 62 of the Income Tax Ordinance, were issued which have remained un-complied with. Assessment is therefore, pending due to non-compliance. It is further clarified that a letter for cancellation of adjustment was sent to the DPC on 12-4-2005 but its reply was awaited. The respondents have not committed any `maladministration'. The adjustment of Rs.4,38,096 was made against the outstanding demand of the assessee, therefore, provisions of section 102 of the Income Tax Ordinance, 1979 for statutory compensation were not attracted.

4. On the date of hearing on 27-5-2005 the complainant was represented by Mr. Aamir S. Khan, Advocate and Ms. Naurin Yaqoob (DCIT) represented the respondents. She submitted that the respondents were prepared to issue voucher for the refund amount but were awaiting reply from the DPC for cancellation of the adjusted amount. The A.R. submitted that unnecessary delay was being caused and the refund withheld without any reason which amounted to `maladministration' and the complainant was entitled to statutory compensation. He said the DPC was a department of the respondent and it was their internal matter to get the adjustment cancelled. The D.R. submitted that the voucher would be issued on receipt of reply from the DPC, Lahore. Efforts will be done to expedite the issue of refund voucher of the due amount.

5. The explanation offered by the respondents for delay in issue of refund voucher is not satisfactory. The Taxation Officer issued the letter to the DPC on 12-4-2005 for cancellation of the adjusted amount and to date no reply has been received which indicates that he did not pursue the matter diligently. It is, therefore, recommended:-

(i) Refund Voucher of the amount due should be forthwith issued in favour of the complainant.

(ii) Explanations from Incharge of DPC should be called for the delay in responding to the Taxation Officer's letter dated 12-4-2005 and from the Taxation Officer for not following up of his letter.

(iii) Compliance be reported within 30 days from the date of receipt of the findings.

C.M.A./573/FTOOrder accordingly.