BANO ROLLER & FLOUR MILLS, KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 581 (2005)

Income Tax Ordinance (XLIX of 2001)---

----S.170(4)---Income Tax Ordinance (XXXI of 1979) Ss.94 & 129(2)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Refund---Mandatory payment of 15% of demand was made along with additional tax---Appeal was allowed by the First Appellate Authority and second assessment was annulled---Appeal effect was given and refund was determined but credit of additional tax paid was not allowed---Determined refund was also not issued---Reason for delay in deciding the claimed refund was attributed to the confusion created by the complainant/assessee by filing returns at Hyderabad and at Karachi---Refund order was approved by the Commissioner of Income Tax but verification could not be made from the record regarding issuance of refund voucher and concerned Commissioner of Income Tax was directed to issue the refund immediately after verification---Validity---Department provided copy of refund order under S.170(4) of the Income Tax. Ordinance, 2001 whereby refundable amount was determined---Refund voucher was issued after a lapse of about 10 months---Department was not able to offer any plausible explanation for the inordinate delay in issuance of refund voucher---Rectification application had not been disposed of despite repeated reminders---Department failed to justify non-payment of compensation for delayed refund to the complainant/assessee---Maladministration was established---Federal Tax Ombudsman recommended that the Central Board of Revenue to direct the Taxation Officer concerned to dispose of the rectification application of the complainant dated 27-8-2003 and resultant refund if any be issued and that the compensation for delayed refund be worked out and paid to the complainant strictly in accordance with the provisions of S.171 of the Income Tax Ordinance, 2001.

S. Asghar Abbas, Adviser (Dealing Officer).

Ali Sajjad, Advocate for the Complainant.

Dr. Pir Khalid Ahmed, DCIT for Respondent.

FINDINGS/ DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The complainant an Association of Persons is an existing Income Tax Assessee of Circle Hyderabad on National Tax Number 08-05-TR19866.

2. The complainant's main grievance is non-issuance of refund along with the additional payment for delayed refund relating to the Assessment year 2000-2001. The facts of the case are briefly stated as under:---

3. The Association of Persons namely Messrs Al-Hamd Enterprises purchased Messrs Bano Roller Flour Mills at Plot No.200 Sector 7-A, KIA, Karachi and established its Head Office at Hyderabad. The First assessment for the year 2000-2001 was completed as a new case in Circle-01, Range-II, Hyderabad Zone on 30-6-2001 on an income of Rs.16,000 being lease money for two months. Another assessment for the same assessment year was completed in the status of individual ex party under section 63 of the repealed Ordinance in Circle 22, Zone-C, Karachi on an income of Rs.1,37,00,000. The ease was thereafter transferred to Circle-06, companies Zone-V, Karachi on the point of jurisdiction. Since double assessment was finalized for the same income, the complainant filed appeal before the Commissioner of Income Tax Appeal Zone-V, Karachi and mandatory payment, of 15% of the impugned demand of Rs.7,67,139 was paid on 30-4-2002 and Rs. 10,000 was further paid on 29-6-2002.being additional tax.

4. The complainant's appeal was allowed by the Commissioner of Income Tax Appeal and the second assessment made at Karachi was annulled vide appeal order dated 29-6-2002. The appeal effect was given vide order under section 132 of the repealed Ordinance dated 12-12-2002, determining thereby refund at Rs.7,67,139. It is alleged that while passing the aforesaid order the taxation office failed to allow credit of Rs.10,000 which was paid as additional tax by the complainant. It is further, alleged that the aforesaid determined refund was also not issued by the taxation officer along with the appeal effect order dated 12-12-2002. It is also stated that the department filed second appeal before the Income Tax Appellate Tribunal, Karachi which was dismissed vide 1TA No.1645/KB of 2002 dated 18-7-2003.

5. It is stated that the complainant's Authorized Representative made an application for rectification under section 221 of the Income. Tax Ordinance 2001 on 27-8-2003 requesting the Taxation Officer Circle-6, Companies-V Karachi to allow credit of Rs.10,000 paid as additional tax. The complainant also filed a prescribed application for refund on the same date i.e. 27-8-2003 to the Commissioner of Income Tax, Companies Zone-V, Karachi for refund of Rs.7,67,139. Since no action was taken on the refund application the A.R. of the complainant issued a reminder to the Commissioner of Income Tax on 10-11-2003 and copy thereof was also endorsed to the taxation officer, Circle-06 Companies Zone-V, Karachi. The complainant's Authorized Representative was obliged to address an application to the Regional Commissioner of Income Tax, Southern Region, Karachi on 15-10-2003 as his letters addressed to the CIT and Taxation Officer concerned were not responded. The complainant reiterated his request for allowing credit of Rs.10,000 by passing rectification order on his application dated 27-8-2003. The Regional Commissioner of Income Tax was also requested to direct the officer concerned to issue refund which was already determined. It is stated that thereafter a letter bearing No.1969 dated 25-2-2004 from the Special Assistant to the Commissioner, Companies-V, Karachi was received along with the photocopies of the correspondence between the taxation officer and his supervising authorities. It is alleged that neither the rectification application has been disposed of nor the determined refund has been issued along with the compensation so far. The complainant has prayed for issuance of directions to the concerned officer to pass rectification order and issue refund along with the additional payment for delayed refund at the earliest.

6. The respondents have forwarded the parawise comments prepared by the Regional Commissioner of Income Tax, Southern Region, Karachi. It is pleaded therein that the assessing officer having jurisdiction over Korangi area, where the four mill existed, initiated assessment proceedings and on account of non-compliance of statutory notices, completed ex parte assessment on total income of Rs.1,37,00,000. It is further stated that the complainant's claim of refund pertained to mandatory payment of 15% of the demand raised, which was due to the complainant under the law. The reason for delay in deciding the claim of refund is attributed to the confusion created by the complainant by filing Income Tax Returns in Circle-01, Hyderabad and at Karachi. It is reported that the records received from Companies Zone-V, showed that the refund order was approved by the Commissioner of Income Tax but verification could not be made from the record regarding issuance of refund voucher and the concerned CIT was therefore directed to issue the refund immediately after verification.

7. The case has been discussed with the above cited representatives of both the sides. The Departmental Representative has provided copy of refund order under section 170(4) of the Income Tax Ordinance, 2001 dated 10-11-2003 whereby refundable amount was determined at Rs.7,67,139. The refund voucher was however, issued after a lapse of about 10 months on 8-9-2004. The Departmental Representative has not been able to offer any plausible explanation for the inordinate delay in issuance of refund voucher. The examination, of record confirms the allegation of the complainant that its rectification application filed on 27-8-2003 has not been disposed of by the taxation officer despite repeated reminders issued to him and his supervisory authorities. The respondents have failed to justify non-payment of compensation for delayed refund to the complainant. Maladministration is established. It is, therefore, recommended as under---

(i) The C.B.R. to direct the taxation officer concerned to dispose of the rectification application of the complainant dated 27-8-2003 and resultant refund if any be issued.

(ii) The compensation for delayed refund be worked out and paid to the complainant strictly in accordance with the provision of section 171 of the Income Tax Ordinance 2001.

(iii) The above recommendations be implemented within 30 days of receipt of this order and compliance be reported within a week thereafter.

C.M.A./372/FTOOrder accordingly.