ABDUL RASHEED VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2009 P T D 1155
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
ABDUL RASHEED
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 1393-L of 2003, decided on 01/04/2004.
Income Tax Ordinance (XXXI of 1979)---
----Ss.122 & 156---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3), 9 & 11---Refund determined under S.156 of Income Tax Ordinance, 1979, claim for---Lapse of four years in taking decision, whether to comply with refund order or not---Validity---Maladministration on account of neglect, inattention, delay, incompetence, inefficiency and inaptitude was evident from taking such long period to decide what to do with refund order---Authority had failed to give valid reasons for such delay in deciding matter---Onus lying on authority to prove absence of maladministration in such case had not been discharged---Federal Tax Ombudsman recommended to the Commissioner to ensure completion of action under S.122 of Income Tax Ordinance, 1979 in accordance with law without undue delay and institute enquiry to determine responsibility for inordinate delay in taking such decision.
Muhammad Mushtaq, Advisor (Dealing Officer).
Nauman Ali Bukhari for the Complainant.
Muhammad Asim Halim, DCIT for the Revenue.
FINDINGS/DECISION
JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The complainant in this case is an `individual' earning his income from production and exhibition of films. He entered into a joint venture for exhibition of films with Messrs Pan Asia (Pvt.) Ltd. Karachi and Messrs Bambino Cinema Karachi for the assessment year 1998-99. The complainant filed his Income Tax Return under Self-Assessment Scheme declaring income at Rs.274,000. This return was accepted as such vide order under section 59(1) of the repealed Ordinance, dated 23-6-1999. However the demand notice and I.T. 30 indicated no demand payable by the complainant. The complainant intimated the Taxation Officer that in fact tax has been deducted from payment made by Messrs Pan Asian Industries (Pvt.) Ltd. and Messrs Bambino Cinema Karachi at source and refund of Rs.326,810 was due to him. The Taxation Officer vide his order under section 156, dated 27-11-1999 rectified the above order and determined refund of Rs.326,810. It is alleged that in spite of repeated requests made by the complainant to the taxation authorities, the above determined refund has not been issued to the complainant. The complainant alleges that it made applications to the Taxation Officer for issuance of refund on 19-7-1999, 9-3-2000 and 23-5-2000 but so far refund has not been issued, which has caused grievance to the complainant.
2. In reply the R.C.I.T. Eastern Region Lahore has denied any maladministration in this case and has submitted that the complainant entered into contract with Messrs Pan Asia Industries (Pvt.) Ltd. and Messrs Bambino Cinema Karachi for exhibition of his films in Bambino Cinema and Prince Cinema Karachi. The receipts of the complainant were in nature of contract and liable to deduction of tax under section 50(4). According to R.C.I.T. tax deducted at source was final liability under section 80C of the repealed Ordinance and the complainant was required to file statement under section 143B of the repealed Ordinance instead of Income Tax Return under section 55. The R.C.I.T. has submitted that the Taxation Officer by mistake entertained the return filed by the complainant under section 59(1) and carried out rectification subsequently under section 156 of the repealed Ordinance although receipts of the complainant were covered by presumptive tax regime. According to R.C.I.T. this mistake was pointed out in the inspection, which was carried out before the complainant was made to the Federal Tax Ombudsman and remedial action is being taken to retrieve the loss of revenue.
3. Mr. Nauman Ali Bukhari Advocate attended for the complainant. He countered submissions made by the R.C.I.T. in his report and explained that the complainant entered into a joint venture for exhibition of films of Messrs Shera Films Corporation in Prince Cinema Karachi and Bambino Cinema Karachi. The collection of ticket money was to be made by the above two concerns and then after deducting expenses share of the complainant was to be remitted to him by the above two concerns. However the above two concerns illegally deducted tax from the payment made to the complainant although they could not do so under any provisions of repealed Ordinance. The complainant furnished copies of the challan for payment of tax to the Taxation Officer who rectified the order under section 59(1) creating refund of Rs.326,810 on 27-11-1999. The AR has further explained that this refund has not been paid in spite of repeated request but on the contrary Taxation Authorities tried to deprive the complainant of the above refund, which had already been determined by the Department. At first notice under section 65 was issued for the assessment year 1996-97, 1998-99 but subsequently a notice under section 122 was issued to the complainant on 5-9-2003. The AR has submitted that issued of notice under section 122 is illegal because it was served on the complainant after the complaint was made with the Federal Tax Ombudsman. Mr. Muhammad Asim Halim D.C.I.T. attended for the Revenue. He reiterated the submissions made by the R.C.I.T. in his report.
4. The complainant and respondent's reply have been examined and rival arguments have been considered. The admitted facts are that the refund of Rs.326,810 was determined vide order under section 156 the repealed Ordinance on 27-11-1999 and till the date of issuance of notice under section 122 on 5-9-2003 the respondent took almost four years to decide whether to comply with their own refund order or not. The respondent's reason for non-implementation of refund order has been recorded in paras. 2 and 3 supra. However, neither the complainant nor the respondent has produced any evidence in support of their contentions. Since the complaint is only about the inordinate delay in implementation of the refund order, the issue of nature of payment is not required to be sorted out by the Federal Tax Ombudsman.
5. The investigation clearly establishes maladministration on account of neglect, inattention delay, incompetence, inefficiency and in-aptitude evident from taking almost four years to decide what to do with the refund orders. It amounts to maladministration as defined in section 2(3)(ii) of the Establishment of the Office of the Federal Tax Ombudsman, 2000. The respondent has failed to give valid reasons for the inordinate delay in deciding the matter. The onus to prove that there was no maladministration in this case lay on the Revenue Authorities which onus has not been discharged.
6. It is recommended:---
(i) That C.I.T. ensures completion of action under section 122 in accordance with law and on relevant facts without undue delay.
(ii) That the C.I.T. institutes enquiry to determine the responsibility for inordinate delay in taking necessary action in accordance with law.
(ii) Compliance report be submitted within 40 days of receipt of these recommendations by the Revenue Division.
S.A.K./244/F.T.O.Order accordingly.