SHABBIR AHMAD SUMRA VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2011 PTD 2455
2011 PTD 2455
[Federal Tax Ombudsman]
Before Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman
SHABBIR AHMAD SUMRA
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.196/LHR/IT(166)406 of 2011, decided on 22/01/1922.
July,
2011. (a) Income Tax Ordinance (XLIX of 2001)---
----Ss.170 & 171---Establishment of the Office of Federal Tax Ombudsman Ordinance, (XXXV of 2000), S.2 (3)---C.B.R. Circular No.15 of 1997 dated 6-11-1997---Refund---Retrenchment from service under golden handshake scheme---Pretext, loss of assessment record---Refund claim was not processed by the Department on the ground that returns and other records were not available and inference was drawn that the complainant had not filed returns---Validity---Complainant had approached concerned officials several times after the announcement of the apex court judgment for its implementation and payment of resultant refund and compensation due to him but there was no response---In case any document was required by the Department to dispose of refund claim, the same should have been formally requisitioned by issuing notice to the complainant---No notice was issued and the Department seeked to further delay matters on the pretext of loss of complainant's assessment record---Application filed by the complainant seeking payment of refund and compensation cite the complainant's National Tax Number which showed that the complainant was indeed borne on the Departmental record as a taxpayer and Department should have taken action to implement the judgment of apex court and issued any refund found due to the complainant as a result of income tax deducted at source on lump sum payment of golden handshake amount---Delay in issuance of refund was tantamount to maladministration---Delay also created the complainant's right to receive compensation under S.171 of the Act---Federal Tax Ombudsman recommended Federal Board of Revenue to direct the Chief Commissioner to issue refund due /compensation due, as per law, within 21 days.
2006 PTD 2277 rel.
(b) Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S.2(3)-Maladministration---Loss of assessment record-Non?-availability of complainant's assessment record in the Department was a serious lapse on the part of Departmental officials concerned as being custodian of all taxpayer's records; it was the Department's responsibility to keep the record in safe custody and ensure its integrity---Evidently, the Department had failed to discharge its responsibility in that regard, and such a lapse was tantamount to maladministration.
Muhammad Munir Qureshi, Dealing Officer.
Riaz Ahmad Raja, ITP Authorized Representative.
Saleem Akhtar, DCIR Departmental Representative.
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN). ---This complaint is against non issuance of refund.
2. The complainant claimed refund amounting to Rs.94,885 for Assessment Year 1998-99, on 31-3-2000. The refund arose on account of excess deduction of tax at source on the lump sum payment made at the time of his retrenchment from service under the golden handshake scheme.
3. The complainant contested the interpretation of Circular No 15 of 1997 by the Department in Writ Petition No.6895 of 1998 before the Lahore High Court, Multan Bench, Multan. The petition was disposed of on 6-8-1998 and a decree was awarded against the Deptt. In another judgment on a similar issue dated 3-12-1999, the Rawalpindi Bench of the Lahore High Court, Lahore, also returned a verdict against the Deptt and directed that tax deducted on lump sum payment of golden handshake amount to retrenched employees of government and semi government organizations be refunded forthwith. Subsequently, the, matter pertaining to taxability of cited amount was taken up by the Hon'ble Supreme Court of Pakistan and in judgment cited as 2006 PTD 2277, the apex Court held that no exception could be taken to the legal validity of C.B.R. Circular No.15 of 1997 (C.No.1(39)E&IC/97) dated November 06 1997 whereby lump sum receipt of golden handshake amount was held to be taxable as salary income. As a consequence, and as provided for in paragraph-5 of the said Circular, the retiring employee could opt to have the amount taxed as a separate block of income at the average of the preceding three years tax rates or the tax rate for assessment year 1998-99, whichever was more beneficial to him.
4. Under the FTO Ordinance, a complaint is required to have been filed within six months of the cause of grievance. In the present case, the grievance relates to assessment year 1998-99 and the Supreme Court of Pakistan judgment on the issue of lump sum taxability of golden handshake amount was received on 17-4-2006.
5. The complainant has filed an application for condonation of delay in filing the complaint before the Hon'ble Federal Tax Ombudsman. He submits that he had first exhausted remedy of appeal before the superior judiciary and after the apex Court judgment of 17-4-2006 he approached the Departmental authorities for its implementation but failed to elicit any response. After exhausting all efforts to obtain due refund of tax deducted at source on the golden handshake lump sum amount in an arbitrary manner, he decided to file a complaint before the Hon'ble FTO.
6. After due consideration of the matter, the delay-in filing the complaint before the Hon'ble FTO is hereby condoned.???
7. When confronted, the Deptt filed a reply reiterating the position given above regarding taxability of lump sum receipt of golden handshake amount. However the Deptt contended that in the complainant's case the Returns and other records were not available and the inference drawn was that the complainant had not filed Returns in the absence of which it was not possible to, process the refund claim.
8. The complainant contested the Departmental contention and submitted that there had been no statutory default on his part and he was a regular taxpayer till his premature retirement after which he had not earned any taxable income and was dependent on his pension for his livelihood. The complainant pointed out that since the issue of taxability of golden handshake amount was finally decided by the Supreme Court, the Deptt sought to delay implementation of the apex Court's judgment by raising unwarranted objections. The stated non availability of complainants assessment record in the Deptt was a serious lapse on the part of Departmental officials concerned as being custodian of all taxpayer's records it was the Department's responsibility to keep the record in safe custody and ensure its integrity. Evidently, the Deptt had failed to discharge its responsibility in that regard, and such a lapse was tantamount to maladministration under the FTO Ordinance. Finally, the complainant stated that he had filed a duplicate Return of Income for assessment year 1998-99 on 27-5-2011 along with necessary supporting documentation just to meet the Departmental objections regarding his, `missing assessment record'.
9. The complainant had approached concerned Departmental officials several times after the announcement of the apex Court judgment for its implementation and payment of resultant refund and compensation due to him but there was no response. In case any document was required by the Deptt to dispose of the Complainant's refund claim, the same should have been formally requisitioned by issuing a Notice to the complainant. No Notice was issued and now the Deptt seeks to further delay matters on the pretext of loss of complainant's assessment record. The applications filed by the complainant before the Departmental authorities seeking payment of refund and compensation cite the Complainant's National Tax Number (NTN) as 04-32-0131125. This shows that he was indeed borne on the Departmental record as a taxpayer and the Deptt should have taken action to implement the apex Court's judgment and issued any refund found due to the complainant as a result of income tax deducted at source on lump sum payment of golden handshake amount.
Findings:
10. The delay in issuance of refund was tantamount to maladministration under section 2(3)(ii) of the FTO Ordinance. The delay also creates the complainant's right to receive compensation under section 171 of the Ordinance.
Recommendations:
11. F.B.R. to direct the Chief Commissioner to -
(i) issue refund due/compensation due, as per law, within 21 days; and
(ii) report compliance within 07 days thereafter.
C.M.A./205/FTO???????????????????????????????????????????????????????????????????????????????? Order accordingly.