SAJJAD AHMED VS The SECRETARY, REVENUE DIVISION, ISLAMABAD

2019 P T D 1198

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

SAJJAD AHMED

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

ComplaintNo.0175/LHR/ITof2019,decidedon12thApril,2019.

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 2(3)(b)(ii), 9(2)(b) & 10(1)---Income Tax Ordinance (XLIX of 2001), Ss. 114(1), 127 & 170(4) & (5)---Refund of tax amount, delay in---Taxpayer was aggrieved of delay in process of his tax refund---Validity---Objections raised under S.9(2)(b) of Federal Tax Ombudsman Ordinance, 2000 was misconceived as taxpayer had already availed legal remedy of appeal for non-passing of order under S.170(4) of Income Tax Ordinance, 2001 by filing appeal under S.170(5) of Income Tax Ordinance, 2001---Failure of authorities to follow directions of Commissioner Inland Revenue (Appeals) was the reason that taxpayer filed complaint---Negligence, inattention, inefficiency, unjustified, oppressive and inaptitude in discharge of duties and responsibilities in not allowing appeal tantamount to maladministration in terms of S. 2(3)(b)(ii)of FederalTaxOmbudsmanOrdinance, 2000---FederalTaxOmbudsmandirectedthe Federal Board of Revenue to direct Commissioner Inland Revenue togiveeffecttoappellateorderandtakenecessarydisciplinaryaction against Commissioner Inland Revenue for neglect, inattention and defying lawful order of Commissioner Inland Revenue (Appeals) which had attained finality---Complaint was allowed accordingly.

Shehzadi Polypropylene Industries v. Federation of Pakistan and others Writ Petition No.5999 of 2017 ref.

Mian Munawar Ghafoor, Advisor, Dealing Officer.

Manzoor Hussain Kureshi, Advisor, Appraisal Officer.

Rana Mushtaq Ahmad for Authorized Representative.

Ms. Shaheena Almas, IRAO, RTO-II, Lahore, Departmental Representative.

FINDINGS/RECOMMENDATIONS

MUSHTAQ AHMAD SUKHERA, (FEDERAL TAX OMBUDSMAN).---The complaint was filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against the delay in issuance of appeal effect order and as a consequence non-issuance of refund for Tax Year 2014.

2.Precisely, the Complainant filed online return of income for Tax Year 2014 under Section 114(1) of the Income Tax Ordinance, 2001(the Ordinance) claiming refund amounting to Rs.0.640 million. The Complainant also e-filed refund application for Tax Year 2014 on 12.03.2015. As the Department (Deptt) had been failed to process refund application for Tax Year 2014, within the stipulated time, the Complainant filed appeal under Section 127 of the Ordinance. The Commissioner-IR (Appeals-III), Lahore vide order dated 05.10.2017 remanded the matter back with the direction to the Deptt to process refund application for Tax Year 2014 and issue refund, if due, to the Complainant, as per law. The Complainant, thereafter, repeatedly approached the Deptt and also filed applications dated 12.12.2018 and 03.01.2019 but even after passage of more than one and half years, no response had been made.

3.The Complaint was sent for comments to the Secretary, Revenue Division, in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response thereto, the FBR vide letter dated 20.02.2019 forwarded parawise comments of the Commissioner IR, Zone-I, RTO-II, Lahore dated 14.02.2019. Preliminary objection regarding bar of jurisdiction was raised under Section 9(2)(b) of the FTO Ordinance, on the ground that the complaint had been filed without resorting to statutory remedy provided under Section 170(5) of the Ordinance read with Section 127(1) of the Ordinance. Reliance was placed on the judgment of Hon'ble Lahore High Court in W.P. No.5999/17 (Shehzadi Polypropylene Industries v. Federation of Pakistan etc.). On merits, it was contended that the CIR (Appeals-III), Lahore directed to do the needful under the law and issue refund voucher in favour of the appellant, if it was due. The Complainant, however, never attended the proceedings thereafter for processing refund for Tax Year 2014. It was further contended that tax collected @ 4% on gas consumption bill of CNG stations under Section 234A of the Ordinance, was final tax.

4.The AR of the Complainant filed rejoinder and reiterated that the grievance of the Complainant was that the Deptt did not process the refund application. Due to that inaction, the Complainant sought legal remedy of appeal. The CIR (Appeals-III), Lahore vide order dated 05.10.2017 accepted the appeal and directed the Deptt to process refund for Tax Year 2014 and issue refund voucher to the Complainant, if it was due, as per law. Thereafter the Deptt despite having not filed an appeal before the Appellate Tribunal Inland Revenue (ATIR), had been failed to process refund for Tax Year 2014, as per law.

5.Both sides heard and available record perused.

6.The preliminary objection raised under Section 9(2)(b) of the FTO Ordinance is misconceived as the Complainant had already availed legal remedy of appeal for non-passing of the order under Section 170(4) by filing appeal under Section 170(5) of the Ordinance. It was for the failure of the Deptt to follow directions of the CIR (Appeals-III), Lahore that the Complainant filed this complaint. The case law cited above is thus not relevant in the present circumstances, for the mere fact that legal remedy of appeal against non passing of refund order had already been exhausted by the Complainant. The preliminary objection is ill founded and has been raised just for the sake of an objection. It is also against the directions of the F.B.R to all the field formations, to refrain from raising un-founded objections. In any case, the objection of bar on jurisdiction of this organization, is baseless and frivolous, hence stands overruled.

7.Admittedly, second appeal before the Appellate Tribunal Inland Revenue (ATIR) had not been filed for the obvious reason that the CIR (Appeals-III), Lahore had simply directed the Deptt, to process the refund for Tax Year 2014 and pass order, as per law. Unfortunately, the CIR, Zone-I, RTO-II, Lahore in sheer over enthusiasm to justify its failure to carry out directions of the appellate order, did not appreciate the legal position and raised preliminary objection of bar of jurisdiction under Section 9(2)(b) of the Ordinance, on the frivolous grounds, specially when the Deptt had not preferred second appeal and the order of CIR (Appeal) dated 05.10.2017 had attained finality. Moreover, after receipt of the CIR (Appeals-III) Lahore's order, not even a single correspondence had been made with the Complainant. Thus notwithstanding plea on taxability of the CNG's income, which can be examined during processing, the undue and un-justified delay in not processing the refund application for Tax Year 2014 and failure to pass order as per law, in terms of the CIR (Appeals-III) Lahore's order, is evident.

Findings:

8.Negligence, inattention, inefficiency, un-justified, oppressive and ineptitude in the discharge of duties and responsibilities in not allowing appeal effect, tantamounts to maladministration in terms of Section 2(3)(b)(ii) of the FTO Ordinance.

Recommendations:

9.FBR to--

(i)direct the Commissioner-IR Zone-I, RTO-II, Lahore to give appeal effect to the appellate order dated 05.10.2017, as per law;

(ii)take necessary disciplinary action against the concerned CIR, for neglect, inattention, inefficiency and defying lawful order of the CIR (Appeals) dated 05.10.2017, which had attained finality for such a long time; and

(iii) report compliance within 45 days.

MH/32/FTOOrder accordingly.