SHAHSONS PAKISTAN (PVT.) LTD., MULTAN VS The SECRETARY, REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2072 (2016)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 170 & 171---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3)(ii) & 10(4)---Non-issuance of income tax refund---Complainant, claimed additional payment under S.171 of Income Tax Act, 2001 for delay of payment of tax refund---Representative of the complainant, delivered a copy of letter, claiming that the matter had been fully verified and there was no justification to withhold the refund any further---Departmental representative submitted that verification from Bank was still needed, but he failed to point out any justifiable deficiency---Department's failure to settle the refund claim within time as prescribed under S.170 of the Income Tax Ordinance, 2001, was tantamount to maladministration under S.2(3)(ii) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue was recommended to direct the Commissioner to complete the verification process, and issue the due amount of refund within 30 days; and report compliance within 7 days thereafter.

Muhammad Daud Khan, Advisor, Dealing Officer.

Riaz Ahmad Raja, ITP, Authorized Representative.

Abid Gulshan, DCIR, Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.--This complaint is regarding non-issuance of income tax refund amounting to Rs.8,349,326 under section 170 of the Income Tax Ordinance, 2001 (the Ordinance) for the tax year 2015. Statutory period prescribed by law for the purpose has since lapsed. The Complainant also claims additional payment under section 171 of the Ordinance for delay in payment of tax refund.

2.The complaint was sent for comments to Secretary Revenue Division, in terms of Section 10(4) of the Federal Tax Ombudsman Ordinance, 2000 (the FTO Ordinance). In response, the FBR submitted its comments vide letter dated 13.05.2016.

3.The AR claims that the Complainant is a limited company and derives income from manufacture and supply of agricultural tractor parts to Millat Tractors Limited and Al-Ghazi Tractor Limited etc. Return for the tax year 2015 was filed on 16.12.2015 on FBR web portal i.e. IRIS claiming refund on account of excess of tax deductions made under sections 147 (Advance Tax), 148 (Import of Goods), 153 (Payment for Goods, Services and Contract), 231A (Cash Withdrawal from Banks), 235 (Electricity Bills) and 236 (Telephone and Mobile Bills). Application for issuance of refund was filed on 07.01.2016 with original electricity and telephone bills etc. The AR contended that refund claim was complete in all respects but it has not been settled within the prescribed period of 60 days under section 170(4) of the Ordinance. Personal visits to RTO office have gone unheeded and nothing has been done in this regard so far. He also claimed additional payment under section 171(2) of the Ordinance for the delay in payment of refund by the Deptt.

4.The DR claimed that necessary verification was being made. It is claimed by the Deptt that to ascertain accuracy of refund claim required verification. He claimed that the refund voucher would be issued as and when the process of verification was completed. The DR deposed that there is no maladministration on the part of the Deptt.

5.Both the parties have been heard and the record perused. The AR delivered a copy of PRAL's letter dated 07.03.2016 claiming that the matter had been fully verified by PRAL and there was no justification to withhold the refund any further. However, the DR submitted that verification from some banks was still needed, but he failed to point out any justifiable deficiency.

Findings:

6.Department's failure to settle the refund claim within time as prescribed under section 170 of the Ordinance is tantamount to maladministration under section 2(3)(ii) of the Federal Tax Ombudsman Ordinance, 2000.

Recommendations:

7.FBR to--

(i)direct the Commissioner to complete the verification process and issue the due amount of refund within 30 days; and

(ii)report compliance within 7 days thereafter.

HBT/59/FTOOrder accordingly.