LAHORE: President Arif Alvi has endorsed the order of the Federal Tax Ombudsman (FTO) against the Federal Board of Revenue (FBR) that the tax officials have committed maladministration by deliberately rejecting income tax refund claim of the complainant on frivolous grounds.
The FTO has directed FBR to recall the order dated July 4, 2022 by invoking the provisions of section 122A of the ordinance for Tax year 2013 to give effect to tax deduction made under Section 236A of the ordinance for Tax Year 2013 and dispose of the refund claim as per law and after giving proper hearing.
Later, the President rejected the representation of the FBR in this matter.
The complaint was filed under section 10(1) of the Federal Tax Ombudsman Ordinance,2000 (FTO Ordinance) for payment of refund claim amounting to Rs0.214 million in terms of section 170(4) of the Income Tax Ordinance, 2001.
The (complainant) a timber merchant purchased wood through auction and filed income tax return for Tax Year 2013 by claiming tax deduction under section 236A of the Income Tax Ordinance, 2001. The complainant filed refund application, followed by reminders along-with all supporting documents but the department did not entertain the refund application.
Being aggrieved, the Complainant filed complaint before the FTO. The department has rejected the refund claim on the grounds without giving proper opportunity of being heard to the complainant hence the FTO office referred the matter to Secretary Revenue Division for comments. It was contended that the complainant had provided various documents regarding tax deduction under section 236k of the Income Tax Ordinance but failed to provide prescribed certificate under Rule-42 of the Income Tax Rules, 2002 (the Rules) and CPR of tax deduction.
The complainant was confronted through specific notice under Section 170(4) of the Ordinance for provision of excess tax deduction proofs. On the due date, nobody appeared and no application of adjournment was received. Under these circumstances, the department was left with no option but to reject the refund claim of the complainant.
However, it was observed that the complainant filed a refund application dated May 21, 2022 and provided all supporting documents. On the other hand, the Department has rejected the refund claim of the Complainant on the ground that complainant had failed to provide prescribed certificate under Rule-42 of the CPR, As per Section 164 of the Ordinance, either CPR or some equivalent document is to be provided which has already been provided by the complainant.
At the outset, the representative of FBR has argued that the FTO may not be justified in directing the Commissioner-IR Gujrat Zone, RTO Sialkot to recall the orders passed u/s 170(4) in terms of section 122(A). As per section 9(2)b of FTO,2000 all the assessment and refund related matters for which remedy of appeal is available to the taxpayer at the relevant appellate forum does not come under the preview of maladministration and do not fall under the jurisdiction of the FTO.
The right forum of appeal in the instant case was CIR (Appeals) Sialkot against the orders passed under section 170(4) of the Ordinance. He has prayed that representation before the President of Pakistan may be accepted by setting aside the orders of FTO. It was pointed out that the learned Federal Tax Ombudsman thrashed the matter vide Para 6 of order as follows:-
Deliberately rejecting the refund claim of the complainant in terms of Section 170(4) of the Ordinance for Tax Year 2013 on the frivolous ground by ignoring of Section 164 of the Ordinance tantamount to maladministration in terms of Section 2(3) (ii) of the FTO Ordinance. As deduction u/s 236A being CNIC based is internally verifiable from FBR’s ITMS as well therefore, the fallacy of the grounds for rejection is glaringly visible.The recommendations of the Federal Tax Ombudsman directing FBR to direct the Commissioner-IR, Gujrat Zone, RTO Sialkot to recall the order dated 04.07.2022 by invoking the provisions of Section 122A of the Ordinance for Tax Year 2013 to give effect to deduction made under Section 236A of the Ordinance and dispose of the refund claim as per law and after giving proper hearing and report compliance within 45 days, are unassailable and sustainable.
It is merely a reiteration about the duty of the departmental authority to decide the matter as per law after giving the opportunity of hearing to the Complainant.
The agency has the lawful authority to decide the matter on its merits in accordance with the law. There was no valid justification to assail the order of the learned FTO. In such circumstances, this representation was liable to be rejected.
Accordingly, the President, as per his decision, has rejected the representation of the FBR.
