2005 PLP 1908 (PTD)

Assessment year 1996‑1997 Rs.374,314 Assessment year 1999‑2000 Rs.632,728 Rs.1,007,042 (iii) Rectification were made under section 221 of the Income Tax Ordinance, 2001 in the orders for Assessment years 1999‑2000 and 2000‑2001 on 30‑6‑2003 and refunds of Rs.974,617 and Rs.1,926,707 were created for the two years respectively out of which following adjustments were made through I.T. 104 after detailed discussion with the AR of the assessee. 1999‑2000 Rs.357,761 2000‑2001 Rs.142,800 2001‑2002 Rs.151,900 2002‑2003 Rs.011,544 Total: Rs.664,005 Balance refund payable to assessee company is Rs.1,262,702." The RCIT has admitted total refund due to the complainant amounting to Rs.2,470,828 which according to him will be issued to the complainant after completing necessary formalities. The RCIT has submitted that refund could not be paid to the complainant because of the verification of challans for payment of tax but no maladministration was involved in the case.

4. Mr. Muhammad Iqbal Hashmi, Advocate attended for the complainant. He has explained that a number of applications for issuance of refund have been made for the Taxation Authorities. Last application for refund was made on 6‑9‑2003 but so far no refund has been issued. The AR has submitted that the plea that refund could not be issued because of verification of challans for payment of tax was not correct because refund once determined by the Taxation Officer as per demand notice implies that necessary verification has been completed. Secondly certificate for deduction of tax at source have been issued by the persons who have been authorized under section 50(4) of the repealed Ordinance to deduct tax. The Income Tax Department should rely on the certificates issued by the deducting authorities. As far as adjustment of refund for various years is concerned the AR has submitted that the following adjustment as indicated by the RCIT are not correct because the Taxation Officer has himself determined the refund of Rs.974,670 for the assessment years, 1999‑2000 and Rs.1,926,338 for the assessment years, 2000‑2001. If refund has been determined for these years then there is no question of adjustment of refund for the earlier assessment years against the Income Tax demand for these years. The AR has submitted that total amount of refund as indicated by the RCIT at Rs.2,470,428 is also not correct because actual amount of refund is Rs.3,520,392 as under:‑‑ 1993‑1994 (51,316) 1994‑1995 (62,427) 1995‑1996 (59,075) 1997‑1998 (1,007,042) 1999‑2000 (974,617) 2000‑2001 (1,926,707) 2002‑2003 (119,766) Total Refund (4,200,950) Less demand 1996‑1997 (374,314) Net Refund (3,826,636)

5. Mr. Muhammad Jamil Bhatti, DCIT attended for the respondent and reiterated the submissions made in the parawise comments. The complainant and respondent's reply have been examined and arguments of the two sides have been considered. The refund due to the complainant has been admitted by the Respondent. An investigation into the facts of the case indicates that concerned tax employees generally disregard the law, rules, regulation and administrative instructions of C.B.R. as well as the recommendations of Federal Tax Ombudsman regarding proper accounting of .tax withheld and collected from tax payers. Consequently credit claimed on account of tax paid by and withheld or collected from the assessee is not being allowed in I.T.30. Form promptly after, determining the tax payable. Assessees are unnecessarily harassed when they seek such credit. Often it is allowed at the time of assessment to the extent of determined liability. Credit for tax paid in excess of liability is allowed several years after the assessment and the refund of such excess payment is not allowed even after it is so determined. Maladministration on both counts is proved in the instant case. The respondent has contended in the parawise comments offered under the signature of the RCIT that there was no maladministration in the admitted non-payment of refunds determined in the assessment orders for assessment year 1994‑95 on 15‑12‑2003 and for Assessment year 1994‑95 on 18‑12‑1994. Further it is admitted in para. 5 of the comments that a refund of Rs.974,617 was determined for A.R. 1999‑2000 vide order, dated 30‑6‑2003 passed under section 221 of the Income Tax Ordinance, 2001 yet in the same breath it is submitted in para. 4 that out of refund amounting to Rs.1,007,042 determined for Assessment year 1997‑98 vide order, dated 11‑6‑1999 an amount of Rs.632,728 was adjusted towards the demand of tax for Assessment year 1999‑2000. Again in para. 6 it is submitted that out of refund amounting to Rs.1,926,707 determined on 30‑6‑2003 for Assessment year 2000‑2001 an amount of Rs.357,761 was adjusted towards the outstanding tax liability for Assessment year 1999‑2000. It is incredible because it is admitted in para. 5 that a refund of Rs. 974,617 has been determined for Assessment year 1999‑2000 on the same date. There are similar contradictions about the adjustment against the so called outstanding tax liabilities for ‑assessment years 2000‑2001 and 2002‑2003. If maladministration of neglect and inattention on the part of RCIT is so glaring who will ensure remedial measures against rampant maladministration at the lower levells.

6. It is deemed necessary for the benefit of tax employees at all levells to reiterate that neglect, inattention, delay, incompetence, inefficiency and ineptitude in the administration or discharge of duties and respondents, unnecessary attendance for settlement of claims of refund, willful errors in the determination of refunds, deliberate withholding or non payment of refunds already determined fall under the definition of maladministration provided under subsection (3) of section 2 of the FTO Ordinance, XXXV, 2000. It is time to recommended: (i) That Secretary, Revenue Division takes serious cognizance of the negligence and inattention of the officers at the level of Regional Heads and emphasizes upon them that besides becoming role models of vigilance, attentiveness, promptness, efficiency, competence and aptitude in the administration and discharge of their duties and responsibilities they are supposed to bear in mind that avoidance of disciplinary action against a delinquent officer or official is also maladministration. Appropriate action taken by him may be conveyed within thirty days. (ii) That Commissioner concerned ensures that determined tax liabilities are correctly ascertained year wise, credit of tax claimed to be paid by or deducted or collected from the complainant is fully allowed without any further delay or harassment or the complainant and contradictions in adjustments are resolved within 15 days and the entire amount of refund due is paid within 30 days. (iii) Compliance is reported within 45 days. C.M.A./213/FTO Order accordingly.