2003 PLP 1655 (PTD)

(a) admits receipt of the request and the certificate of the Executive Engineer but asserts that the relevant Department has not responded when confirmation was sought, (b) conveys: " no refund is due to the complainant as the same was also not claimed in the statement under section 143-B.." and (c) asserts: As per provision of section 80-C no refund is allowable against presumptive income because tax deducted and collected under` presumptive tax regime constitutes final discharge of tax liability of the complainant. It concludes by submitting that (a) the assessment...stands completed under section 59(A) of the repealed Ordinance, (b) no refund was created, (c) "The provisions of section 156 are. not even applicable" and (d) the taxpayer had not filed any appeal against the assessment order.

4. The learned counsel Mr. Latif Ahmad Qureshi (Advocate) submitted that whereas the return was filed in September, 2001, the Mobilization Advance had to be deposited back to the PWD in May, 2002. Therefore, the position as reported in the return, had changed inasmuch as a sum of Rs.985,000, originally declared as a `receipt'. no longer belonged to the Complainant. Since the assessment had been made under section 59A, by operation. of law, `revised return' could not be filed and, therefore, request by way of `rectification' was made by submitting proof about the reversal of receipt entry. The AR brought on record decision from Lahore High Court reported as 1994 PTD 994 in re: Koh-i-Noor Industries Ltd. and from Sindh High Court reported as 2002 PTD 87 in re: Metropolitan Steel Corporation to canvass that any amount paid in excess of the legally due tax; needed to be refunded to the taxpayer.

5. A scrutiny of record and arguments by the learned counsel reveal that the Department accepts that the amount received as Mobilization Advance was declared as receipt was returned to the concerned client as execution of the contract was cancelled and, therefore, the tax already deducted and deposited had become refundable to the Complainant. The difficulty which the Department expresses is that the assessment has been finalized by operation of law under section 59A of the repealed Ordinance, and that any provision corresponding to section 156 does not exist in the Income Tax Ordinance, 2001 (hereinafter called the new Ordinance). This view seems to be based on an incorrect appreciation of the provision of section 122 of the new Ordinance, which reads as- (1) Subject to this section, the Commissioner may amend and assessment order treated as issued under sect ion 120 or issued under sections 121 and 122 or issued under sections 59, 59A, 62, 63 or 65 of the repealed Ordinance, by making such alternations or additions as the Commissioner considers necessary to ensure that the taxpayer is liable for the correct amount of tax for. the tax year to Which the assessment order relates. (5) An assessment order shall only be amended under sub section (1) and an amended assessment shall only be amended under subsection (4) where the Commissioner

(a) is of the view that this Ordinance has been incorrectly applied in making the assessment including the misclassification of an amount under a head of income 14, incorrect payment of tax with the return of income, an incorrect claim for tax relief or rebate, an incorrect claim for exemption of any amount or an incorrect claim for a refund; or (b) has definite information acquired from an audit or otherwise that the assessment is incorrect. (here underlined for emphasis) A close reading of the above provision leaves no room for doubt that the prime concern of the Legislature is "to ensure that the taxpayer is liable for the correct amount of tax". For this purpose the Commissioner has been vested with the authority to make such alternations or additions" as many times as necessary, specially when `definite information' is acquired.. Obviously, the Commissioner has now wider powers to reduce or to enhance the assessment, whatever is necessary, to ensure that `the taxpayer is liable for the correct amount of tax". On this view of the matter, there should be no difficulty to alter/amend the assessment when it is evident that the: principal amount having been returned to the client, the sum deposited as tax by way of withholding; has become refundable to .the Complainant. The denial to pass necessary order in this behalf is evidently an act falling under the definition of misadministration" as per subsection (3) of section 2 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. It is therefore, recommended that Commissioner, by resort to section 122 of the New Ordinance modify the assessment framed under section 59A of the repealed Ordinance and refund the amount falling due to, the Complainant.

6. Compliance be reported within 30 days of the receipt of this order. C.M.A./L-686/FTO Order accordingly.