2003 PLP 1010 (PTD)

Rs.18,493,690 @5% Rs. ,924,685 Refund claimed Rs.554,812 (ii) Assessment was finalized under section 80C vide DCR No.C/1821, dated 30‑6‑2000 and refund was not created in the said IT‑30 as tax deducted was final discharge of tax liability. Tax has been deducted at the prescribed rate i.e. @ 5%. (iii) The assessee never filed any application for issuance of refund before the Assessing Officer, IAC or CIT. The plea adopted by, the assessee is not based on facts and without any documentary evidence. No refund is due to the complainant as has been stated above, neither was any created. (iv) The claim of refund by the complainant is not in accordance with law. Moreover, if any action of assessment is to be disputed appellate forums should be approached for redressal as laid down in the law. (v) The complainant has failed to make out a case of maladministration. The complaint being frivolous merits rejection both on the points of facts and jurisdiction."

3. The representatives of the complainant and the respondent have been heard. It is stated by the representative of the complainant that the complainant was engaged in the execution of contracts for construction of "Bunds" (embankments) etc. During the financial year 1996‑97 (assessment year 1997‑98) he also statedly executed a contract for carriage of stones from Government quarries, to various sites. It way pointed out that in the case of such carriage of goods the tax withholding rate prescribed through S.R.O. 600(I)/91, dated 2‑7‑1991 is 2%. The relevant portion of the said S.R.O. reads as under:‑‑‑ "S.R.O. 600(I)/91.‑‑‑In exercise of the powers conferred by clause (c) of subsection (4) of section 50 of the Income Tax Ordinance, 1979 (XXXI of 1979); and in supersession of its Notification No.707(I)/80, dated 26th June 1980, the Central Board of Revenue is pleased to specify the special rate specified in the table blow for deduction of advance tax under the said subsection in respect of the payments specified in the table. Payments Rate (i) ... ... ... ... ... ... (ii) ... ... ... ... ... ... (iii) ... ... ... ... ... ... (iv) Payments on account of transportation of goods Two percent through goods transport vehicles.

4. The complainant's A.R. has also referred to C.B.R. Circular No.18 of 1993, dated 30‑10‑1993 in which At has been clarified that where deductions have been made in excess of the prescribed rate such excess payment would not be considered as final discharge of tax liability under section 80C of the Income Tax Ordinance and would qualify for refund under section 96 of the Income Tax Ordinance.

5. In context of the contentions of the complainant's A.R. the reply of the respondent is found to be quite inadequate. It has not been explained in the reply as to why the prescribed rate of deduction in the case of a carriage contract was considered to be 5% when according to the S.R.O., dated 2‑7‑1991 it was 2%. It is also not clear as to why the complainant is stated never to have filed any application for refund when the refund was claimed in the statement under section 143B. It has also not been explained as to why the plea of the complainant is said to be not based on facts and not in accordance with law and also what documentary evidence was required which had not been furnished. The respondent's plea that if the complainant is dissatisfied with the assessment he should approach the appellate forum is also devoid of merit because section 80C is not specifically mentioned in section 129 of the Income Tax Ordinance and also because the departments failure to refund an amount claimed by the complainant, without giving any proper reason certainly calls for action by this office in the light of section 2(3) of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000.

6. In the light of the above, it is recommended that the matter be examined by the Commissioner of Income Tax and if excess deductions have been made from any payments to the complainant which qualify for the lower rate of 2% prescribed by S.R.O. 600(I)/91, dated 2‑7‑1991, the excess amount deducted be refunded to the complainant. The final report regarding action taken may be sent within 30 days. C. M.A./611/FTO Order accordingly.