2008 PLP 1838 (PTD)

Khawaja Muhammad Irshad (DCIT) for Respondents. DECISION/FINDING JUSTICE (RETD.) MUNIR A. SHEIKH, (FEDERAL TAX OMBUDSMAN).

The complainant filed an appeal before the CIT (A) under section 62 of the repealed Income Tax Ordinance, 1979 in respect of assessment for the years 2002-2003. The CIT(A) vide order, dated 20-9-2004 allowed certain direct relief to the complainant. So an application dated 29-9-2004 was submitted for giving appeal effect and issuance of the refund. The Assessing Officer passed appeal effect order dated 30-11-2004 determining refund of Rs.1,46,96,

081. As per section 100 of the repealed Income Tax Ordinance, 1979 read with C.B.R's. standing instructions, the Assessing Officer was required to issue refund voucher along with the appeal effect order. This was, however, not done. The complainant again filed an application on 18-7-2005 with the Assessing Officer for issue of refund of Rs.52,12,726 as an amount of Rs.94,84,355 was adjusted towards the liability of tax, year 2004. The respondents did not react on his request. This was followed by a reminder, which also remained unheeded. The inaction of the respondents for issuance of refund voucher amounts to 'maladministration'.

2. In the parawise comments the RCIT, Eastern Region, Lahore submits that the respondents have filed an appeal before the ITAT against the order of CIT(A) hence the final tax liability of the complainant is yet to be determined. It is contended that the provisions of the repealed Income Tax Ordinance, 1979 are not applicable to the complainant's refund. His application dated 18-7-2005 is to be dealt with under section 170 of Income Tax Ordinance, 2001 which was to be decided within 45 days of its receipt. The complaint was lodged on 27-8-2005 i.e., before the expiry of the period of 45 days hence it is pre-mature and without any locus standi or cause of grievance at the time of its filing. An objection to the jurisdiction of F.T.O. to investigate the matter has also been raised. It is further submitted that no compensation is payable to the complainant. However, the Taxation Officer has been directed to resolve the issue expeditiously.

3. The complainant submitted rejoinder controverting the assertions of the respondents. It is alleged that there is no provision in the extant taxation law which links the refund with the final out come of appeal/litigation. The respondent's contention that the provisions of section 100 of the repealed Income Tax Ordinance are not applicable to the facts of the case is misplaced. The complainant's appeal related to the assessment year 2002-2003 and the assessment order was passed under section 62 of the repealed Income Tax Ordinance, 1979. The appeal effects have 'also been given under section 132 of the same Ordinance. The respondents' assertion that the complainant filed the application for refund on 18-7-2005 is also incorrect because, the application was submitted on 29-9-2004. Moreover, no such application was required under section 100 of the repealed Ordinance. The refund determined on account of CIT's order starts after 3 months of the receipt of the appellate order. Therefore, the compensation is increasing day by day till the payment is made.

4. In the hearing of the case on 30-9-2005 the complainant was represented by Mr. Shahid Pervez Jami, Advocate and Khawaja Muhammad Irshad represented the respondents. The parties took adjournment for sorting out the issue. So the case was adjourned to 19-10-2005. On this date the D.R. submitted that the complainant had been requested to provide the original challans and on their receipt the refund will be issued after verification. The A.R. submitted that the complainant had already submitted the copies of the original challans and .by 20th October, 2005 would provide another set of the desired challans. He further submitted that since the respondents have agreed to issue the requisite refund, therefore, compensation for delayed refund should also be awarded as per provisions of the repealed Income Tax Ordinance, 1979.

5. From the arguments of the parties and the D.R's undertaking to issue the refund voucher, the main issue of refund stand resolved. Since the order of the CIT(A) .and the appeal effects were given under the repealed Ordinance from which the refund flows, therefore, the refund and compensation thereon is to be dealt with under the same law as per section 239(4) of the Income Tax Ordinance, 2001.

6. In view of the position in the preceding para. it is recommended that: -- (i) The respondents should issue the requisite refund voucher to the complainant on production of challans of payment of tax. - (ii) Compensation for delayed refund should also be paid to the complainant as per law. (iii) Compliance to be reported within 30 days from the date of receipt of the finding. C.M.A./2/FTO Order accordingly.