2011 PLP 1666 (PTD)

3. According to the ARs:-- (i) For the assessment years 1999-2000 to 2001-2002, WWF had been charged without legal justification and on appeal, CIT (Appeals) deleted WWF; (ii) The Taxation Officer himself observed in the appeal effect order dated 26-6-2006 (page 10) for the above years that WWF was not chargeable in complainant's case, but in the computation of income (page 11), he again charged WWF and did not rectify this mistake even on written requests of the taxpayer; (iii) The Taxation Officer also charged WWF for tax years 2004 and 2005, which was deleted by the Commissioner (Appeals); (iv) WWF was unlawfully charged through rectification orders for assessment year 2002-2003 and tax years 2003, 2006 and 2007 on 4-6-2010 against which appeals were pending before Commissioner (Appeals); (v) WWF was not chargeable in complainant's case, but the Deptt wrongly levied WWF even after clear directions of the appellate authorities; (vi) Not only were rectification orders charging WWF made in violation of appellate decisions but also rectification orders passed for assessment year 2002-2003 and tax years 2003 and 2004 were barred by time; (vii) No action was taken on applications filed by the taxpayer for correction/re-rectification of illegally rectified orders. Consequently those orders got vacated due to time limitation and original orders for relevant years stood restored. The ARs emphasized that action of the Deptt charging WWF for all the years was unlawful, displaying gross maladministration in terms of section 2(3) of the FTO Ordinance 2000. They prayed that the Deptt be directed to vacate the unlawful orders and issue refund with compensation without delay.

4. The DR did not disagree with the ARs and conceded that WWF was not chargeable in complainant's case. He claimed that the Taxation Officer charged WWF on the basis of Audit Objection raised by External Audit authorities to avoid any adverse perception of the higher authorities. He agreed to the complainant's refund claim and stated that no mala fide was involved on the part of the Deptt. In support of his claim the DR stated that an amount of Rs. 4.6 million (approx) was earlier on refunded to the complainant. He attributed the delay in issuance of admissible refund to non-verification of outstation tax deductions, particularly for tax years 2008 and 2009, and promised that refund due would be issued as soon as such payments were verified. The ARs, however, asserted that certificates regarding deduction of tax were duly provided to the Deptt on the basis of which a part refund was issued, and the balance amount could also be refunded on the basis of verification certificates which were permissible under section 164(2) of the Income Tax Ordinance, 2001 (before amendment through Finance Act 2009).

5. After discussion, both the parties agreed to assist each other to sort out the issue of verification of payments and refundable amount. The DR conceded that unlawful orders of rectification needed to be revised by invoking provisions of section 122A or 221 of the Income Tax Ordinance, 2001. Findings:--

6. The unlawful orders passed for charging WWF even after appellate decisions and delay in issuance of refund is tantamount to maladministration in terms of sections 2(3)(i) and (ii) of the FTO Ordinance, 2000. Recommendations:

7. F.B.R. to - (i) ensure that refund due is issued with admissible compensation as per law after modifying orders under sections 122A/221 of the Ordinance within 21 days; and (ii) report compliance within 7 days thereafter. H.B.T./102/FTO Order accordingly.