2025 PLP 1717 (PTD)

"Be that as it may the recommendations of the learned FTO are to the extent to "direct the Commissioner-IR Zone-I RTO-II Lahore to complete verification and dispose of refund applications Tax Years 2016 to 2019, after providing the Complainant opportunity of hearing, as per law, within 45 days" The preliminary objection raised by the Deptt is thus, overruled.

8. During hearing AR reiterated the stance taken in the complaints. The only issue agitated is that amendment proceedings of assessment are being taken up through notice under section 170(4) whereas scope of Section 170 is limited only to the verification of tax payments etc. and amendment proceedings cannot be taken up through Section 170 of the ITO, 2001. A number of decisions of higher appellate fora are available on the issue. In one such case the Hon'ble Lahore High Court (reported as 2016 PTD 377) has held as under:? ."Needless to say that refund can be claimed on the basis of an assessment order. If an amount was paid in excess the chargeable tax, as determined in the assessment order, it can be claimed as refund under subsection (1) of Section

170. Section 170 gives powers; only to see whether claimed refund is supported by evidence or not. Examination of relevant provisions do not suggest that the Commissioner can look into correctness of Return, which has attained status of an assessment order. The assessment order (under section 120) is an order for all purposes of the Ordinance including issuance or rejection of refund under Section 170, therefore, Commissioner cannot go behind the assessment order, while exercising jurisdiction under Section 170." The officer issued repeated notice under section 170(4) calling information related to amendment of assessment. The AR agitated before Commissioner-IR Zone-I time and again but she did not respond.

9. Hon'ble Lahore High Court in PTR 328 of the 2009 has held that Commissioner can however proceed simultaneously under the provisions of Sections 170(4) and 122(5A) of the ITO, 2001 and would dispose of the refund matter in accordance with law. The CIR has perhaps interpreted this judgment that issues relating to amendment would simultaneously conveyed through show cause notice under section 170(4) and notice under section 122(5A) of the ITO, 2001. Besides confronting the amendment issues through notice under section 170(4) show cause notice under section 122(9) dated 25.09.2020 read with Section 122(5A) has also been issued which is misinterpretation of decision of Hon'ble High Court. Secondly notice under section 122(9) is not relevant in this case because same has been based on original return filed for Tax Year 2018 on 22.11.2018 whereas same was revised on 15.05.2019 and was accepted under section 120(3) of the ITO, 2001. The Deptt is insisting for compliance of both the show cause notices i.e. under sections 170 and 122(9) of the ITO, 2001. Both the said notices are unlawful.

10. The case was finally fixed for hearing for 31.03.2022 and Mr. Muhammad Abid, CIR Zone-I (who succeeded Mst. Mofiza Iqbal against whom complaint is filed) attended the proceedings and insisted that his predecessor had rightly processed the case. During hearing hot words were also exchanged between AR and the CIR for which both have filed written statements alleging each other. FINDINGS:

11. After going through the detailed written as well as oral arguments by both sides following aspects are quite clear; i. The department lacks the clarity to dispose of the pending issues as per law and norms. Prolonged proceedings adversely impact the both, department as well as the taxpayer. ii. The complainant doesn't come clean either. On one hand he had agitated that the core reason for rejection of refund claim at the time of first rejection of refund claim under section 170(4) (that tax deducted under section 148 of the ITO, 2001 was final discharge of tax liability) was neither raised in the show cause notice nor opportunity of hearing was given. But in the instant complaint he is contesting the issuance of notice communicating the same reason and opportunity of being heard. iii. Departmental view that it is a case of FTR therefore nothing is overpaid to be refunded is a legal issue, subject to different interpretation of law and FTO office is not a proper forum to decide such issues rather superior courts constitute the right fora. Facts of each individual case determine the application of law and legal precedents. iv. Mere issuance of a notice or a show cause itself doesn't constitute any maladministration unless some illegal order is passed as courts have held in a number of cases that mere issuance of show cause cannot be taken as infringement upon someone rights. v. Notices under section 122(9) read with 122(5A) being related to assessment issues need not be discussed at this forum as any lapse on any account is the prerogative of appellate fora.

12. In view of above discussion the allegations levelled by the AR on the CIR i.e. "Malfunctioning and misuse of powers - double proceedings and duplication of notices - just to gulp down the lawful refund - deliberate withholding and non-payment of refund - defiance and contemptuous proceedings " appears to be premature. Prolonged proceedings under section 170(4) despite issuance of multiple notices however constitutes maladministration in terms of section 2(3) (i) & (ii) of FTO Ordinance, 2000.

13. However, this has been noticed with concern that the conduct of DR, during the course of proceedings remained far from being exemplary. Being tax collectors, the FBR functionaries are expected to be polite, composed and compassionate while listening to the grievances of tax payers. The conduct of a civil servant ought not to be prejudicial to good order, service discipline or unbecoming of an officer and, a gentleman. The FBR functionaries must be all the time congisant of the fact that "Courtesy" is one of the core values being pursued by FBR. RECOMMENDATIONS:

14. FBR is required to:-- (i) direct the CIR to dispose of the refund claim for TY 2018, in accordance with law and after giving proper opportunity of being heard to the complainant and compliance to be reported in 30 days. (ii) take practical measures to inculcate the true essence of "Courtesy" in its functionaries and this should also be one of the cardinal yardsticks in performance evaluation of the officers/officials. MQ/18/FTO Order accordingly.