FINDINGS /DECISION This complaint alleges 'maladministrationrepresented by non-issuance of refund at Rs,13,120 for the year, 2003 despite application, dated 24-4-2004.
2. The relevant facts are that the complainant-Individual, is an agent of Bata Pakistan Limited for sale of shoes and exists at NTN 21-12-1185199. Return for the year, 2002-2003 was filed declaring Income at Rs,82,000 and refund, arising out of withholding, was claimed, Rs,13,120. The Return was accepted by operation of law as on the date of filing i,e, 29-9-2003. When the complainant moved an application for issuance of refund he was asked vide letter, dated 6-7-2004 to file an affidavit from the person in whose name the Electricity meter was installed affirming that he has not claimed any credit under section 235 of the Income Tax Ordinance, 2001 (hereinafter called the Ordinance). This was duly complied on 16-7-2004. Still no refund was issued although application on prescribed form had also been filed on 22-4-2004. This is the. Cause of grievance.
3. The Respondent has forwarded parawise comments by the RCIT, Eastern Region, Lahore attributing non-issuance of refund to complainant's failure to provide copies of "certificates on the prescribed form" regarding deduction of tax by Bata Pakistan Limited and that "additional information i,e, such as Bank Branch of deposit date and its Challan Number is required". The R-CIT concludes by conveying that "the concerned officer has been directed to call for original Challans for proper verification and passing refund order under section 170 of the Incothe Tax Ordinance, 2001 after which refund shall be issued to the assessee."
4. The learned counsel, Mr. M. Ashraf Saqib (Advocate) appearing for the complainant pleaded that they have fulfilled their part of the obligation by submitting a certificate as required by the provisions of subsection (2) of section 164 of the Ordinance in addition to refund application on the form prescribed under Rule 71 of the Tax Rules, 2002. The onus , according to the AR, is now on the Department either to disprove the complainant's certificate or to issue refund and the delay represents 'maladministrationas defined in Clause (3)(iii) of section 2 of the Establishment of Office of the Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance).
5. Mr. Muzzamil Hussain (D-CIT) appearing for the Respondent submitted that the Assessing Officer's anxiety is to ascertain that the amount deducted by the withholding agent has actually reached the Treasury for which such information as the Branch of the Bank where the withholding agent deposited the money is relevant to exclusively establishing this factum.
6. The contentions of the contending parties have been considered and record examined. It appears that the necessity of streamlining the process of verification needs focused attention by the C.B.R. A number of complaints reveal that refunds have been withheld on the plea that evidence about the amount collected/deducted having reached Treasury, is lacking. It is important to remember that the taxpayer from whom amount is collected/deducted by the withholding agent, cannot be held responsible if the agent who has been designated as "the person in trust for the Federal Government", as per section 166(2)(a), does not adhere to the requirements of law and does not deposit the 'trust moneyin the Government account according to the prescribed procedure and confirmed through the prescribed monthly/annual Statements. Having received such Statements from the withholding agents, the tax functionaries have with them all the information about collection/ deduction of tax and its deposit in the Treasury, Consequently, there appears no valid reason to once again call upon taxpayers to submit this very information/documents. In case .The withholding agents do not cooperate nobody is to be blamed for laxity in enforcement, but the C.B.R. For failure to effectively implement the will of the legislature expressed by enacting specific provisions laying down:-- Payment in Government account of amounts of tax Collected/deducted.=Section 160, Rule 50 :Failure to deposit in Govt. account to render withholding agents personally liable.=Section 161, 162(2), 163 :Certificate by the withholding agents to Govt. =Section 164(1), Rules 48/49 :Monthly and Annual Statements by withholding agents to Commissioner.=Section 165, Rules 51, 51A, 52 :Additional tax for non-deduction/collection. =Sections 205(3)/205(5) :Prosecution of withholding agent for failure to collect/ deduct.=Sections 191(1)(c), 192 :Prosecution for non-maintenance of record of collected/ deducted by the withholding agent.=Section 193 If the above scheme of withholding is compiled/enforced in letter and spirit by furnishing details through prescribed statements of collection/ deduction as per section 165, and the information concurrently disseminated during the Income year, each Circle can have full record of, amounts withheld in respect of each NTN, well before the commencement of Tax Year, thus possibility of evasion by way of omission of a transaction by the taxpayer would be ward off, and at the same time, wasteful belated efforts to seek verification of the amounts collected/deducted eliminated.
To sum up, the indifference by the concerned Commissioner to meaningfully monitor the collection/ deduction of tax at source by the withholding agents, represents "maladministration" as defined clause (3)(ii) of section 2 of the FTO Ordinance.
7. Coming to the facts of the present complaint, (i) the refund stands created on record, (ii) certificate from the withholding agent as required by section 164(2) has been furnished, (iii)
Affidavit about Electric meter has been filed, thus (iv) fulfilling the obligation cast by subsection (2) of section 164 of the Ordinance. Since the C.B.R. Has been vested with sufficient authority to compel the withholding agent to deposit the collected/deducted amount in the Treasury, any suspected default by that 'the person in trust cannot be made an excuse to deprive the taxpayer of his lawful claim supported by certificate which, the law mandates: "shall be treated as sufficient evidence of the collection/ deduction for the purpose of section 168". This is cognizable under clause (3) of section 2 of the FTO Ordinance.
8. However, the DR has given assurance that an Inspector is being deputed to personally visit the office of Bata Pakistan Limited to: (a) verify the veracity of the certificate issued by them, and (b) confirm that the deducted amount has been deposited in the Government account. The DR promised that refund will be issued within a week from today. The AR for the complainant expressed satisfaction with this undertaking by the DR.
9. It recommended that:--
(i) "The C.B.R. Issue fresh mandate to 'tax functionaries on the lines indicated in para. 6 (supra) and report compliance within one month of the receipt of this Order".
(ii) Refund amount be issued to the complainant as undertaken by the Respondent.
(iii) Compliance of No,(ii) be reported within 15 days of the receipt of Recommendation by the Revenue.Division.