FINDINGS /DECISION JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This complaint points out that refunds for four assessm ent years 1999-2000 to 2002-2003, aggregating at Rs,24,875 have not been paid despite applications and reminders and even request to the Commissioner.
2. The relevant facts are that the complainant-Individual is a timber merchant and exists on NTN 04-09-Z-2265241. Assessm ents for the years under consideration were finalized as under:- 1999-2000: No Order Sheet entry and no assessment order available. Return filed on 15-10-1999 seems to have been accepted as per para. 12(a) of SAS for 1999.
2000-2001: As per Order Sheet entry Return accepted under section 59(1) of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) vide DCR No,201/88.
2001-2002: As per Order Sheet entry Return accepted under section 59A of the repealed Ordinance on 24-9-2002-DCR No,336/14.
2002-2003: As per Order Sheet entry Return accepted under section 59(1) of the repealed Ordinance on 3-2- 2004-DCR No, 172/132.
The Demand Notices conveyed no refund although the same was claimed on each Return by attaching electricity and telephone bills through which tax was withheld under section 50 of the repealed Ordinance. The complainant, therefore, made request for rectification on 31-1-2004 which was carried out on 4-5-2004 through a combined order, dated 4-5-2004. Still no refund was issued till 14-6-2004, hence the complaint.
3. The Respondents have forwarded para-wise comments by RCIT, Central Region, Multan conveying that refund amounting to Rs,24,875 has been issued vide Voucher No,78 Book No,9735, dated 29-6-2004, thus the grievance of the complainant has been redressed and the complaint be filed.
4. None was present for the complainant when called out obviously because the refund has been issued. However, for the Respondents Mr. Arif Malik (A-CIT) attended who was heard and the record examined. Following is an inventory of deficiencies as revealed by the scrutiny of record:-
(i) No separate covers as prescribed for (a) Returns, (b) Assessments, and (c) Miscellaneous correspondence, have been maintained and all papers are lumped together in one cover.
(ii) Order Sheets have not been regularly maintained. Entries were made at random (copy obtained for record).
(iii) For the assessm ent year 1999-2000 no Order Sheet entry or any other document is available to show when the assessm ent was made. However, as per para. 12(a) of C.B.R. Circular No,18 of 1999 the Receipt for filing of return was "to constitute the assessment order under section 59(1).....................
". Since Return was filed on 15-10-1999, Counting, from this date rectification became time-barred on 14-10-2003 but the same was made on 4-5-2004 and the order clearly admits that originally assessment was under section 59(1).
(iv) When the refund voucher (together with consolidated rectification order) was submitted to the IAC for countersignature (approved on 30-6-2004), he failed to notice the legal deficiency as respects rectification being barred by time. The IAC should have suggested remedy through the suo motu action under section 122A of the Ordinance for creation and issuance of refund.
(v) Assessm ents for all the four years were completed before 30-6-2002. Therefore, refund vouchers should have been issued forthwith under section 100 of the repealed Ordinance read with C.B.R. Circular No,ITB-3(5)/86, dated 3-7-2004of which defiance was to be treated as "misconduct" for action under Efficiency and Discipline Rules.
(vi) The complainant was entitled to mandatory additional payment for delayed refund both as section 102 of the repealed Ordinance and section 171 of the Income Tax Ordinance, 2001 (hereinafter called the Ordinance). This was not allowed although both these sections use the words "there shall be paid" and "the Commissioner shall pay to the taxpayer" a further sum by way of compensation in case refund is delayed.
It is pertinent that in the rectification order, dated 4-5-2004 (copy brought on record) the Assessing Officer clearly admitted; "while preparing IT-30 effect of deduction under section 50(7E) was not given", and On perusal of record claim of the assessee was found genuine". The DR conceded that Returns available on file are accompanied by electricity and telephone bills together with details of month-wise deductions and that no subsequent information was either called for or submitted voluntarily when seeking rectification. There being no dispute that (i) full particulars justifying refund were furnished with the Returns filed under SAS, and (ii) assessments were framed under section 59; no bona fide reason existed for not determining refunds and for not dispatching the vouchers along with the notice under section 85. Such acts of 'neglect, incompetence and ineptitude', defined as 'mal administration as per Clause 3(ii) of section 2 of the Establishment of the Office of FTO Ordinance, 2000, cannot be allowed to deprive the complainant/taxpayer of his vested right for mandatory 'Additional payment for delayed refund'.
Therefore, to validate the already issued refunds and to bring the assessment record in conformity with law it is recommended that:-
(i) The Commissioner, taking cognizance of foregoing facts under-takes written counselling of the concerned Special Officer (the person not the Office) or lapses as pointed out hereinabove and against the IAC (person not the office) for not having exercised supervisory functions with diligence with a copy endorsed to the Director, Compliance Monitoring Section of FTO Office.
(ii) That the Commissioner ensures either further rectification of the rectified assessment order for 1999-2000 to allow credit for tax collected under section 50(7E) of Repealed Ordinance for which necessary evidence is already on record or considers allowing due relief suo motu under section 122A of the Income Tax Ordinance, 2001.
(iii) The Commissioner to order release of Voucher for additional payment for delayed refund, due as per law in respect of all the four years.
(iv) Compliance report be submitted within 30 days of receipt of this order.