DECISION /FINDINGS ' JUSTICE (RETD.) MUNIR A. SHAIKH, FEDERAL TAX OMBUDSMAN.----The complainant being new taxpayer filed statement under section 143(B) of the repealed Income Tax Ordinance, 1.979 for assessm ent year 1995-96 as carriage contractor rendering service to Messrs Pakistan State Oil Company Limited. She filed an application for NTN and No,04-15-3940210 was allocated. Later on a new N.T. Number 0663589-0 was allocated. The respondent issued notice under section 92 of the repealed Income Tax Ordinance, 1979 to P.S.O. For the recovery of arrears amounting to Rs,19,310 without quoting any assessm ent year and the P.S.O. On 20-4-2000 withheld and paid the amount to government treasury without any verification from the complainant. The complainant applied for refund of this deduction of tax in financial year 2000-01 but the Taxation Officer refused to issue the refund on the ground that the arrears of Rs,19,310 were outstanding against the complainant AOP for the assessm ent years 1981-82 to 1984-85. The complainant requested the department to provide copies of the assessm ent orders, returns and notice under section 92 for assessment years 1981-82 to 1984-85 to examine the outstanding demand. The Taxation Officer with mala fide intention declined to provide the same. The complainant's contention is that she has never done any business under the name and style of Messrs Qamar Carriage Company, Multan during the assessm ent years 1981-82 to 1984-85 and any N.T.N was not allocated to her at that time. The business was started with effect from July, 1994 and for the first time the statement under section 143-B was filed for assessm ent years 1995-96. On verification from the department it transpired that inadvertently NTN 0817464 was quoted by the P.S.O. On the certificate of the complainant'. It was confirmed by the PRAL that' NTN 0817464 belonged to one Mr. Mustafa Kamal of Karachi who was a salaried person. Since this recovery has been made illegally, the respondent be directed to issue refund of Rs,19,310 along with compensation as per law and any other relief which may be due to the complainant.
2. The RCIT, Central Region, Multan has raised preliminary objection that the complaint pertains to rejection of refund by an order under section 177(4) of the Income. Tax Ordinance, 2001 which is appealable and thus falls within the ambit of section 9(2)(b) of the F.T.O's. Ordinance, 2000.
Moreover the complainant was aggrieved by recovery of tax on 12-9-2000 but she filed application on 30-10-2004 for return of the tax after lapse of 4 years. Thus the complaint is hit by section 10(3) of the F.T.O's. Ordinance, 2000. On the factual side it is stated that the AOP is a carriage contractor and an amount of Rs,19,310 is outstanding against the AOP as per arrears register for assessment years 1981-82 to 1984-85. These arrears were recovered through Pakistan State Oil. The record pertaining to these assessm ent years is not traceable. The complainant furnished certificate issued by P.S.O. Bearing NTN 0817464 which confirmed that the complainant against whom the demand was outstanding and from whom the recovery was made are one and the same. The complainant filed statement under section 143-B of the repealed Income Tax Ordinance, 1979 for assessm ent years 1995-96 without mentioning the NTN. The address of business is given as Railway Road, Shujaabad and residential address as 629-C, Gulgasht Colony, Multan which was written on the statements for assessm ent years 1996-97 and 1997-98. These addresses and name of the AOP are the same against whom demands were outstanding in the arrears register The complainant verbally requested the Taxation Officer to show him the arrears register for verifying the demand.
This request was without fulfilling the legal requirements for examination of the assessment record.
Therefore, the Taxation Officer was justified in refusing the examination of the arrears register which confirms the name and address and NTN of the complainant and shows that assessee is an old one. The NTN mentioned by the tax withholding agent i,e, P.S.O. In the certificate is the same as mentioned by the complainant in his returns for tax years 2003 and 2004. The complainant neither attended the proceedings for issuance of refund nor submitted power of attorney of the AR. The complainant against whom the arrear demand was outstanding and the one claiming refund are the same and no illegality has been committed by the respondent in declining the refund.
3. During hearing the complainant was represented by Messrs Mirza Muhammad Salim Baig and Mr. Niaz Ahmad Khan, Advocates. Mr. Muhammad Abid (DCIT) represented the respondent on two earlier hearings but on 22-5-2006 Mr. Muhammad Sultan (ITO) represented the respondent. The AR of the complainant filed a rejoinder controverting the preliminary objection and parawise comments of the respondent. The DR submitted that record of the case prior to assessment year 1995-96 and the complainant's application for Taxation No,0817464 were not available. The only evidence of arrears was the arrears register. The complainant had also mentioned this dumber in returns pertaining to tax years 2003 and 2004.The AR of the complainant submitted that an affidavit has been filed to the effect that the complainant started business in assessment years 1995-96. This has not been rebutted by the respondent. There was no business of the complainant in assessm ent years 1981-82 to 1984-85. The complainant had mentioned NTN 0817464 on the return of tax years 2003 and 2004 along with other NTNs after the recovery had been effected as its mention was necessary for refund. If the complainant's AOP and the AOP whose outstanding arrears were the same then why did not the respondent take action for recovery for over 15 years?
If no return was filed in the assessme nt years 1985-86 why action was not taken against that AOP?
The arrears record was fake and it did not contain the signatures or verification of any responsible officer. The complainant had filed first application of refund on 29-9-2000 followed by two applications dated 18-12-2000 and 30-4-2004 which were rejected on 11-2-2006. So this complaint was within time.
4. The respondent has failed to prove that the demand of arrears of Rs,19,310 is against present AOP of the complainant which is a continuation of the earlier AOP. The complainant has submitted a copy of letter from PRAL in which it is shown that NTN 0817464 is of one Mustafa Kamal Khan who is a salaried' individual of Karachi. The National Identity Card of the complainant gives her year of birth as 1971 which means that she was about 11 years old in 1982 when arrears of Rs,55 for assessm ent years 1981-82 were raised against Messrs Qamar Carriage Company. This shows that the NTN in question was not allocated at the time to the complainant as member of the AOP. The inaction of the respondents for not effecting recovery for 15 years has not been explained. The absence of assessm ent record and applications for allocation of NTN raise the presumption that the present complainant was not the same which owed the arrears pertaining to assessment years 1982 to 1985. The recovery has been effected without notice to the complainant after a period of over 15 years and without ascertaining the liability of existing members of complainant AOP.
Therefore, the impugned orders of rejection of refund are not maintainable in the eye of law. So the respondent's preliminary objection to the maintainability of the complaint is overruled.
5. In view of the finding in the preceding para., it is recommended that:--
(i) The impugned orders of rejection of refund should be set aside and case remanded for de novo decision after giving an opportunity of hearing to the complainant.
(ii) Disciplinary action be initiated against the concerned officials for not effecting the recovery of arrears for over 15 years.
(iii) Compliance to be reported within 30 days from the date of receipt of the finding.