ORDER-IN-REVIEW MUSHT AQ AHMAD SUKHERA, FEDERAL TAX OMBUDSMAN.---- The Review Petition (RP) was filed by the Complainant (Petitioner) under Section 14(8) of the Federal Tax Ombudsman Ordinance, 2000 read with Section 13(1) of the Federal Ombudsmen Institu tional Reforms Act, 2013 seeking review of Findings dated 23.04.2019, whereby the complaint was rejected being barred by jurisdiction in terms of section 9(2)(b) of the Federal Tax Ombudsman Ordinance, 2000 (FT O Ordinance).
2. The RP was filed on the following grounds:
(i) That subject matter of the complaint was neither assessment order nor any addition made by the Deptt including assessment of income etc.
(ii) That sole purpose of Section 171 of the Income Tax Ordinance 2001 (the Ordinance) was to induce the Deptt to pay/adjust and allow refund expeditiously and promptly which the Deptt deliberately avoided.
(iii) That the complaint was rejected without considering merits of the case in terms of Section 9(2)(b) of the FT O Ordinance which was contrary to law .
(iv) That impugned Findings may be recalled for de novo consideration in the light of various verdicts of the Courts and on merit of the case.
(v) That for monetary loss and mental agony , the Petitioner may be awarded cost as well compensation under section 22 of the FT O Ordinance.
3. In response to notices, the Commissioner-IR (CIR) WHT RTO Abbottabad submitted parawise comments vide letter dated 11.06.2018. It was contended that as per provisions of Section 171 of the Income Tax Ordinance, 2001 (the Ordinance) additional payment for delayed refund was legally not due to the Petitioner and such legal position was duly conveyed to him, vide letter dated 25.09.2018. Moreover , the reference against the ATIR Peshawar's order dated 24.05.2016, preferred by the Deptt on the legal issues and matter was now sub judice before the Hon'ble Peshawar High Court, Abbottabad Bench. It was further contended that the impugned Findings were fair, just and as per law , hence do not warrant review/modification.
4. Arguments of the parties heard and record perused.
5. Precisely , the Deptt allowed appeal effect to the ATIR Peshawar's order dated 29.08.2016, after an inordinate delay of 71/2 months on 11.04.2018 and thereafter issued resultant refund for Tax Year 2013, vide voucher dated 11.04.2018, without paying additional payment for delayed refund. Against failure of the Deptt to issue additional payment for delayed refund, the Petitio ner filed Complaint No.0668/ISB/IT/2018, which was disposed of vide Findings/Recommendations dated 15.08.2018, whereby FBR was required to-
(i) direct the Commissioner-IR concerned to dispose of request of the Complainant regarding additional payment for delayed refund for T ax Year 2013, after providing opportunity of hearing, as per law; and
(ii) report compliance within 45 days".
6. The Deptt vide letter dated 25.09.2018, rejected request for additional payment for delayed refund against which the Petitioner filed complaint No. 028/ISB/IT/2019, which was rejected vide impugned Findings dated 23.04.2019, for want of jurisdiction under Section 9(2)(b) of the FTO Ordinance, on the ground that the matter pertained to assessment of income hence appealable before the appropriate forum.
7. On a re-appraisal, it is found that no formal order of rejection was passed by the Deptt. The rejection was made vide letter dated 25.09.2018, holding that refund for Tax Year 2013, was not due in terms of subsection 2(a) and (c) of section 171 of the Ordinance. Legally , against rejection of additional payment for delayed refund under A section 171, no remedy of appeal was available to the Petitioner , in terms of section 127 of the Ordinance. As legal remedy of appeal is not available to the Petition er against rejection of additional payment for refund for Tax Year 2013, therefore, jurisdiction of this forum is not barred under section 9(2)(b) of the Ordinance.
8. Section 171(2) of the Ordinance, envisages following three eventualities when refund shall be treated as having become due:
(a) in the case of refund required to be made in consequence of an order on an appeal to the Commissioner (Appeals), an appeal to the Appellate Tribunal, reference to High Court or an appeal to the Supreme Court, on the date of receipt of such order by the Commissioner , or
(b) in the case of refund required to be mqde as consequence of revision order under section 122A, on the date of the order is made by the Commissioner , or
(c) in any case, on the date the refund order is made.
[Explanation- For removal of doubt, it is clarified that where a refund order is made on an application under subsection (1) of the section 170, for the purpose of compensation, the refund becomes due from the date refund order is made and not from the date the assessment of income treated to have been by the Commissioner under section 120.]
9. The Deptt while rejecting request of the Petitioner for additional payment for delayed refund in terms of Section 171 of the Ordinance, has placed reliance on the case law reported as 2015 PTD 1913 in the case of CIR v.
Messrs Chicago Metal Works . From perusal of the above case law, it is abundantly clear that question of law raised in reference before the Hon'ble Lahore Court was 'date of refund due' for the purpose of calculation of 'additional payment for delayed refund' in terms of subsection 2(c) of section 171 of the Ordinance. The ATIR in its order , which was subject matter of reference, held that for the purpose of section 171 refunds becomes due on the date of order treated to have been made under Section 120 of the Ordinance. The Hon'ble High Court, however , held that in terms of Explanation to section 171(2)(c) of the Ordinance (held to be applicable retrospectively), the refund becomes due on the date, refund order is made. The instant case, however , relates to subsection 2(a) of Section 171 of the Ordinance, as refund for the Tax Year 2013, was created as a result of ATIR Peshawar's order dated 24.05.2016. Thus, the facts of instant compliant are quite distinguishable from the facts of the reported case, hence not applicable. Admittedly , the Deptt allowed appeal effect under section 124(4) of the Ordinance, to the ATIR's order referred to above, almost after two years and that too after the Petiti oner filed Constitutional Petition
(CP) before the Hon'ble Peshawar High Court. The refund voucher was issued on the same day i.e. on 11.04.2018.
Thus, this case clearly falls under Section 171(2)(a) of the Ordinance. The Deptt's plea that matter is also sub judice before the Hon'ble Peshawar High Court also does not come to its rescue, as the issue raised before the Hon'ble High Court, are on legal issues. Besides, once appeal effect is allowed and refund determined thereby , had been issued, the Petitioner is entitled to additional payment for delayed refund under section 171(2)(a) of the Ordinance, from the date of receipt of such order , by the Zonal Commissioner-IR. The Petitioner's plea regarding compensation under section 20 of the Ordinance is, however , not plausible in view of the fact that he is already held entitled to additional payment for delayed refund from the date ATIR's order dated 24.05.2016 was received by the Zonal Commissioner-IR. Accordingly , while accepting the RP, the impugned findings stand recalled and following fresh Findings/Recommendations are issued.
Findings:
10. Failure to settle additional payment for delayed refund in terms of Section 171(2)(a) of the Ordinance, is tantamount to maladministration under Section 2(3) (i)(a) of the FT O Ordinance.
Recommendation:
11. FBR to-
(i) direct the Commissioner-IR WHT RTO Abbottabad to issue additional payment for delayed refund in terms of Section 171(2)(a) of the Ordinance, after providing opportunity of hearing to the Complainant, as per law; and
(ii) report compliance with 45 days.