FINDINGS/RECOMMENDATIONS DR. ASIF MAHMOOD JAH, FEDERAL TAX OMBUDSMAN. The above-mentioned complaints were filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against non- issuance of refund for Tax Years 2009 and 2013. Both the complaints being identical in nature are disposed of by a single consolidated order.
2. Precisely, the Complainant, an individual, previously filed Complaint No.121/FSD/IT/(97)/490/2015 on the same issue which was disposed of vide Findings dated 11.09.2015 with the following direction: "6. However, during processing of complaint on 29.07.2015 both the parties agreed to resolve the issue with mutual assistance within two weeks."
3. Thereafter the Complainant approached the Deptt, for resolution of the problem but Deptt did nothing within stipulated time.
4. Facts in brief are that during pendency of refund application for Tax Year 2013, statutory proceedings under Section 122(5A) of the Income Tax Ordinance, 2001 (the Ordinance) for Tax Year 2013 were initiated on 03.12.2014 but no adverse action was taken. For Tax Year 2009 statutory proceedings were also initiated under Section 122(5A) of the Ordinance on 06.06.2015 and within 20 days an ex-parte order was passed on 26.6.2015. This order was challenged in first appeal but the CIR (Appeals) Multan vide order dated 26.08.2015 upheld the Addl. CIR's order. The Deptt without the consent of the taxpayer adjusted outstanding refund of Tax Year 2013 without passing any order under Section 170(3) of the Ordinance against tax demand of Tax Year 2009 and also recovered Rs.547,810 under Section 140 of the Ordinance. Being aggrieved the Complainant preferred appeal before the Appellate Tribunal Inland Revenue (ATIR) against the CIR/(Appeals) order dated 26.08.2015. The ATIR vide I.T.A. No. 2975/LB/2015 dated 15.03.2016 deleted the addition under Section 111 of the Ordinance and also directed the Deptt to allow credit of sum covered under TAS, 2008 as well as vacated the orders of two authorities below and remanded the matter to the ACIR to proceed afresh. The Deptt failed to give appeal effect in terms of Section 124(2) of the Ordinance within stipulated time.
5. The Deptt, however, filed reference against said order in the Hon'ble Lahore High Court, Multan Bench, but the division bench of the Hon'ble High Court dismissed reference against the supra order bearing T.R. No. 16 of 2016 by pronouncing verdict in paragraph No. 2 of its order dated 06.03.2017.
"Since the matter has been remanded to the Assistant Commissioner Inland Revenue, we do not find this tax reference has validly been filed. This tax reference is accordingly dismissed."
A certified copy of this reference order was issued by the court on 22.3.2017. The Deptt again failed to pass order in terms of Section 124(2) read with Section 124(7) of the Ordinance within stipulated time. The AR made various visits to the tax authorities but despite clear directions by the higher appellate fora nothing has happened so far. The Deptt officers were also requested on many occasions vide following series of letters / reminders dated 21.07.2020, 06.08.2020, 07.08.2020, 26.08.2020, 08.09.2020, 05.10.2020, 18.03.2021, 02.11.2021 and 09.03.2022. A letter was also written to examine the assessm ent record of the tax payer vide letter dated 10.8.2020. In response to which Assistant Director IP RTO, Multan vide letter No.02 dated 13.8.2020 apprised the tax payer that requisite documents are not available with his office.
6. The Complainant approached the Deptt repeatedly to give appeal effect under Section 124 of the Ordinance but failed to get any response hence resorted to file the instant complaint.
7. The complaint was referred to the Secretary Revenue Division, for comments, in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response thereto, the Chief Commissioner-IR, RTO, Multan forwarded para-wise comments of the Commissioner-IR, Multan Zone dated 12.04.2022 vide letter dated 13.04.2022.
8. The Deptt has contended that: "in the instant case the then Additional Commissioner Inland Revenue invoked action under Section 122(5A) of the Ordinance and passed amended assessment order on 26.06.2015 for Tax Year 2009 creating payable tax demand amounting to Rs.6,273,5041-. The Complainant being aggrieved filed appeal before the CIR (Appeals), Muttan contesting the amended order on various grounds. The Appellate Commissioner vide A.0 No.103 dated 26.08.2015 confirmed the Order under Section 122(5A) of the Ordinance. Therefore, the then Unit Incharge by resorting to the provision of Section 170(3)(a) of the Ordinance, adjusted the refund amounting to Rs.5,725,694/- due for Tax Year 2013 against the tax payable for the Tax Year 2009. The Complainant being aggrieved with the order passed by the Appellate authority, preferred 2nd appeal before the ATIR. The ATIR vide I.T.A. No. 2975/LB/2015 dated 15.03.2016 vacated the order of two authorities below and remanded back the matter to the ACIR to proceed afresh by providing reasonable. The Deptt filed Reference before the Hon'ble High Court (Multan Bench), Multan, the Hon'ble High Court, Multan Bench, Multan dismissed the Tax Reference with the findings "Since the matter has been remanded to the Assistant Commissioner Inland Revenue, we do not find this tax reference has validly been filed. This tax reference is accordingly dismissed." Resultantly, the Order passed by the learned ATIR vide I.T.A. No. 2975/LB/2015 dated 15.03.2016 remained intact for de novo proceedings under Section 122(5A) of the Ordinance. The Addl CIR, Range-I has taken up the matter for de novo proceedings. The refund cannot be issued until the completion of the proceedings.
9. During the course of hearing on 20.04.2022, the AR objected to the para-wise comments furnished by CIR, Multan Zone. The CIR, Multan Zone was directed to file para-wise comments/reply to the allegations contained in the complaints on 25.04.2022.
10. The Addl CIR, Range-I, Multan Zone, RTO, Multan vide letter dated 06.05.2022 submitted that: "the Complainant filed the complaint before your august forum on the issue that departmental action regarding demand creation was annulled by the Hon'ble Lahore High Court and after Court's decision refund was accrued to the Complainant which was not issued. The decision of High Court was attached in the complaint papers. Tfie main issue involved in the complaint is issuance of refund for Tax Year 2009. The tax demand was created by then Audit Range of RTO, Multan (which deals with Companies and Corporate cases) and later-on the case was transferred to Multan Zone, RTO, Multan. This office checked that whether any decision of Lahore High Court was received in the above mentioned unit or in Multan Zone but no order of Hon'ble High Court is available in the offices. This office has requested its legal advisor to provide copy of High Court orders so that the refund can be processed. It is being assured that as soon as the copy of Court's order is received the refund will be issued. It is therefore, requested that extension of 15-days may kindly be granted."
11. During the hearing the AR repeated his stance as per written arguments. The DR conceded that appeal effect in terms of Sections 124(1)/124(2) of the Ordinance could not be given because the order of the Hon'ble High Court was not received by the Deptt. He further argued that inattention to court orders is also attributable to frequent change in jurisdiction within the RTO and posting/transfer of officers.
12. Both the parties heard and record perused.
13. Evidently, the Order of the AT1R dated 15.03.2016 and Howie High Court's Reference order dated 06.03.2017 have attained finality. In terms of Section 124(2) of the Ordinance, the Deptt was required to give appeal effect within the prescribe time. In the instant case, the Deptt failed to respond to the Complainant's multiple letters/reminders and pass order under 'Section 124(2) of the Ordinance for almost five years.
FINDINGS:
14. Neglect, inattention and delay in the administration or discharge of duties and responsibilities and delay in allowing effect to the ATIR order dated 15.03.2016 consequent to Hon'ble High Court's Reference order dated 06.03.2017, is tantamount to maladministration, in terms of Section 2(3)(ii) of the FTO Ordinance on the following grounds:
(i) The Deptt stance that Hon'ble High Court's order dated 06.03.2017 was not received by it, is not vindicated from the record. The certified copy of this order shows that Deptt was duly represented by its legal advisor on the date of hearing i.e. 06.03.2017. The AR statedly provided a copy of this order on 27.03.2017 to the Deptt.
(ii) The Deptt squarely failed to follow the order of the learned ATIR dated 15.03.2016 to re- adjudicate the issues which might have safeguarded the revenue which has apparently been caused.
(iii) The taxpayer/Complainant has suffered hardship due to indifferent attitude of the Deptt.
RECOMMENDATIONS:
15. FBR to:-
(i) direct the Commissioner-IR, Multan Zone to allow effect to the ATIR' s order dated 15.03 .2016 and settle the Complainant's refund for Tax Years 2009 and 2013, within 30 days, after providing opportunity of hearing, as per law;
(ii) the CCIR may hold a fact finding inquiry as to who is responsible for this neglect and take appropriate action in order to forestall such instances in future; and
(iii) report compliance accordingly.