FINDINGS /DECISION ' This complaint alleges delay in issuance of refund determined at Rs,22,194 for the assessment year, 1998-99. It also demands compensation for delay in issuing the refund.
2. Briefly the facts are that the Complainant-Individual enjoys Income from Salary. During the year under consideration, he imported a `special purpose vehicle' meant for handicapped persons which was exempt from import duty as well as from Income Tax. However, to obtain prompt clearance of the consignment the Tax, as demanded by the Customs authorities, was deposited with the hope that refund would be obtained from the Income Tax Department. Return for the assessm ent year, 1998-99 was filed declaring Income at Rs,120,143 on which tax liability came to Rs,4,965. Since deductions-at-source out of Salary and, by the Customs at Import stage, aggregated at Rs,27,159 (i,e, Rs,3,498 + Rs, 23, 661) a refund of Rs, 22,194 was worked out vide IT-30 (no date given but entered in the DCR at SI.C/1868) which was duly intimated to the Complainant on 4-5-2001. Application was then moved for refund on 5-5-2001 followed by reminder on 19-3- 2002 which was addressed to the Commissioner with copy to the Assessing Officer. The indifference to issue refund is the cause of grievance.
3. The Respondent has forwarded para-wise comments by R-CIT, Eastern Region, Lahore which admit that deductions out of Salary and collection at Import stage aggregated Rs,27,159 whereas the tax demand came to Rs,4,965 resulting in a refund of Rs,22,194 as per IT-30. The R-CIT, however, conveys that the Complainant is not entitled to refund because though the import for "special purposes vehicle" was exempt from Customs duty and Income Tax, yet Capital Value Tax was payable and the "Tax was deducted by the Customs authorities on account of CVT and not by the Income Tax Department. As CVT is not adjustable against income-tax liabilities, hence the same is not refundable". Another reason for not issuing the refund, as advanced by the R-CIT, is that tax amounting to Rs,23,661 on the "special purpose vehicle" was collected by the Customs authorities during the financial year 1996-97, hence it was not adjustable against the tax liabilities for the assessm ent year, 1998-99 as the relevant year for such claim was 1997-98.
4. The learned counsel for the Complainant argued that the Department was unnecessarily confusing the issue which is very simple inasmuch as refund, as admitted on IT-30, is clearly due and should be issued to the Complainant. The AR pleaded that the Assessing Officer had examined all evidence before accepting the claim for which Challan of payment at the Import stage was presented proving that the amount went in the Government Treasury under the Income Tax head and not under CVT. As about the claim not having been made in the year, 1997-98, the AR explained that the matter of levy of other Federal Taxes was agitated in a Writ before the High Court by a group of those who imported "special purpose vehicles". Therefore, when the Writ was decided on 27-11-1997 claim for payment of Income Tax was made in the year, 1998-99. Copy of the High Court order was presented for record.
5. Mr. Abdur Rehman Warraich (D-CIT) appearing for the Revenue on his turn pleaded that when payment was made in the year, 1997, claim for its refund could be made in the Return for 1997-98.
According to the DR, claim in the year, 1998-99 was wrongly admitted and the situation calls for amendment by resort to section 122 of the Income Tax Ordinance, 2001. As respects assessment year, 1997-98, the DR submitted, no claim for Credit for payment at Import stage was filed and, therefore, that assessm ent cannot be rectified or amended moreso when it has become time- barred for such actions, as per limit prescribed by law.
6. Investigations in the light of arguments by the two sides confirm the factum of Import of the "Special Purpose Vehicle" and payment of Income Tax at Import stage. It is also accepted on all hands that the consignment was exempt from Income Tax hence refund could be claimed.
Moreover (a) proof of payment of Income Tax at Import stage was tendered before the Assessing Officer who found it valid and after adjusting a sum of Rs,1.467 towards tax liability for that year determined Rs,22,194 as refundable. These facts negate the plea by the R-CIT that the sum paid did not represent Income Tax but CVT which could not be adjusted or refunded. The record further shows that there is no proposal in the offing for amendment/rectification of assessment for the year, 1998-99 nor any order has been passed, nor action contemplated, under section 170 of the Ordinance. These acts of omission or commission are 'contrary to law', rules and regulations and as such expose "neglect, inattention, delay" besides 'deliberate withholding of refund, which fall in the definition of "maladministra-tion" as per sub-clause (i) (a), (ii) and (v) of Clause 3 of section 2 of the FTO Ordinance. It cannot be ignored that an excess payment of Rs,22,194 has gone into the Government Treasury out of the pocket of a taxpayer. Therefore, a way has to be found out to disburse it legally. Taking into consideration the suggestion by the DR, it is Recommended that:--
(i) Section 122 of the Ordinance be invoked to amend assessment for the year, 1998-99 to withdraw 'excessive' relief in tax allowed in that year.
(ii) The payment for which credit is withdrawn in 1998-99 be allowed as payment by suo motu revising the assessm ent for 1997-98 taking resort to section 122A. Consequential refund be issued then.
7. Compliance report be submitted within 30 days of receipt of this order. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.