Income tax refunds: Company says taxmen never demanded gratification

ISLAMABAD: A company being assessed at Large Taxpayer Office (LTO) Lahore has informed the Federal Investigation Agency (FIA) that relevant tax officials have never demanded any gratification from the company for issuance of its two income tax refunds amounting to Rs 233 million.

The said company falling under the jurisdiction of Large Taxpayer Office (LTO) Lahore has shared its experience to the FIA regarding allegation of corruption in issuance of refund being investigated and has clarified that no gratification whatsoever was either demanded or paid when in April 2024 two refund of over Rs 130 and Rs 103 million was sanctioned by Commissioner LTU, Lahore and later when amount of Rs.103 million was credited in its bank account by the FBR.

In this regard, the company has addressed a letter to the Deputy Director, Anti Money Laundering Cell, FIA, Lahore.

According to the letter of the company, it has been widely reported in the national press and the social media that FIA has summoned the Member Operations, FBR to joint inquiry into allegations of corruption, kickbacks, bribery, and illegal approval of tax refunds by Large Taxpayer Office Lahore in the last five years. Since our company has been issued refund of Rs.103 million therefore it has been considered imperative that its experience is shared with the investigating agency to arrive at just conclusion.

The relevant law and procedure of issuance of refund are that taxpayer electronically files refund application. The concerned assessing officer is required to pass an order within 60 days of filing of application to accept, curtail or reject the refund claim. The refund order under section 170(4) is issued by the assessing officer after getting approval in writing by the concerned Commissioner. Then refund order is forwarded to the FBR and FBR electronically transfer refund amount in the given bank account of the taxpayer.

Whereas the company refund application for Tax Year 2022 was not processed by the assessing officer within the prescribed time and when many fallow up visits and reminders failed the company had to file a writ petition No.21973/2023 before Lahore High Court and court vide its order dated 03.04.2023 directed the FBR to decide the application within 30 days. However, FBR also did nothing and the company had to file a contempt of court application No.Crl.Org. 1916-W of 2024 and the honourable court issued notice to the Chairman FBR to explain his position.

Only then FBR moved and treated the writ as a representation under section 7 of the FBR Act and the Chairman held a hearing on 18.01.2024. After hearing a letter dated 06.02.2024 was issued by the FBR to the Chief Commissioner, LTO Lahore directing the concerned Commissioner to pass the refund order within 30 days. Only thereafter refund other under section 170(4) sanctioning refund of Rs.130 million was passed on 08.04.2024. Whereas under similar facts and circumstances refund order for Tax Year 2021 was passed on 29.04.2024 sanctioning refund of Rs.103 million. In both years refund claims were arbitrarily curtailed on the pretext of pending claim of tax credit under section 65D though there is none.

The refund of Rs.103 million sanctioned later on 29.04.2024 has been credited by the FBR in the bank account of the company on 08.07.2024 whereas refund of Rs.130 sanctioned earlier on 08.04.2024 has not been credited by the FBR though FBR is burdening itself with compensation for delayed refund in this Tax Year. The refund claims of other tax Years are pending with the assessing officer and after surfacing of under inquiry speed money scandal in May 2024 refund processing has been halted altogether to the disadvantage of the taxpayers.

The company further said that it is hereby affirmed that neither any gratification was demanded at any stage nor was offered/paid but getting income tax refund is almost a mission impossible in very genuine refund claims of leading taxpayers being assessed in Large Taxpayers Office across the country and not merely at Lahore. Withholding refund to achieve budgetary targets is mindset from top to bottom. For a meaningful result of the investigation in addition to details of issued refunds the details of pending refund claims at LTO be called for to ascertain the factual position, it added.

Copyright Business Recorder, 2024