Tax refund of over Rs 4.8 million is to be paid to a car dealer of Karachi along with a penalty of 15 percent additional surcharge for late payment.
There is, however, one proviso in the order of Federal Tax Ombudsman Saleem Akhtar that no stay order has been granted by High Court.
The complainant, World-wide Motors (Pvt) Ltd, Karachi, had complained that huge amount of refund, pending for the year 1994-95, is locked up. The company had made several requests but these remained unheeded.
However, it is interesting to note that in the instant case, the complainant had shown a loss of Rs 37,142,121 for the assessment year 1994-95, but assessment was completed at a total income of Rs 907,546 on February 28, 1995.
This order u/s 62 was rectified u/s/156 on April 11, 95 and a loss of Rs 2,119,854 was determined, creating a refund of Rs 100,490.
Once again, the order was cancelled and, under direction of Additional Director of Inspection of Audit, the Inspecting Additional Commissioner of Income Tax, Range 11, Companies 1V, Karachi, the return was reassessed.
This time, total income was determined at Rs 8,410,210 and tax demand of Rs 4,121,003 was created. And, for non-payment of demand, an additional sum of Rs 531,522 was demanded. Thus, the tax liability was worked out at Rs 4,652,525, out of which a sum of Rs 3,146,578 was adjusted.
The company filed appeal before the income tax appellate tribunal which cancelled the revised assessments in its order dated January 5, 2003.
The company sought appeal effect through several applications to the concerned income tax officer but no response was received. The complainant then moved the FTO secretariat.
In response, the department pointed out that appeal effect was given in a letter dated July 14, 2003, but the refund application was not presented on the prescribed form as required under section 170 of the ordinance.
Further, it pointed out that the claim could not be accepted as the matter was sub judice before Sindh High Court.
After hearing both sides and going through the record, the Federal Tax Ombudsman noted that the appellate tribunal had given its order of repayment on January 5, 2003 which had to be given effect to within three months, otherwise, additional compensation at 15 percent had to be paid.
The FTO further noted that the department gave appeal effect on July 14, 2003 and the service of order was made on one Iqbal Khan on September 3, 2003, in no way an authorised agent of the complainant.
In the meantime, the complainant continued to file letters to the department for issuance of refund claim. The service of appeal effect was not on the right person.
The FTO order further noted that the arguments of the department were not convincing. The complainant had made several requests and repeated applications were not responded to.
The FTO observed that the lack of response and delay without reasonable ground shows inefficiency and incompetence of the department. Had it acted promptly within stipulated period by giving appeal effect and served the order on the complainant, the exchequer would been saved of the additional payment under the law. It is unfortunate that the exchequer has been burdened with extra amount.
The FTO has recommended that the order giving appeal effect to the order of the Appellate Tribunal dated January 5, 2003 be served on the authorised representative of the company or the assessee; the refund for the assessment year 94-95 be paid within 30 days of the receipt of the order together with compensation under section 171 of the Income tax Ordinance 2001 provided no stay order has been granted by the High Court. Further compliance be reported within 45 days.
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