FTO rejects reason for delay in refund

The Federal Tax Ombudsman, former Justice Saleem Akhtar, has held that delay in depositing withheld amount by the withholding agent should not be the reason for delay in payment of refund to the taxpayer.
It was the duty of the department to take action under section 86 against the withholding tax agent, and the refund of Rs 383,329 along with additional compensation be made to the complainant.
The complainant, Top End Production, Lahore, which produced TV programme for Tele-world Marketing, submitted that it was aggrieved by the non-implementation of FTO's earlier order dated 1.10.2003 for payment of refund for the assessment years 1999-2000 to 2001-2002.
The departmental representative had assured the FTO that the tax payments for these years would be verified and the due refund would be paid within a month, but this was not complied with.
The department issued only part of the refund and withheld other payments on the ground that the withholding tax agent the Tele-world Marketing had not deposited the refund within a week as prescribed by law and that some payments were made under wrong heading. The department needed foolproof verification to allow refund.
On hearing both sides and going through the record, the FTO in his finding noted a number of lacunae.
First, the challan form for payment does not have any column for the section in which the payment is to be made. It is therefore illogical to presume that payments are by the Tele-world Marketing on their account and not for the parties whose names are clearly mentioned in the column meant for details of payment.
Second, the challan form clearly mentions the name of the Topend Productions and the amount withheld from it.
Third, as for the delay in depositing the withheld amount, the responsibility falls on the withholding tax agent and not on the taxpayer. The department should have taken cognisance under section 86 of the repealed ordinance.
The FTO findings also mention that CBR circular no 5, 2003 dated June 30, lays down that refund vouchers should be issued within three months of the refund order, and refund voucher should be delivered to the taxpayer by registered post, or courier service.
In the complainant's case, it is not in dispute that the refund claimed has already been shown due on IT 30 of each year under consideration.
The order further states: On the basis of data available on record, it emerges that the department is responsible for deliberate withholding (non-payment) of refund thus committing maladministration.
He therefore recommended that the refund aggregating Rs 383,329 for the assessment year 1999-2000 to 2001-2002 be issued under section 170 of the Income Tax Ordinance 2001.
Further, additional payment under section 171 of the ordinance for the period from which the refund originally became due to the date of payment is also issued.
The FTO further directed that the compliance report be submitted within 30 days.