Non-issuance of refund: FTO directs FBR to pay compensation to taxpayer

ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to pay compensation to the taxpayer for delaying income tax refund since 2014-15.

The Tax Ombudsman, while disposing of a complaint relating to non-issuance of refund has directed the FBR to settle the long pending refund claim and grant compensation for delayed refund as per law and incorporate computation of tax in appeal effect order.

Briefly, the complainant was a private limited company, earning income from providing marketing and fulfillment house services. They filed the income tax returns for the years 2014 and 2015 along with refund claims on account of tax deduction in excess of admitted liability.

The FTO observed that the complainant had been running from pillar to post to get the refund duly created as a result of appeal order and verified withholding tax, the credit of tax which had also been allowed in audit vide orders under Section 122 (5A). The deliberate withholding of refund of duly verified tax tantamount to maladministration in terms of section 2 (3) (i) (a)(b) and (ii)of the FTO Ordinance.

As per details, the FTO sought secretary Revenue Division for comments, the chief commissioner–IR, CTO, Karachi informed that the refund was to be processed by enforcement division on the basis of appeal effect order by Additional Commissioner Inland Revenue (ADCIR) audit in IRIS and ADCIR Audit had only uploaded the text of appeal effect order and no computation had been made in the order.

The Tax Ombudsman further found out that maladministration has been caused through inefficiency and red tape in the department. Additional commissioner Audit was a senior officer of Grade 19, with more than 10-15 years of service, his lack of knowledge regarding the processing of orders in IRIS was extremely shocking.

Tax Ombudsman Dr Jah observed that “passing of orders under section 122 (5A) and ensuring rectification and appeal effect orders was his core job, anyone who is not conversant with the process of his core job responsibility is not fit enough to hold that position, Alternatively if the order is not deliberately left incomplete with the intention of non-creation of due refund on the basis of credit already allowed after due verification in order under section 122 (5A),the maladministration is evident”.

The FTO has further directed the FBR to look into the conduct of the additional commissioner Audit, from the perspective of his suitability for field posting.

Copyright Business Recorder, 2022