Issuance of refund/compensation: president endorses FTO recommendations to FBR

President of Pakistan has confirmed the Federal Tax Ombudsman (FTO) recommendations to Federal Board of Revenue (FBR) to issue refund/compensation without prejudice to outcome of audit proceedings under Section 177 of the Income Tax Ordinance 2001.
Sources told Business Recorder that the President has rejected a representation filed by FBR under section 32 of the FTO Ordinance, 2000 read with Section 14 of the Federal Ombudsmen Institutional Reforms Act, 2013 wherein the recommendations issued by the FTO to the FBR to issue refund / compensation due in accordance with law without prejudice to any outcome of audit proceedings have been endorsed by the President of Pakistan.
When contacted tax lawyer Waheed Shahzad Butt told this correspondent that present case is one of instance of rule of law and principles of natural justice when there is issue of returning taxpayer's money in shape of refund. Taking cognizance of severe mal-administration of justice by some FBR officials the FTO judiciously intervened into the matter and directed the FBR to the issue the refund due to the taxpayer without prejudice to outcome of audit proceedings.
He said that the denial of refund would be violation of Article 24(1) of the Constitution which lays down that no person shall be deprived of his property save in accordance with law. The FTO is required by the terms of the statute (FTO Ordinance, 2000) that governs the working of the Office of the FTO to unmask maladministration and recommend action to prevent its recurrence and this is exactly what the FTO has done while exercising his jurisdiction against revenue division employees.
The President's order states, "This representation dated 10.10.2016 has been filed by the Agency/FBR against the findings of the FTO dated 08.09.2016. whereby it has been held that the FBR to direct the CIR issue refund/compensation due, in accordance with law without prejudice to any outcome of audit proceedings and report compliance within 21 days.
The Complainant, an individual contends that in tax year 2015 he purchased dead/fallen trees from the Chief Conservator, Forests (North Zone), Rawalpindi and paid advance tax under Section 236(A) of the Income Tax Ordinance, 2001 on the transaction @ 10% of the total bid amount. The tax so deposited is claimed as adjustable against tax demand under Section 120(1) of the Ordinance. The taxpayer e-filed his return of income and claimed refund. The department failed to process/dispose of the refund claim although all requirements of law and procedure stipulated in the statute were fulfilled. Instead a notice was issued to the complainant under Section 177 of the Ordinance, informing him that his case had been selected for audit for the tax year 2015. The indifference shown by the Dept. and the delay in disposal of the refund claims has been claimed as tantamount to "maladministration" under Section 2(3)(ii) of the FTO Ordinance, 2000.
The instant representation has been field by FBR Request for issuance of refund has been decided vide order u/s 170(4). The said order is appealable order. Therefore, provision of Section 9(2)(b) of the FTO Ordinance, 2000 are attached. The Agency has apprised that in the instant case, the taxpayer's case has been selected for audit u/s 177 and proceedings are pending. The actual tax liability of the taxpayer can be ascertained only after the completion of audit proceedings. The matter pertains to the assessment of income and determination of tax liability. Therefore, instant complaint is hit by provisions of Sectio 9(2)(b).
After perusal of record and examination of all documents, it has become clear that the FTO has made recommendations which are only to the extent of direct the CIR issue refund/compensation due, in accordance with law without prejudice to any outcome of audit proceedings within 21 days. It is just a harmless order and only the Agency has to decide the issue. Thus the findings of the learned FTO are quite sustainable and the Agency has unnecessarily filed this representation. In such circumstance, this representation is liable to the rejected having to merits and the recommendations of the FTO are sustainable and unexceptional. Accordingly, the President has rejected the representation of the FBR-Agency and findings of the FTO are upheld, the President's order added.