Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) that adequate publicity should be made for the awareness of taxpayers regarding technical/procedural changes for refund claims, the "IRIS" be made fully compatible to facilitate timely processing of refund and claims be settled by removing irritants in the procedure.
In a recently passed order FTO ruled that after the introduction of IRIS, the new procedure for processing the refund claims, it was the Departmental obligation to ensure that the system was in line with the provisions of law so that the taxpayer's right to receive refund was not neglected.
When contacted, a tax lawyer Waheed Shahzad told this scribe that the removal of deficiencies in its automated system (IRIS) was the departmental responsibility and the taxpayer could not be deprived of its lawful right by the Department for its in-adequacy. It is further added by lawyer that an assessment, once finalised under Section 120(1) of the Ordinance, is valid for "all purposes" under the Ordinance. A plain reading of the text of section 120(1) of the Ordinance makes it abundantly clear that "all purposes" includes payment of refund.
The FTO order states, complaint was filed in terms of Section 10(1) of the FTO Ordinance, 2000 against delay in issuance of income tax refund for Tax Years 2013 and 2014. Refunds were claimed on the basis of income tax returns filed electronically which were followed by refund applications. Original documentary evidence was also claimed to have been submitted. Despite completing the legal and procedural requirements, the Department failed to pay the lawful refund.
On reference to the Secretary, Revenue Division, in terms of Section 10(4) of the FTO Ordinance, the FBR forwarded the comments of Chief Commissioner and Commissioner. The Commissioner without controverting the facts about the filing of returns and refund applications simply stated that the refund applications did not appear in his inbox of the Inland Revenue Information System (IRIS) due to which refund could not be processed. The AR contended that the return and refund application having been filed in accordance with the prescribed procedure, legal responsibility was adequately discharged by the Complainant taxpayer. Further, if any difficulty was faced by the concerned Commissioner with regard to the automated system, it was the departmental obligation to correct it and ensure that refund was processed and order passed within the statutory time limitation: FTO order added.
The FTO observed, D.R while reiterating the departmental position, explained that the refund claim was required to be processed through newly introduced IRIS but the instant claim did not reflect in the Commissioner's folder/ inbox, so it could not be issued.
After the introduction of the IRIS, the new procedure for processing the refund claims, it was the Departmental obligation to ensure that the system was in line with the provisions of law so that the taxpayer's right to receive refund was not neglected. The Supreme Court of Pakistan has clearly disapproved the withholding of legally admissible refunds. The FBR, admitted the inadequacy of its automated system as the latest procedural technicalities brought about through automation system of PRAL were not compatible with the legal provisions, nor the taxpayers have been made aware of such technical formalities through any publicity by FBR. The new techniques introduced by PRAL should have been publicised through press and electronic media at least six months before their implementation; which must be done now. Before adopting such a measure, refusal to settle refund claims on the basis of such technicalities would amount to arbitrary act tantamount to maladministration.
FBR to ensure that adequate publicity is made for the awareness of taxpayers regarding technical/ procedural changes for refund claims; the IRIS is fully compatible with the provisions of income tax law to facilitate timely processing of refund; refund claim of the Complainant is settled by removing irritants in the procedure, as per law, within three weeks: FTO order added.