The Federal Tax Ombudsman (FTO) ruled that the Commissioner Inland Revenue has committed error by selecting himself a case for audit and not by Federal Board of Revenue (FBR), as his selection contradicts findings of Lahore High Court (LHC) judgement and is therefore contrary to law and hence tantamount to maladministration.
When contacted, a Lahore-based lawyer Waheed Shahzad Butt told Business Recorder here on Monday that in a recently decided complaint case FTO ruled that non-issuance of refund was attributed by deptt to the selection of complainant's case for audit. This selection had been made by the Commissioner IR, RTO Gujranwala and not by the FBR. The LHC having held in judgement reported as 2012 PTD 1815 that selection for audit could only be made by FBR, the Commissioner IR fell in error by selecting complainant's case for audit himself. His selection contradicts findings recorded in cited LHC judgement and is therefore contrary to law and hence tantamount to maladministration under section 2(3) of the FTO Ordinance 2000.
Tax lawyer added that the selection of any taxpayer for the audit by the Commissioner-IR is illegal and without lawful jurisdiction. The audit selection is also against the guarantees given in Article 4, 10A, 18 & 25 of the Constitution, hence, void ab initio and a nullity in the eyes of law. If the law had prescribed a specific method and given specific powers for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than that provided by law would not be permitted.
It is further added by tax lawyer that the present move by FBR field formations specifically RTO Gujranwala is a deliberate attempt to recover revenue merely to show highest performance without realising the fact whether it is within the four corners of law? Everybody had to work within the command of Constitution and law and should not hesitate to discharge his duties in accordance with law and Constitution.
The FTO order states, "This complaint is against non-issuance of income tax refund. When confronted, the deptt filed a reply that was received on 01.04.2014, explaining that complainant's refund claim for Tax Year 2012 had been processed. However, the deptt said that the refund so determined could not be issued to the complainant, statedly because audit proceedings initiated on 24.03.2014, were then pending disposal. The complainant's case was selected for audit by the Commissioner IR, because of various alleged discrepancies detected in the final accounts for Tax Year 2012 and pending final disposal of audit proceedings the refund had been held in abeyance. The complainant referred to Lahore High Court judgement cited as [2012 PTD 1815] (ChenOne Stores Ltd vs FBR) in support of his contention that the selection for audit was wrongly made by CIR and not by the FBR. As the FBR had admittedly not selected complainant's case for audit Tax Year 2012, the audit proceedings initiated by the deptt were assailed as illegal being contrary to Lahore High Court judgement.
After the complaint was received by the Chief Commissioner IR and Commissioner IR, RTO Gujranwala, the legal validity of order passed under section 170(4) of the Ordinance was not then in question. Non issuance of refund was attributed by deptt to the selection of complainant's case for audit on 24.03.2014. This selection had been made by the Commissioner IR, Zone-II, RTO Gujranwala and not by the FBR.
The Commissioner IR, Zone-II, RTO Gujranwala, started audit proceedings and used that as a pretext to withhold disposal of complainant's refund claim pending before him as per revised return filed for Tax Year 2012. This action is violative of President of the Pakistan's decision No 135/2004, dated 07.07.2005 disposing of departmental representation in C.No 1643-4/2003 (Mr Khalid Mehmood Vs CBR). The President had expressly directed that pendency of audit proceedings was not a valid reason to withhold refund payment. The Commissioner is bound to fully implement decisions of the President in the FTO's matters and his failure to do so in complainant's case is tantamount to maladministration under section 2(3) of the FTO Ordinance 2000. The FBR to direct the Chief Commissioner to re-process complainant's refund claim in accordance with law and dispose of the refund claim within 30 days and report compliance within 7 days thereafter, the FTO order added.
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