Refund settlement: FTO assails unilateral orders against taxpayers

LAHORE: The Federal Tax Ombudsman (FTO) has maintained that passing any order related to refund settlement by tax authorities without providing an opportunity of hearing to taxpayers is tantamount to maladministration, said sources.

It is not only a manifestation of maladministration but also contrary to the law and legal procedure, they added.

It may be noted that the department wastes no opportunity of challenging the jurisdiction of the FTO when a taxpayer lodges a complaint against non-issuance of refund claim, which in most of the cases prove misconceived, especially when the department passes orders for settlement of refund claims without providing an opportunity of hearing to a taxpayer.

They said a perusal of all such departmental orders reflects that not a single correspondence is placed on record and the refund amount is reduced unilaterally without providing opportunity of hearing to taxpayers in line with the Income Tax Ordinance.

The sources said the issue of unilateral determination of refunds has become more visible since the e-filing returns of income by taxpayers. When a taxpayer claims his refund online, the income tax authorities calculate it unilaterally without providing an opportunity of hearing to the taxpayers, which leads to controversies by and large and matters fall in the office of the FTO for a speedy redressal.

It is worth noting that the present FTO Dr Asif Mahmood Jah has been proactive in resolving refund matters in a record number in the shortest possible time. President Dr Arif Alvi has also acknowledged the fact in his recent remarks during a function at the presidency last week.

A large number of private sector entities have preferred to get their refunds through the office of FTO throughout the country which has put the department into an awkward position. Therefore, most of the replies from the department suggest challenging the proceedings at the forum of FTO. The department is of the view that since the impugned orders is appealable under the Income Tax Ordinance; therefore, the FTO should not intervene on a mere complaint from a taxpayer.

However, the office of FTO extends its jurisdiction on account of procedural discrepancy in the impugned order and prefers to continue with hearing of the same on the touchstone of maladministration. The office of FTO had received 7000 complaints during 2022, 6500 of which were disposed of and refund claims with Rs7 billion were decided and payment to the aggrieved taxpayers was ensured as well.

Copyright Business Recorder, 2023