FBR must refund amount after assessment order quashed: FTO

ISLAMABAD: Federal Tax Ombudsman (FTO) Zafar Hijazi has ruled that the Federal Board of Revenue (FBR) cannot lawfully retain money recovered under an assessment order once that order has been set aside by the appellate authority.

In a latest order, the FTO held that once an assessment order is annulled in appeal, it ceases to exist in the eyes of law. Consequently, the legal basis for recovery also disappears and the recovered amount cannot be withheld merely because reassessment proceedings are pending.

Rejecting the department’s objection regarding jurisdiction, the FTO observed that the complaint related to maladministration arising from failure to implement the appellate order, continued attachment of the taxpayer’s bank account, and delay in deciding the pending refund application. These issues fall squarely within the jurisdiction of the FTO.

The FTO directed the FBR to immediately implement the appellate order by lifting the bank attachment, decide the refund application strictly in accordance with law, and submit a compliance report within 45 days.

The decision reaffirms that while tax authorities are free to complete reassessment proceedings in accordance with law, they cannot deny taxpayers the relief flowing from a valid appellate order or retain amounts without lawful authority. It reinforces the principles of lawful administration, prompt implementation of appellate decisions, and protection of taxpayers against arbitrary recovery measures.

Copyright Business Recorder, 2026