Taxpayer’s IT refund claim: FTO directs FBR to correct unjust rejection

ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to correct what it termed the unjust rejection of a taxpayer’s income tax refund claim, ruling that the department acted arbitrarily and in violation of the principles of natural justice.

In an order issued by Federal Tax Ombudsman Zafar Hijazi, the FTO instructed the Commissioner Inland Revenue, Refund Zone, RTO Lahore, to revisit the rejection of a Rs1.089 million refund claim for Tax Year 2024, provide the taxpayer with an opportunity of hearing, and decide the case strictly in accordance with the law within 30 days.

The case was filed by Lahore-based taxpayer Noor Muhammad Bhatti, who maintained that he had submitted all mandatory documents, including a duly sworn affidavit, with his refund application.

Despite the affidavit already being available on the department’s record, the refund was rejected on the ground of its alleged non-submission.

After examining the record, the Ombudsman observed that the same tax office had approved the complainant’s refund for Tax Year 2023 on identical supporting documents, making the subsequent rejection for Tax Year 2024 inconsistent and arbitrary.

The FTO further noted that the taxpayer was denied an opportunity of hearing before the adverse decision, contrary to the principles of natural justice.

The FTO also dismissed the department’s objection that the matter should only be pursued through the appellate forum, holding that complaints involving maladministration in refund matters fall within the Ombudsman’s jurisdiction.

The order further observed that the tax department had the means to verify the taxpayer’s electricity consumption details through the relevant distribution company instead of rejecting the claim on technical grounds without proper verification.

Such conduct, the Ombudsman held, constituted maladministration under the FTO Ordinance.

The FTO has directed the FBR to reconsider the refund claim after giving the complainant a fair hearing and submit a compliance report within 30 days.

Copyright Business Recorder, 2026