The Federal Tax Ombudsman Justice Saleem Akhtar (Retd) has castigated the tax authorities for four years' delay in payment of refund of an assessee.
The taxation officer by his order dated November 27,1999 had created a refund of Rs 326,810 but it were not paid till the complainant, Abdul Rashid, a film exhibitor, brought the matter to the notice of the FTO secretariat.
He complained that several reminders to implement the refund order remained unattended.
The FTO expressed surprise that the department took almost four years to decide whether to comply with their own refund order or not.
The complainant had entered into a joint venture for exhibition of films with M/s Pan Asia Karachi and M/s Bambino Cinema Karachi for exhibition of films for assessment year 1998-99.
He filed a return under the self-assessment scheme declaring income at Rs 274,000 and the return was accepted as such. But he came to know that the return was filed by mistake, as tax of Rs 326,810 had been deducted at source and this refund was due to him.
When the FTO sent a notice of complaint to the RCIT Eastern Region, Lahore, the RCIT denied any maladministration and submitted that the complainant entered into an agreement with the two companies for exhibition of films at Bambino and Prince Cinema, Karachi.
The receipts of the complaint were of the nature of contract and liable to deduction of tax u/s/50(4).
The RCIT admitted that the deduction of tax at source was the final liability and the complainant was required to file a statement u/s 143B instead of Income tax return u/s 55.
The RCIT further submitted that the taxation officer by mistake entertained the return and rectification was being carried out before the complainant lodged a report with the FTO.
During hearing, the authorised representative of the complainant Nauman Ali Bokhari submitted that the refund created by the taxation officer on November 27,99 had not been paid. On the contrary, the tax authorities tried to deprive the complainant of the refund.
The FTO observed that the investigation clearly establishes maladministration on account of neglect, inattention, delay, incompetence and inefficiency evident from taking almost four years to decide what to do with the refund orders.
The respondent has failed to give a valid reason for the delay.
The FTO, therefore, recommended that the Commissioner of Income Tax should ensure completion of action u/s 122 in accordance with law and that the CIT should institute an inquiry to determine the responsibility for the inordinate delay in taking action. Compliance should be reported within 40 days.