Refund case: Ombudsman finds lapses by tax authorities

ISLAMABAD: The Federal Tax Ombudsman has found serious procedural lapses by tax authorities in a years-old refund case involving an Islamabad woman, declaring the department’s handling of the matter “arbitrary, unjust and oppressive” and directing the Federal Board of Revenue to conclude the pending proceedings within 30 days.

According to an official order of the Federal Tax Ombudsman Islamabad, the complainant, Fozia Sharif, had approached the forum against what she described as unjustified delay, repeated notices and harassment by the tax department over a refund claim relating to tax year 2020.

The case centres on a refund claim that remained unresolved for several years while the department continued proceedings under Sections 111(1) and 122(9) of the Income Tax Ordinance.

The complainant maintained that she had already submitted all required documents, including explanations, bank statements and supporting evidence, before the tax authorities.

A key issue highlighted in the order was an amount of Rs2 million, which the department treated as unexplained. The complainant’s position was that the amount was a gift received from her husband, an overseas Pakistani, through proper banking channels.

The Ombudsman noted that proceedings under Section 111(1) were initiated through a notice dated 15 April 2021, requiring compliance by 24 April 2021, but the matter was concluded only on May 6, 2026 through an ex-parte decision. The order observed that the department reached this conclusion after a delay of more than five years, without properly examining the relevant documents or providing a proper opportunity of hearing.

The Ombudsman held that the delay caused hardship to the taxpayer, who was “condemned unheard,” violating the principle of timely justice and reflecting an arbitrary exercise of discretionary power.

The order further recorded that another notice under Section 122(9) was issued on 7 May 2026 and was still pending at the time of hearing. The Ombudsman found that the tax department had treated the remittance as unexplained despite the complainant’s claim that it had come from her husband through formal banking channels.

The Federal Tax Ombudsman concluded that the department’s conduct amounted to maladministration under the FTO Ordinance, 2000.

In its recommendations, the Ombudsman directed the FBR to instruct the Commissioner-IR, North Zone, RTO Islamabad, to conclude the pending proceedings for tax year 2020 within 30 days, after examining documents related to the foreign remittance and gift, and after giving the complainant a reasonable opportunity of hearing.

The FBR has also been directed to submit a compliance report within 40 days.

Copyright Business Recorder, 2026