ISLAMABAD: The Federal Tax Ombudsman (FTO) has held that Regional Tax Office (RTO), Rawalpindi, committed maladministration by unnecessarily delaying a lawful income tax refund for over 21 months, despite the underlying tax demand having already been quashed by the Lahore High Court, Rawalpindi Bench.
In its landmark order, the FTO noted that funds had been coercively recovered from the taxpayer through bank attachment for Tax Year 2017 on the strength of a demand later annulled ab initio by the High Court vide judgment dated 13.11.2024.
The recovered amount, the FTO held, became immediately refundable in consequence of that judgment.
Significantly, the FTO rejected the department’s defence that a fresh refund application under Section 170 of the Income Tax Ordinance, 2001, was a precondition for release of the amount, terming the plea “legally misconceived”.
The order clarifies that once a High Court grants direct relief, the department is obligated to implement the appeal effect and issue the consequential refund and statutory compensation on its own, without compelling the taxpayer to file repetitive applications.
Terming the prolonged withholding of the refund a manifestation of “delay, inaction, and ineptitude”, the Ombudsman ruled it maladministration under Section 2(3)(ii) of the FTO Ordinance, 2000, and directed the FBR to have the Commissioner release the refund along with statutory compensation under Section 171 of the Ordinance and report compliance within 30 days.
Copyright Business Recorder, 2026