FTO Directs FBR to Adopt Uniform Procedure for Verification of Income Tax Refund Claims

The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to issue necessary instructions to field formations for adopting a uniform treatment in the verification of claims of income tax refunds.

In this regard, the FTO has directed the FBR to look into the discriminatory treatment of the income tax refund case vis-à-vis a case with 100 percent identical facts that have been given altogether treatment.

According to an order of the FTO issued against the FBR on Tuesday, the FBR should direct the concerned CCIR to look into the discriminatory treatment of the instant case vis-à-vis a case with 100 percent identical facts has been given altogether treatment;

The FBR should also direct the Commissioner-IR, Zone-Ill, RTO Lahore to revisit u/s 122A the order u/s 170(4) which is based on discriminatory treatment vis-à-vis order u/s 170(4) referred to above and settle the claim of refund, after providing the opportunity of hearing and as per law.

The above-mentioned complaint was filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against delay in disposal of refund application for Tax Year 2021.

The Complainant filed a return of income for Tax Year 2022 u/s 114(1) of the Income Tax Ordinance, 2001 (the Ordinance) claiming a refund amounting to Rs. 1,564,9501. The refund accrued on account of excess tax deducted under Section 236j of the Ordinance. The Complainant e-filed a refund application for Tax Year 2021 on 21-07-2023, however, the department failed to pass the order under Section 170(4) of the Ordinance, within the stipulated time. However, a very prominent aspect involving grave maladministration cropped up during the hearing in the instant case.

During the hearing, they argued, that the department has rejected his claim of refund based on deduction u/s 236A of Rs. 1,564,940 dated 03-11-2020. The above referred CPR contained only two entries i.e. one in respect of the Complainant i.e. Muhammad Saeed Habib and a Second in the name of Malik Muhammad Yousaf (NTN:32301-4996791-7) at Rs. 1,564,9501- i.e. the same amount of tax was deducted u/s 236A.

However, to utter astonishment, the department rejected the claimed refund in respect of the instant Complainant but accepted in respect of another person i.e. Malik Muhammad Yousaf, based on the same CPR, as referred to above. The department issued a refund u/s 170(4) for the tax year 2021 vide order dated 29-06-2022 in respect of Malik Muhammad Yousaf authored by DCIR Unit-Ill, Range-I, Zone-V, RTO Lahore.

The author of the above-referred order verified the claimed amount u/s 236A through ITMS only. However, the same claim u/s 236A based on the same CPR was denied in the instant Complainant. It is a clear case of arbitrariness and discriminatory treatment meted out to the Complainant and falls clearly, within the ambit of maladministration in terms of section 2(3)(ii) of the FTO Ordinance.

It may further be added, that the above-referred maladministration pertains to the time frame prior to filling of the first appeal and 2nd appeal as well and is not the subject mailer of appeal before the tribunal. This is grave and clear maladministration that cannot be left unattended. Due to this commission of maladministration, there has been unnecessary litigation between appellate authorities and this forum as well, FTO order added.

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