2025 PTD 70 FEDERAL-TAX-OMBUDSMAN-PAKISTAN

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VS Ss.2(3)(1)(a)(b) & (ii) & 9(1)---Income Tax Ordinance (XLIX of 2001), Ss. 170(3) & (4), 221, 122(9) & 122(5A)---Letter No. 6(43) Rev.Bud/2021/116078-R dated 10.05.2022 issued by the Federal Board of Revenue---Disposal of cases of all individuals/AOP who had adjusted refund claims against admitted tax liability of Tax Years 2016-2021, matter of---Federal Tax Ombudsman, jurisdiction of---Maladministration---Scope---Respondent /Department raised objection regarding bar on jurisdiction of the Office of Federal Tax Ombudsman---Validity---Issue in hand was not of assessment of determination of tax---The taxpayer had outstanding refund claim of previous years far in excess of admitted tax liability clearly visible in respective tax years in IRIS---Determination of refund under S.170 of the Income Tax Ordinance, 2001, for those previous tax years against prescribed period of six months, was pending with the department---Now the Department intended to penalize the taxpayer for not being able to produce refund order which was in fact to be processed by the Department itself---This was a fit case of maladministration to be treated by Federal Tax Ombudsman. Citation Name: 2025 PTD 70 FEDERAL-TAX-OMBUDSMAN-PAKISTANBookmark this Case VS Ss. 2(3)(1)(a)(b) & (ii) & 9(1)---Income Tax Ordinance (XLIX of 2001), Ss. 170(3) & (4), 221, 122(9) & 122(5A)---Letter No. 6(43) Rev.Bud/2021/116078-R dated 10.05.2022 issued by the Federal Board of Revenue---Refund claims, self-adjustment of---Scope---Disposing of cases of all individuals/AOP who had adjusted refund claims against admitted tax liability of Tax years 2016-2021 by the FBR in light of Letter No. 6(43) Rev.Bud/2021/116078-R dated 10.05.2022---Federal Tax Ombudsman initiated investigation of the matter---Argument of the Respondent / Department was that a taxpayer colud not adjust any refund already claimed in previous years until and unless it was determined by the Department under S. 170(4) of the Income Tax Ordinance---In support of said argument, the decision of the Supreme Court judgment dated 05.03.2020 in Civil Petitions 283-L to 286-L of 2018 dated 05.03.2020 had been quoted /referred to---Validity---Said judgment was distinguishable which was with reference to claim of additional payments for delayed refunds (compensation); on the contrary, issue-in-hand was not of said matter---In the present matter, the claim of the taxpayer was his own excess payments of previous tax years for which he had applied to the Department as per law and it was the responsibility of the Department to dispose the applications of refund in terms of Ss. 170(3) & 170(4) of the Income Tax Ordinance---But the Department, instead of complying with the said provisions, kept on sleeping over the refund application of taxpayer for more than prescribed period of sixty days---Taxpayer ,on the other hand, after having failed to get his refunds issued, resorted to claiming of its adjustment in his return in subsequent years for which a separate TAB was provided in return of income through IRIS (This TAB was subsequently removed in income tax return for Tax year 2022 in IRIS)---Thus, all the actions of disposal of refund application of previous years, determination of refund and adjustment of the same against taxpayer's admitted liability in terms of provisions of Ss.170(3) & 170(4) of the Income Tax Ordinance, 2001, was pending with the Department and the Department was asking the taxpayer to produce the evidence for the same---Thus, non-disposal of refund applications of previous years and issuance of show cause notice under S.221 or 122(9)/122(5A) of the Income Tax Ordinance, 2001 without conducting proper desk audit tantamounted to maladministration in terms of S.2(3)(1)(a)(b) &(ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the respondent / FBR to issue clear cut and uniform instructions / clarifications with respect to letter-in-question---No refund adjustment claim can be rejected without taking substantial steps (i.e. conducting detailed desk audit of returns, verifying tax payments from ITMS/IRIS etc., confronting specifically unverified tax deductions/payment setc.)---Federal Tax Ombudsman recommended to dispose of refund applications for previous years on merits as per law after providing opportunity of hearing---Federal Tax Ombudsman disposed of Own Motion Investigation accordingly.

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