The Federal Tax Ombudsman (FTO) has instructed the Federal Board of Revenue (FBR) to call for an explanation from an officer of the Corporate Tax Office Karachi for unprofessional attitude and inefficiency in the passing of an adverse order after seven years of rejecting the claim of refund without providing a single opportunity for a hearing.
The FTO has directed the FBR to call for an explanation from Deputy Commissioner Inland Revenue, Unit 9, Enforcement –II Corporate Tax Office Karachi for the unprofessional attitude and inefficiency in the passing of an adverse order last month after seven years of rejecting the claim of refund without providing even a single opportunity for a hearing. The Ombudsman has also directed to submit a compliance report within 45 days.
The FBR also directed the commissioner-R Enforcement-II, CTO Karachi to revisit the order dated 5th September 2022 for the tax year 2016 and dispose of the claim of refund on its merit as per law, after affording a proper opportunity of hearing to the complainant.
According to the details, the complainant filed income tax returns for the tax year 2016 and adjusted tax payable against the tax refund claimed for the tax year 2014. The DCIR, Unit-9, Range-C, Audit-III, CTO Karachi issued a rectification order rejecting the adjustment of an undetermined refund and created a tax liability of Rs. 1.316 million on 23rd May 2022.
Thereafter, ADCIR, Range C, Audit-III also issued an order on the same issue on 27th June 2022 for the same tax year 2016, creating the same tax liability. Thus, there were two orders on the same issue for the same tax year in the field, each creating tax demand and rejecting adjustment of undetermined refund of the tax year 2014. Further, no refund order for the tax year 2014 was issued despite the refund application being pending since 28th July 2015.
The illegal infirmity of duplicate assessment proceedings was corrected by the department after realising its mistake. However, the perusal of the refund order dated 5th September 2022 for the tax year 2014 issued by the DCIR Unit9, Enforcement-II, the CTO Karachi reveals that the claim of the refund was rejected summarily without issuing a single notice and without providing any opportunity to the complainant.
The complainant had e-filed a refund application for the tax year 2014 on 28th July 2015. The Department was required to have disposed of the refund application, either way within sixty days of filing, after providing the opportunity of hearing. It is, however, observed that the department slept over the matter for seven years.
The complainant on the other hand, after having failed to get his refunds issued, resorted to claiming its adjustment in his return in the subsequent tax year 2016. But, the FBR penalized the complainant for not being able to produce a refund order which was in fact to be processed by the FBR itself.
Thus, in this case, the FBR not only rejected the refund adjustment through a rectification order for the tax year 2016 but also summarily rejected the claim of refund on 5th Sept 2022 without providing any opportunity.
