Mr. Mehtab Ali Bungash, D.C.I.T. Companies-V, Karachi present for the respondents.
The complainant a Private Limited Company derived income from business of Indenting Commission and is an existing Income Tax Assessee of Companies Zone-V, Karachi on National Tax Number 1484807. The complainant is aggrieved by non-issuance of refund and compensation by the taxation officer concerned. The facts of the case are briefly stated as under:-
2. The assessment for the year 1997-98 was completed u/s 62 of the repealed Income Tax Ordinance 1979 on 15.06.1998 and refund was created at Rs.90,909. The assessment for the assessment year 1999-2000 was also completed u/s 62 of the said Income Tax Ordinance on 22.05.2000 which resulted in determination of refund of Rs.26,623. It is stated that the Deputy Commissioner of Income Tax, Circle-A-3 Companies Zone-III, Vide his letter dated 26.05.1998 required the complainant to pay Rs.752,928 within 5 days of the receipt of the said letter being arrears demand including additional taxes u/s 87, 89 and penalty u/s 108 of the repealed Income Tax Ordinance 1979. The complainant’s A.R. vide his letter dated 3rd June 1998 pointed out various discrepancies and deficiencies in the aforesaid letter dated 26.05.1998 and requested the assessing officer to give effect to the appellate order of C.I.T. (Appeals) relating to the assessment years 1992-93, 1996-97 (against imposition of penalty) and serve the order of additional tax levied u/s 87 for the assessment year 1993-94. It is alleged that the D.C.I.T. before expiry of 5 days served notice u/s 92 of the repealed Income Tax Ordinance 1979 on the Banker of the complainant on 3.6.1998 and had recovered a sum of Rs.65,033. It is further, stated that on receipt of the reply of the complainant’s A.R., the DCIT amended the notice for recovery and required the complainant to pay Rs.326,845. It is alleged that the complainant’s A.R. vide his letter dated 30.06.1998 requested the DCIT to withdraw the notices u/s 92 served on the banker and provide orders passed u/s 87 and 89. The DCIT did not provide the copies of the orders u/s 87 and 89. He however, had withdrawn the notice issued u/s 92 to M/s Habib Bank Limited Central Branch, Karachi vide his letter dated 29.06.1998. Notice under section 92 was again issued on 25.10.1999 to the banker for recovery of Rs.196,792.As per Bank Advice a sum of Rs.41,643 was recovered. Photo copy of bank advice has been produced alongwith the complaint. It is reiterated that despite repeated request in writing the DCIT did not provide copies of orders passed u/s 87 and 89. The complainant submitted refund applications u/s 170 of the Income Tax Ordinance 2001 for the assessment years 1997-98 and 1999-2000. Refund for the year 1999-2000 for an amount of Rs.26,623 was issued on3.5.2006 but no compensation was paid alongwith the refund. It is alleged that the respondents had deliberately withheld the refund and compensation relating to the assessment year 1997-98 and did not make payment of compensation without any reason for the assessment year 1999-2000. The recovery made u/s 92 at Rs.65,050 and 41,614 was not lawful. This amounted to maladministration. The complainant has prayed for redressal of its above stated grievances.
3. The Respondents have forwarded the parawise comments of Regional Commissioner of Income Tax, Corporate Region, Karachi. It is reported that refund of Rs.90,909 created for the assessment year 1997-98, was adjusted against the tax demand for the preceding assessment years i.e.1993-94, 1995-96 and 1996-97. the refund of Rs.26,623 for the assessment year 1999-2000 was issued on 7.1.2006 i.e. within the limit of prescribed under section 170 of the Income Tax Ordinance 2001. It is pleaded that neither any refund for the said years was pending nor any compensation for delayed refund was due to the complainant.
4. It is further stated that no correspondence regarding recovery of tax u/s 92 of the repealed Ordinance against arrear demands created u/s 87 and 89 of the said Ordinance was available on the record. However if the complainant produced evidence in this regard the same would be considered on merit. It is reported that order u/s 89 of the repealed Ordinance 1979 was available and could be provided if applied by the complainant. The Additional Tax u/s 87 was charged in the assessment order passed u/s 62 of the repealed Ordinance for the assessment year 1992-93. Taxpayer filed appeal before CIT (Appeals) but the levy of additional tax u/s 87 was maintained. It is pleaded that the contention of the taxpayer regarding refund of additional taxes recovered by invoking the provision of Section 92 of the repealed Ordinance was not correct.
5. The case has been discussed in detail with the representatives of the complainant and the department. The case records produced by the Departmental Representative have also been examined. The A.R. of the complainant disputed the observations of the respondents that refund created for the assessment year 1997-98 was adjusted against the outstanding demand for the assessment years 1993-94, 1995-96 and 1996-97. He contended that there was no outstanding demand relating to the assessment year 1993-94. He further, pleaded that the D.C.I.T. never provided copies of adjustment memos to the complainant. The A.R. of the complainant further, pleaded that his client was entitled for additional payment for delayed refund for the assessment year 1999-2000. The reference to refund application u/s 170 of the Income Tax Ordinance 2001 made by the respondents in the parawise comments was misconceived and misplaced. In fact the complainant was not required to make any application for refund due to amendment made in section 100 of the repealed Income Tax Ordinance 1979 by the Finance Act 1985. As regards the levy of penalty u/s 108 of the repealed Ordinance, relating to the assessment year 1996-97 it is stated by the by the A.R. that in appeal filed by the complainant, the amount of penalty was deleted vide Appellate Order No.87 dated 31.03.1997 passed by the Commissioner of Income Tax (Appeals) Zone-III, Karachi. Regarding the recovery of arrear demand u/s 92 of the repealed Ordinance, the A.R. of the complainant has produced photo copies of Debit Advices of Habib Bank Limited for recovery of Rs.65,033 and Rs. 41,614. The Authorized Representative vehemently contended that the taxation officer concerned did not provide copies of orders passed u/s 87 and 89 of the repealed Ordinance despite repeated reminders issued in this regard.
6. The Departmental Representative reiterated the plea taken in the parawise comments that additional tax u/s 87 was charged while passing order u/s 62 of the repealed Ordinance for the assessment year 1992-93. The D.R. produced photo copy of the order passed u/s 89 of the said Ordinance relating to the assessment year 1991-92 where by demand of additional tax was created at Rs.52,137.
7. The Departmental Representative failed to produce copies of adjustment memos regarding adjustment of refund relating to the assessment year 1997-98 against the outstanding arrears of preceding years. He however assured that copies of all the relevant documents in this regard would be provided to the complainant. The plea taken by the respondents in the parawise comments that additional tax was charged u/s 87 of the repealed income tax Ordinance 1979 relating to the assessment year 1992-93 in the order passed u/s 62 of the said Ordinance is not well founded. The perusal of the copy of the assessment order passed u/s 62 shows that the additional tax was to be charged u/s 87 in a separate order. The D.R. has not been able to provide copy of the order u/s 87. He has however, produced copy of order for the year 1992-93 passed u/s 132 of the repealed Ordinance alongwith copies of I.T-30 and demand notice. The amount of Rs.82,699 has been shown in the I.T-30 as payable u/s 87 of the repealed Ordinance. The A.R. of the complainant contended that no appeal was filed by the complainant on the issue of additional tax u/s 87 as no order was passed by the assessing officer. He has produced a copy of the Appellate Order No.426 and 427 dated 10.01.1996. The D.R. has not produced any evidence regarding service of order passed u/s 87 and 89 of the repealed Income Tax Ordinance 1979. Maladministration is established and the following recommendations are therefore made:-
(i) The C.B.R. to direct the taxation officer concerned to provide the complainant, copies of adjustment memos regarding adjustment of refund determined for the assessment year 1997-98 against arrear demand of preceding years.
(ii) The complainant’s claim of compensation for the assessment year 1999-2000 be decided in accordance with law.
(iii) The complainant should be provided an opportunity to produce evidence regarding recovery of arrear demand u/s 92 of the repealed Income Tax Ordinance and after careful examination of the same, the resultant, refund if any be issued.
(iv) The order u/s 87 relating to the assessment year 1992-93 and order u/s 89 for the year 1991-92 be served on the complainant.
(v) The above recommendations be implemented within 45 days of the receipt of this order and compliance be reported within a week thereafter.
(Justice (R) Munir A. Sheikh)