ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to correct what it described as the unjust rejection of a taxpayer’s income tax refund claim, observing that the department acted arbitrarily and in violation of the principles of natural justice.
In an order issued by Federal Tax Ombudsman Zafar Hijazi, the FTO directed the Commissioner Inland Revenue, Refund Zone, RTO Lahore, to revisit the rejection of a Rs1.089 million refund claim for Tax Year 2024.
The FTO ordered that the taxpayer be provided an opportunity of hearing and that the case be decided strictly in accordance with the law within 30 days.
The complaint was filed by Lahore-based taxpayer Noor Muhammad Bhatti, who maintained that he had submitted all mandatory documents, including a duly sworn affidavit, with his refund application. However, the refund claim was rejected on the ground of alleged non-submission of the affidavit, even though the affidavit was already available on the department’s record.
After examining the record, the Ombudsman observed that the same tax office had approved the complainant’s refund for Tax Year 2023 on identical supporting documents. The subsequent rejection of the refund claim for Tax Year 2024 was, therefore, found to be inconsistent and arbitrary.
The FTO further noted that the taxpayer was denied an opportunity of hearing before an adverse decision was taken, which was contrary to the principles of natural justice.
The Ombudsman also rejected the department’s objection that the matter should only be pursued through the appellate forum. The FTO held that complaints involving maladministration in refund matters fall within the Ombudsman’s jurisdiction.
The order further observed that the tax department had the means to verify the taxpayer’s electricity consumption details through the relevant distribution company instead of rejecting the claim on technical grounds without proper verification.
Such conduct, the Ombudsman held, constituted maladministration under the FTO Ordinance.
The FTO directed the FBR to reconsider the refund claim after providing the complainant a fair hearing and to submit a compliance report within 30 days.
