20000210

CBR directs ITOs to issue refund cheques without delay

RECORDER REPORT

ISLAMABAD: The Central Board of Revenue (CBR) has directed the income tax assessing officers to issue refunds without delay.

The step has been taken in view of the fact that the Chief Executive had taken cognisance of the matter. Besides, under the law delayed refunds are to be paid with compensation.

A circular issued by the board regarding income tax refunds on Wednesday directed income tax collectorates that outstanding refund cheques should be issued expeditiously or at the most within three months of the date when they become due. This way, the department does not have to incur the liability of payment of compensation and the tax payers also get their refunds in time.

The circular added that it should be ensured that principle of first-in first-out is followed as far as possible while disposing the claims. Refunds of smaller amounts must be made on urgent basis so that the problems of small tax payers are addressed promptly.

Since the compensation on delayed refunds would be an extra burden on the exchequer, and it might also invite audit objections, the assessing officers should be advised to ensure that issuance of determined refunds are not delayed. The supervisory officers should regularly check this aspect during inspection of the Circles, the circular said.

The CBR has further directed that power to withhold refunds should be exercised sparingly and only in cases where there are genuine reasons to believe that tax payer is likely to disappear divesting himself of all assets, making recovery impossible if the department's appeal against the order giving rise to refund ultimately succeeds. The Commissioner must record the reasons in writing before granting approval for withholding of refund and refunds may be adjusted and issued expeditiously against demands under other taxes as and when referred by the tax payers or tax collectors in accordance with law for which detailed instructions have already been issued vide Board's letter No, 1(1)Ch.CBR/99 of December 17, 1999.

The board has also said that infringement of these instructions by any assessing officer shall henceforth be treated as "inefficiency" and "misconduct" entailing strong penal action under the Government Servants (Efficiency and Discipline) Rules, 1973.

The income tax circular started with the observation that "lately the board has been receiving large number of complaints with regard to late as well as non-issuance of income tax refunds. Even the Chief Executive took cognisance of the enormity of the problem and referred the issue in his address to the nation on December 15, 1999. It was assured by him that refunds in future would be allowed within a specific period and in case of delay, the tax payers will be entitled to a return on the refund."

Section 100 of the Income Tax Ordinance, 1979 provides the issuance of refunds in cases where refund becomes due as a result of an order of assessment, appeal, revision or other proceedings under the Ordinance, irrespective of the fact as to whether the assessee has or has not made any claim. The said section also provides for a payment of additional amount as compensation at the rate of 15 percent per annum if refund became due as a result of decision of Income Tax Appellate Tribunal and the tax was paid under Section 85 read with Section 129.

There is another provision under Section 102 for additional payment for delayed refunds at the rate of 15 percent per annum of the amount of refund due, if the assessee is not paid refund within three months of the date it became due.

It may also be recalled as to when a refund "becomes due" has also been provided in Section 102 and is as under:

"(a) in any case where the refund is required to be made in consequence of any order on an appeal or a revision or (an appeal) to the High Court or an appeal to the Supreme Court, on the date of receipt of such order by the Deputy Commissioner;

"(b) in any case to which sub-section (5) of section 99 applies, on the thirtieth day of June of the financial year next following the date on which the application for refund was made; and

"(c) in other cases, on the date on which the refund order is made."

It, however, seems that the provisions of law are not being followed in letter and spirit with the result that the amounts of refund due have swelled up, the circular added.