FTO recommends FBR to invoke revisionary jurisdiction

ISLAMABAD

Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman (FTO) has recommended Federal Board of Revenue (FBR) to direct the Commissioner to invoke revisionary jurisdiction under Section 122A of the Ordinance and revisit the tax charged under Sections 235, 231A, 234 and 236 of the Ordinance, as per law; and report compliance within 30 days.

Decision to this effect was made by the FTO on a complaint filed by Muhammad Iqbal Sindhu Proprietor Sindhu Industry Street Heera Washing Machine Near Samanabadi Chungi Gujranwala verses the Secretary Revenue Division Islamabad against deduction of tax at source in utility bills and at the time of motor vehicle registration and cash withdrawals from bank and the resultant reduction in the refund claimed.

According to the findings and recommendations of FTO, this complaint was against deduction of tax at source in utility bills and at the time of motor vehicle registration and cash withdrawals from bank and the resultant reduction in the refund claimed. The Complainant is a manufacturer / supplier.

Tax deducted under Section 153 on supplies constitutes final discharge of tax liability. Besides paying the final tax liability, the Complainant has also been subjected to tax withholding in utility bills, cash withdrawals from bank and at the time of motor vehicle registration. He assails the same to be contrary to law as it amounts to double taxation of his income.

When confronted, the Deptt filed a reply in which a preliminary objection was raised that the charge of tax under Sections 235, 231A, 236 and 234 of the Income Tax Ordinance 2001 in cases where final tax on the supply of manufactured goods was paid was an appealable issue and should be left to the regular appellate fora for resolution. On merits, the Deptt contended that the tax as levied was consistent with statutory stipulation and there was no double taxation of income. Both sides have been heard and record examined by the FTO.

The Complainant has contended in the complaint that the Departmental treatment is contrary to law, placing reliance on the Lahore High Court's order cited as 2011PTD1. As the issue involved is of maladministration, the Departmental contention is found to be misconceived. The FTO exercised concurrent jurisdiction in such matters, as held by the Lahore High Court in order dated 13.09.2012 in Writ Petition No.11545 of 2012. On merits, the Lahore High Court's judgment cited as 2011PTD1 holds the field, unless overturned by the apex court.

According to the Findings of the FTO, as held in judgment cited as 2011PTD1, once income is subjected to taxation in the final tax regime, no additional tax is chargeable. Resort to additional taxation in contravention of the High Court's order is tantamount to maladministration. The FTO Recommended the FBR to direct the Commissioner to invoke revisionary jurisdiction under Section 122A of the Ordinance to revisit the tax charged under Sections 235, 231A, 234 and 236 of the Ordinance, as per law; and report compliance within 30 days.