Key Takeaways
- Federal Tax Ombudsman orders FBR to address technical limitations.
- Complainant unable to claim Rs2,341,120 tax credit due to IRIS portal issues.
- FTO finds FBR cannot use software constraints as excuse for denying legal rights.
The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to remove system glitches that have been preventing taxpayers from claiming their lawful tax credits, according to a recent ruling. The decision came in response to a complaint filed by a salaried individual who had invested in an Approved Pension Fund and was entitled to a tax credit under Section 63 of the Income Tax Ordinance 2001.
Muhammad Aleem, the counsel representing the complainant, explained that due to system-related constraints on the IRIS portal, the correct tax credit could not be claimed at the time of filing the return for the tax year 2025. This led the complainant to deposit Rs217,188 merely to ensure timely filing and avoid penal consequences.
The FTO’s ruling highlighted that despite approval from the Commissioner Inland Revenue under Section 114(6)(ba) of the ordinance for a revised return incorporating the tax credit, IRIS still did not allow it. The department itself acknowledged this failure due to glitches in its filing system. Further attempts by the complainant to seek redress from FBR headquarters and other channels went unanswered.
In his statement, Mr Aleem said, 'The Ombudsman observed that the department cannot use the technical limitations of its own software as a shield to deny a taxpayer a substantive legal right. The FBR is duty-bound to provide a functional interface wherever the law allows a credit and the Commissioner authorises a revision.'
The FTO emphasized that taxpayers should not be penalised or forced into litigation because the department’s computer system is not updated in accordance with the provisions of law. The inability of IRIS to implement the commissioner's order, coupled with the silence from FBR headquarters, was held to constitute maladministration under Section 2(3)(ii) of the Establishment of the Office of Federal Tax Ombudsman Ordinance 2000.
The complainant’s case underscores the need for a more robust and reliable tax filing system. The FTO’s directive aims to ensure that taxpayers are not unfairly penalised due to technical issues, thereby upholding the integrity of the tax system.
This ruling is expected to have significant implications for future cases where taxpayers face similar challenges in claiming their lawful rights under the Income Tax Ordinance 2001. It highlights the importance of a functional and updated software interface in ensuring compliance with legal provisions.
'The Ombudsman observed that the department cannot use the technical limitations of its own software as a shield to deny a taxpayer a substantive legal right.'
Muhammad Aleem, complainant’s counsel, counsel representing the complainant
