Law: Federal Tax Ombudsman Ordinance, 2000

Section: 10(1)

Law: Income Tax Ordinance, 2001

Section: 122(1)

  JUDGMENT/ORDER/FINDINGS/RECOMMENDATIONS     This judgment from the Federal Tax Ombudsman (2026 P T D 538), authored by M. Zafar-ul-Haq Hijazi, is a significant ruling on the "maladministration" of tax authorities who delay issuing appeal effects and withholding refunds. The case involves Messrs Sky Hawks, a taxpayer that had nearly Rs. 5.3 million forcibly recovered from its bank account by the FBR, only for the underlying tax demand to be cancelled later in court. Despite winning the case, the taxpayer was forced to wait six years to get the official paperwork (Appeal Effect) needed to reclaim the money. Key Facts of the Case The Forcible Recovery: In 2018, the FBR created a tax demand of ~Rs. 19 million and forcibly recovered Rs. 5,274,596 through bank attachment. The Legal Victory: The taxpayer appealed, and on February 12, 2019, the Commissioner Inland Revenue (Appeals) annulled the tax demand. The Inaction: By law, the FBR was supposed to pass an "Appeal Effect Order" immediately to return the money. Instead, the department did nothing for over six years. The "Half-Baked" Order: Only after the Tax Ombudsman intervened in 2025 did the FBR finally issue the appeal effect order. However, they omitted the credit for the recovered Rs. 5.3 million, effectively still denying the refund. Findings of the Ombudsman The Federal Tax Ombudsman (FTO) reached several stinging conclusions regarding the conduct of the Regional Tax Office (RTO) II, Karachi: 1. Definition of Maladministration The FTO ruled that the prolonged inaction (6+ years) and the failure to give credit for recovered funds constituted "maladministration" under Section 2(3) of the FTO Ordinance. 2. Disregard for Legal Forums The Departmental Representatives failed to show up for three consecutive hearings at the FTO forum. The Ombudsman noted this non-compliance as a serious breach of official duty. 3. Hardship and Anxiety The ruling highlighted that the "anxiety and hardship" suffered by the taxpayer were a direct result of the department failing to diligently attend to its statutory obligations. Recommendations and Directives The FTO…