The Federal Tax Ombudsman has criticized the handling of an Income Tax refund claim for Tax Year 2016 by RTO Islamabad, after a refund application filed by the Directorate of Estate Projects, Nur Khan Base remained unresolved for several years and was ultimately rejected without providing a fresh opportunity of hearing. The matter was decided in Complaint No. 11887/ISB/IT/2026.
According to the FTO’s findings, the tax department had originally issued a notice under Section 170(4) of the Income Tax Ordinance, 2001 on August 15, 2020. The taxpayer submitted its response along with supporting documentary evidence on September 6, 2020. Despite the material being available on record, the refund claim was rejected on June 18, 2026, almost six years later, without issuance of a fresh notice, without granting a hearing, and without adequately addressing the taxpayer’s submissions.
The FTO held that such handling amounted to severe maladministration, particularly because an adverse order was passed without observing due process. The importance of the ruling goes beyond refund processing alone. It reinforces a basic principle of tax administration: where a taxpayer has already submitted explanations and documentary evidence, an adverse decision should meaningfully deal with that material and should ordinarily be preceded by a proper opportunity of hearing. For taxpayers with long-pending refund claims, the decision also highlights the relevance of maintaining a complete documentary trail and using statutory and administrative remedies where processing is unreasonably delayed.