The income-tax ombudsman in Mumbai has released refunds and other dues to taxpayers amounting to over Rs 660 crore, which had been locked up for various years due to red-tapism at the income-tax office.

This is the largest amount distributed to taxpayers in a single year from the office of the ombudsman in Mumbai, a post created in 2007 by the finance ministry, for mediating between the I-T department and taxpayers and for settling taxpayers' grievances in an amicable way.

The income-tax department's ombudsman in Mumbai A K Handa told ET: "A major part of the released amount was related to refunds." The refund settled by the ombudsman in the fiscal year that ended on March 31, 2011, amounted to Rs 537 crore. Of this, refunds were given out in 106 cases in the slab of Rs 1,000 to Rs 10,000.

Refunds have also been issued to 280 persons in the slab of Rs 10,000 to Rs 1 lakh. Forty eight refunds have been given in the Rs 1 lakh to Rs 5-6 lakh slab, six refunds in the slab of Rs 5 lakh to Rs 10 lakh and 11 refunds in the slab of Rs 10 lakh to Rs 1 crore.

Three corporates too have been issued refunds in the slab of Rs 1 crore or above. Handa said he recently managed to release jewellery seized by the I-T department that had not been returned to the owner for 20 years.

Administrative malfunctioning and change in jurisdiction following the restructuring of the administration that took place in 2001, are the two major causes for the inordinate delays in releasing the funds.

"An ombudsman's intervention can resolve such issues," said Handa. Most complaints are received through letters, sometimes even through handwritten notes. The complainants need not visit the office of the ombudsman; a proper letter will do.

On receipt of the letter, the ombudsman will deal with the concerned officer asking him to settle the issue within a certain timeframe. "Most taxpayers are not aware of the institution of the ombudsman and the power of the office to redress the grievances of the taxpayers," said Handa.

The ombudsman post was created in 2007 by the finance ministry. The ombudsman has to work within the framework of guidelines issued in 2007. However, an ombudsman is not statutory and functions more like an advisor.

An ombudsman is not bound by any legal rules of evidence and is expected to be fair and reasonable while performing his functions.