MULTAN: Federal Tax Ombudsman (FTO) has issued directives to the Federal Board of Revenue (FBR) aimed at reforming tax recovery procedures. This decision comes following Complaint No. 6905/MLN/1T/2023 filed by Muhammad Ahmad Shahzad against the Secretary of the Revenue Division, Islamabad.
The complaint, lodged under Section 10(1) of the FTO Ordinance, 2000, highlights a delay in the de-attachment of Mr. Shahzad’s bank account and seeks compensation for business losses incurred due to an allegedly improper tax recovery process by the tax authorities.
At the heart of the issue is an order issued by the Assistant Commissioner Inland Revenue (ACIR) on July 21, 2023, demanding Rs. 4.840 million in taxes. This was followed by recovery notices and subsequent bank account attachment without proper notification to the complainant, as required by Rule 210C(2) of the Income Tax Rules, 2006. Despite the annulment of this order by the Commissioner Inland Revenue (Appeals), Mr. Shahzad’s bank accounts remained frozen, prompting him to cite violations of fundamental rights under the Constitution of the Islamic Republic of Pakistan.
An investigation by the FTO revealed procedural irregularities in the tax recovery process, including the failure to communicate recovery notices in violation of Income Tax Rules. Although the Department rectified the issue before the complaint was filed with the FTO, Mr. Shahzad’s representative, Muhammad Imran Ghazi (AR), insisted on addressing the business hardship caused by the frozen account. The FTO, acknowledging the hardship endured by the complainant, concluded that the Department’s actions were contrary to law and constituted maladministration.
The FTO’s recommendations, dated January 4, 2024, instruct the FBR to ensure legal and procedural compliance during tax recovery to prevent severe consequences to taxpayers and damage to the FBR’s reputation. Compliance with these directives is mandated within 30 days.
This decision underscores the FTO’s commitment to ensuring fair and transparent tax practices and holds implications for taxpayers and tax authorities alike. It signals a push towards greater accountability and adherence to due process within the tax administration system, ultimately fostering a conducive environment for economic growth and development in Pakistan.
