ISLAMABAD: The Federal Tax Ombudsman (FTO) has issued directions to the Federal Board of Revenue (FBR) to initiate disciplinary and criminal actions against senior tax officials, found involved in the fraudulent activity of preparation/approval/issuance of bogus tax refunds.
In the case of “FTO own motion No 0200/OM/2019,” the FTO has ordered the FBR to initiate proceedings for recovery of tax demand created, initiate disciplinary proceedings against the Chief Commissioner-IR, CIR, who willfully and maliciously submitted misleading reports, direct the Chief Commissioner-IR, Corporate tax employee(s) to investigate and identify the tax employee(s) involved in preparation/approval /issuance of refund, and initiate disciplinary and criminal actions against those found involved in the said fraudulent activity.
Earlier, the FBR has ordered a fact-finding inquiry against one of its senior tax officials, after the FTO gave a directive for initiating criminal proceedings against him for alleged “tax fraud”.
Two senior officials have been accused of illegally issuing tax refunds of Rs122.60 million between 2006 and 2009.
When contacted, tax lawyer Waheed Shahzad Butt told this correspondent that “RED ALERT” was primarily the initiative of former FTO Dr Muhammad Shoaib Suddle vide Diary No 6726/2012, while it has been matured in the tenure of present FTO Mushtaq Sukhera under Own Motion intervention, while exercising powers conferred under Section 9(1) of the FTO Ordinance, 2000, to investigate irregularities committed by some FBR’s field formations in processing and sanctioning of bogus income tax and sales tax refunds.
Waheed further in 109 Tax 12, 2014 PTD 1424, it has been recommended to the FBR to proceed against tax employees found involved in perpetration of fraud and bring them to justice, particularly those in the higher ranks…...restructure PRAL and I&I with a view to transform them into proactive agents of sales tax fraud prevention/detection.
In 109 Tax 1, 2014 PTD 1353, it is observed that maladministration on part of the FBR involving negligence and incompetence—Complaint to FTO—-Whether though extreme vulnerability of the FBR’s e-system was demonstrated publicly, CEO PRAL was not ready to accept naked truth.
Whether gross negligence and incompetence together with possibility of collusion of PRAL employees with criminal elements could not be ruled out (Held yes).
In 2015 PTD 2401, it is recorded by the FTO that The circumstances and highly suspect sequence of events discussed supra raise many questions and strongly suggest foul play by PRAL functionaries, devise a fool proof SOP with the consultation of National Response Centre for Cyber Crimes (NR3C) wing of FIA to stop the use of fraudulently prepared documents in PRAL; devise a policy to validate all NTNs on the PRAL data base through a system of biometric verification.
The FTO order states, this is an Own Motion investigation initiated while exercising powers conferred under Section 9(1) of the FTO Ordinance, 2000. In the case of a company with principal activity of electrical installations, refund for Tax Year 2012, 2007 to 2009 and 2011 and delay in recovery of demand created as a result of consolidated order dated 05.06.2013, is tantamount to maladministration.
No comments were, however, offered with regard to Red Alert dated for Tax Year 2012. Subsequently, the CCIR, CRTO Lahore vide letter dated 26.12.2020, reported that in order to retrieve loss of revenue, the Dept had already completed proceedings vide consolidated order dated 05.06 2013, under Section 122(5A) of the Ordinance and created tax demand against the RP, amounting to Rs39.331, Rs31,205, Rs102.046 and Rs6.6496 million, respectively.
The FBR to (i) initiate proceedings for recovery of tax demand created for tax years 2007, 2008, 2009 and 2011 vide consolidated order dated 05.06.2013, as per law; (ii) initiate disciplinary proceedings against the CCIR and CIR who willfully and maliciously submitted misleading comments/reports (iii) direct the CCIR, corporate tax employee(s) RTO, Lahore to investigate and identify the tax employee(s) involved in preparation/approval/issuance of refund and initiate disciplinary and criminal actions against those found involved in the said fraudulent activity, the FTO order added.
Copyright Business Recorder, 2021