Taxmen found involved in 'unique' scam

ISLAMABAD: Federal Tax Ombudsman Dr Asif Mahmood Jah has unearthed a unique kind of scam involving tax officials, who sought account holders' information from the banks, through issuance of fake/forged notices to these banks. This case reflects that some tax officials were practically involved in issuance of fake notices to banks under section 176 of the Income Tax Ordinance, 2001.

In a landmark investigation by the FTO Dr Asif Jah, it has been ordered to FBR that tampering with the notices issued under section 176 of the Ordinance, for seeking information from the bank(s), is tantamount to maladministration. The FBR should prepare Special Operating Procedures regarding statutory approvals, especially, regarding calling for information from the banks under section 176 of the Ordinance through bar-coded notices to be used by the field formation.

It is reliably learned that a refund claimant taxpayer lodged a complaint through tax lawyer Waheed Shahzad Butt, under section 10 of the FTO Ordinance, 2000 alleging misuse of powers, violation of law, cheating and deception against the FBR's official(s) posted at Tax Office Lahore.

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FTO order states: The complainant, a private limited concern, was registered with the Department. According to the AR, Tax Office Lahore issued notices under section 176 of the Income Tax Ordinance, 2001 to various banks to provide information, in respect of the Complainant, covering multiple tax years.

He contended that the ACIR, as authorized by the Zonal Commissioner-IR, concerned; to collect information for Tax Year 2019, whereas he requisitioned the same for multiple tax years. The ACIR, thus, acted beyond his mandate by forging/tempering approval letter issued by the Zonal CIR and sought excess information with malafide intent.

Moreover, the said notices were served on the banks through an unauthorized subordinate employee, a UDC of Audit-Il. The desired information was also secured threatening the banks' management but later on when the complainant protested the information so collected was returned to the banks.

From the facts discussed, AClR, was found accountable for the issuance of unauthorized notices under Section 176, and UDC was found involved in preparing forged permission letter of the Zonal CIR.

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It is; however, observed that neither internal correspondence among Zonal officers is system-based nor correspondence with the banks is governed through bar-coded notices. The manual correspondence, especially the regime governing statutory approvals under Section 176 of the Ordinance, is susceptible to misuse by unscrupulous subordinate officials.

Moreover, in absence of inspection by the CIR/Addl-CIR and non-existence of any SOP has left the ground open to the delinquent subordinates to commit such forgeries for their personal gain. Thus, neglect, inefficiency and misuse of powers and unauthorized issuance of legal notices is evident.

Tampering the notices issued under Section 176 of the Ordinance, for seeking information from the bank(s), tantamount to maladministration, in terms of Section 2(3)(i) & (ii) of the FTO Ordinance.

FTO has directed the FBR to prepare Special Operating Procedure regarding statutory approvals, especially, regarding calling for information from the banks under section 176 through bar-coded notices to be used by the field formation.

The FBR should direct the Chief Commissioner Lahore to initiate disciplinary proceedings against officials as recommended by the internal inquiry report for his deception tampering misstatement and misuse of official position, FTO order added.

Copyright Business Recorder, 2021