Desk-audit of 393,441 individuals, AOPs: FTO directs FBR to give justification

ISLAMABAD: Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to give justification for the desk-audit of 393,441 individuals and associations of persons (AOPs), who have adjusted past refunds claims of around Rs24 billion against admitted tax liability.

The FBR had issued notices to these 393,441 individuals and association of persons to reverse their adjusted past years’ refund of almost Rs24 billion with tax liabilities.

FTO has taken notice and issued notices to Secretary Revenue Division and five chief commissioners of Inland Revenue Service (IRS) to give their response on the notices issued to a large number of people by deadline of June 15.

Under the income tax ordinance 2001, a taxpayer files income tax return every year and may adjust tax liability against refunds of previous. For this purpose, a separate TAB has been provided in return of income available in IRIS.

Around 393,441 individuals and association of persons (AoPs) have adjusted refund claims worth Rs24 billion against admitted tax liability of tax years 2016-2021.

On the other hand, the FBR has asked the chief commissioners to conduct desk audit in these cases to ascertain genuineness of refund adjustment.

According to the FTO, no policy guidelines were provided to the field formations for further action to recover the bogus refund claims. Moreover, the officers of field formations are not using any uniform legal methods for processing of these claims and their subsequent adjustments against admitted tax liability.

Instances have been brought to notice of FTO that instead of conducting detailed desk audit of returns and verifying the tax payments from ITMS/IRIS and finally confronting specifically only unverified tax deductions/payments.

The FTO stated that the officers are using short cut methods causing harassment and ultimate prolonged litigation. There are several pre-requisite before issuing notices to a taxpayer.

Whether the field formations have followed any check lists, FTO’s instructions added.

Copyright Business Recorder, 2022