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ISLAMABAD: The Federal Tax Ombudsman (FTO) has expressed serious concern over shutting down of the Directorate General (DG) Broadening the Tax Base (BTB), Federal Board of Revenue (FBR), which is causing a delay in finalising of big tax evasion cases.

According to a special study conducted by the FTO, the sudden closure of the DG BTB, FBR, is a clear case of maladministration.

The own motion investigation was initiated in terms of Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) because the FTO Secretariat has evidence-based information that some of the most meaningful and innovative initiatives of the FBR’s own officers and field formations stand diluted and washed away due to follow up failure, frequent posting transfers of officers, and massive changes of jurisdictions.

Moreover, through In-House Analysis FTO Secretariat has also identified that though the FBR and its dozens of field formations maintain an organised web portal, rich data centre, exhaustive databases, elaborate and comprehensive operational software and houses a full-fledged and home-grown IT support system, ie, the Pakistan Automation (PVT) LTD (PRAL), yet neither the FBR HQs nor its any single field formation maintains any IT-based tracking system, archiving various valuable initiatives and ventures made by different FBR’s organizations, officers, teams or specially created cells from time to time; any exhaustive, fool-proof and IT-enabled handing over module (from predecessors to successors) for such initiatives; any institutionalized internal follow up system, or any internal evaluation mechanism to gauge whether the goals envisaged under the FBR’s flagship ventures have been logically pursued and achieved. Therefore, it was reasonably assumed that in most of the cases the good job done is wasted, diluted or compromised with the transfer of individuals, dissolution of units/cells and takeover by new managers.

While conducting the In-house analysis FTO Secretariat has information on record that a list of potential cases of tax evasion, along with a detailed Investigation Report and Case Study was prepared and shared by the DG BTB, FBR. This valuable information was duly shared in December 2018, with the concerned field formations for taking action against said entities for not declaring true particulars of their receipts/income and not discharging their responsibilities as withholding agents. However, in 2019, the FBR’s management suddenly shelved this whole BTB regime overnight; disbanding BTB Zones Islamabad, Lahore, and Karachi. Office of the DG BTB was relegated to a ceremonial entity noted with concern that Large Tax Office (LTO) Islamabad has failed to pursue cases assigned as additional charge. Thus, in addition to losing an effective organization, the repository of the whole above data/information was suddenly rendered extinct.

The FTO order said that such a kneejerk attitude of the FBR’s reflects clear maladministration in terms of section 2(3) (ii) of FTO Ordinance, 2000, ie, FTO’s in-house analysis was mainly based on investigation reports generated by DG BTB which clearly show that the concerns were not declaring the true particulars of Income and were not discharging their responsibilities as withholding agents. However, after disbanding of the DG BTB office, progress on these cases was not known. It seems that the valuable information shared with the field formations was lost due to the inattention, incompetence and ineptitude of the officers holding jurisdiction of this case. The department was, therefore, asked vide notices u/s 10(4) of the FTO Ordinance 2000 to file a response to the observation and submit para-wise comments.

Thus, instead of safeguarding the interest of revenue by plugging loopholes in the tax declarations of instant cases, the concerned CIR LTO Islamabad chose to contest the own motion investigations on technical grounds. Out of 34 such cases in which notices were issued by the FTO Office, compliance has been made by CTO and RTO Islamabad in27 cases. As per information provided by field offices, demand amounting to Rs.660 million has been raised in six cases at CTO and RTO Islamabad.

Objection to the jurisdiction raised by the CIR concerned LTO Islamabad in this case reflects an inherent contradiction incompliance patterns of FBR’s field formations. On one hand in 27similar cases wherein the information was provided the intervention of the FTO’s office has enabled the field formations in recovery of millions of rupees in revenue. On the other LTO Islamabad is adamant to protect inattention, ineptitude and inefficiency. Non-provision of information by CIR LTO Islamabad is therefore blatantly against the interest of public exchequer and the core function of FBR.

The FTO office concluded that negligence, inefficiency and ineptitude on the part of FBR officials in enforcing various provisions of law in this major revenue potential case is tantamount to maladministration in terms of Section 2(3)(ii) of the FTO Ordinance. The FTO has recommended the FBR to direct the Director General Internal Audit-IR to conduct inspection in the subject 06 cases to ensure that action is initiated and concluded as per information provided by FTO during instant investigations;

The Chief Commissioner LTO Islamabad to identify the officers who are responsible for unwarranted delay and resultant loss of revenue, the FTO study added.

Copyright Business Recorder, 2022

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