ISLAMABAD: The timely intervention of the Federal Tax Ombudsman (FTO) has resulted in the withdrawal of an illegal notice issued to former chairman Federal Board of Revenue (FBR) Shabbar Zaidi on December 29, 2022, to submit details of movable assets and immovable properties under section 7E (tax on deemed income) of the Income Tax Ordinance by December 31, 2022.
Sources told Business Recorder that the FTO took immediate action on the FBR’s illegal notice issued to the leading chartered account and tax expert of the country.
The FBR’s field formations are illegally issuing notices to the taxpayers to provide information under section 7E (deemed income on immovable properties) of the Income Tax Ordinance, 2011 without providing ample opportunity to respond to the notice within 15 days period.
Such notices are being issued under section 176 (notice to obtain information or evidence) to the taxpayers giving them 1-2 days to respond which is illegal.
Assets declared under two statutes not subject to CVT: expert
The FTO office found that a notice contrary to law, rule, and established practice was issued on December 29, 2022, asking for detailed information related to immoveable properties and moveable assets to Syed Muhammad Shabbar Zaidi for compliance on December 31, 2022, with a warning to impose penalty of Rs25,000 in case of non-compliance. The notice gave only two days for compliance for the purpose of calculation of deemed income under section 7E of the Income Tax Ordinance, 2011.
According to the FTO, the subject notice contains the following apparent defects: (i) The notice is a general notice without examining the return and wealth statement of the taxpayer; (ii) Sufficient time of 15 days was not provided for compliance violating the instruction of FBR; (iii) The section 7E imposes tax on immoveable property and not on moveable assets; whereas notice was issued for immoveable as well as moveable assets;(iv) This issue related to deficiency in income tax return and therefore, notice under section 120(3) should have been issued specifying the exact deficiency.
This defective notice causing harassment tantamount to maladministration in terms of section 2(3)(i)(a)(b) and (c) of FTO Ordinance, 2000.
Accordingly, the FTO took cognizance of this maladministration under section 33 (Informal Resolution of Dispute) of the FTO Ordinance. As a result, the defective notice was withdrawn on the same day, ie, December 29, 2022.
Copyright Business Recorder, 2022