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LAHORE: Taxpayers are exploiting the forum of Federal Tax Ombudsman (FTO) to defeat a complete mechanism and hierarchy for assessment and adjudication of tax liability under tax laws, said sources.

They said taxpayers initiate parallel proceedings before the FTO while adjudicating the same before the relevant appellate forums for settlement of tax issues.

According to the sources, taxpayers hide such parallel proceedings as well as any material or evidence against them to seek favourable directions from the FTO under its suo motu jurisdiction.

Not only this, they added, shrewd taxpayers disclose partial truth out of the departmental investigations and inquiries to start a fishing or roving inquiry against public functionaries through Federal Investigation Agent (FIA) and other forums.

They said it is a settled principle of law that once the matter is sub-judice before the competent forum, no other court of authority, including the FIA or the FTO, can initiate any duplicate proceedings in respect of the same subject matter as it will amount to showing disrespect to the relevant forum as well as tantamount to double jeopardy and multiplicity of proceedings.

They further pointed out that for the purposes of implementation of tax law, including Income Tax Ordinance, 2001, Sales Tax Act, 1990, and Customs Act, 1969, complete mechanism and hierarchy is provided for assessment and adjudication of tax liability through quasi-judicial proceedings.

Similarly, in case of any dispute, forum of an appeal before the commissioner/collector (appeals) and second appeal before the appellate tribunal specially constituted for the purposes of deciding all factual and legal controversies relating to all tax law, rules and regulations, SROs, etc., have been provided by the legislature, followed by the higher forums up to the Supreme Court.

However, they said, the litigants invoke the jurisdiction of FTO to initiate inquiries under its suo motu exercise and jurisdiction. The sources further pointed out that unscrupulous litigants also manage to withhold notices to the department issued to seek their explanation with regard to allegations by the FTO. Accordingly, the office of FTO draws adverse inference against the department and issue directions to initiate the inquiry.

They said the Federal Ombudsman Ordinance 2000 has ousted the jurisdiction of the FTO to investigate or inquire into the matter which are sub-judice before a court of competent jurisdiction or tribunal or board or authority on the date of receipt of a complaint, reference or motion.

Similarly, they added, the FTO has no jurisdiction to investigate or inquire into matters related to assessment of income or wealth, determination of liability of tax or duty, classification of valuation of goods, interpretation of law, rules and regulations. The FTO has the jurisdiction only to investigate any allegation of maladministration on the part of the revenue division or any tax employee, they added.

Copyright Business Recorder, 2023

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Muhammad Kashif Mar 19, 2023 03:24pm
Business community in Pakistan regards tax evasion his basic RIGHT. The following is the most valid point raised by the tax authority. "The FTO has the jurisdiction only to investigate any allegation of maladministration on the part of the revenue division or any tax employee, they added."
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