Recovery notices under Sec 138: FTO orders probe against FBR

ISLAMABAD: The Federal Tax Ombudsman (FTO) has ordered an investigation against the Federal Board of Revenue (FBR) for issuance of tax recovery notices under Section 138 of the Income Tax Ordinance, 2001, during the pendency of first appeal at the level of Commissioner (Appeals) across Pakistan.

It is reliably learnt that a complaint has been lodged by a Gujranwala-based taxpayer through tax lawyer Waheed Shahzad Butt before the FTO, wherein, the Adviser to the FTO had issued notice to the FBR and states, “whereas the above-mentioned complaint has been filed by the complainant, and whereas, the FTO has ordered to conduct an investigation. Now therefore you are required to submit reply to the allegations contained in the complaint by 15.11.2023.”

When contacted, Waheed Shahzad Butt advocate who has represented this case told this correspondent that in order to avoid unnecessary litigation, it was earlier directed by the FBR that coercive measures until a case has passed the test of appeal at the level of Commissioner (Appeals) may be avoided.

Moving and arguing stay application before CIR-A is not a free gift but sure wastage of huge resources of the State (public exchequer) in the shape of consuming the precious time of the CIR-A forum which may be utilised in a productive manner to reduce the pendency of thousands of appeals.

Waheed further added that in ITA 1790/IB/2022 the ATIR had issued specific directions to the FBR, wherein, two circulars have been issued by the FBR on 05.10.2022 (Undue Recovery Proceedings under Section 138 at 1st Appellate Stage).

The department must clarify, whether the afore-cited instructions/directions issued by FBR are binding on field formations in terms of Section 206, whether some field formations have been excluded and whether in the presence of unambiguous directions, a taxpayer is required to seek a stay of demand order from a forum of CIR (Appeals) where appeal against assessment order is pending adjudication?

To save the precious taxpayer money, it is prayed that to avoid heavy cost of litigation and wastage of precious time/resources, to seek/obtain merely stay orders from the forum of CIR (Appeals) during the pendency of first appeal, appropriate recommendations may kindly be issued to the chairman FBR/members for their negligence to promote futile litigation and blunt violation of circulars/instructions issued by the FBR.

The FBR may be directed to issue clear SOP for the field formations to follow the instructions without any fault, the complainant added.

Copyright Business Recorder, 2023