FBR notice issued within 6 years: ‘Taxpayer bound to maintain tax record till...’

ISLAMABAD: Federal Tax Ombudsman (FTO) Friday declared that once Federal Board of Revenue’s (FBR) notice is issued within six years’ time period, the taxpayer is bound to maintain the tax record till decision of the legal proceedings.

This important observation was given by the FTO while deciding a case against the Regional Tax Office (RTO) Lahore. The RTO has issued a reminder of notice after five years, reflecting a glaring example of RTO’s lethargy and inattention is also glaringly visible.

The FTO’s order issued on Friday that the complaint was originally filed under Federal Tax Ombudsman Ordinance, 2000 against alleged illegal issuance of notice under section 161(IA) of the Income Tax Ordinance, 2001 (the Ordinance) on 2018 for Tax Year 2016.

FTO order added that, “Departmental lethargy and inattention is also glaringly visible. Show cause notice for TY 2016 was issued in May, 2018 and then reminder was issued after 5 years in April, 2023, such an inattention and ineptitude tantamount to maladministration in terms of FTO Ordinance, 2000.”

FTO has recommended the FBR to direct the Chief Commissioner concerned to look into this unwarranted delay and fix the responsibility and initiate appropriate proceedings, FTO order added.

FTO admitted that conclusively, the notice under section 161 of the Income Tax ordinance were issued within time limit as set by the Superior Courts and the status of proceedings under section 161 as on June 30, 2022 was of pending before an authority.

It is held that notices issued u/s 161 of the Income Tax Ordinance, 2001 for the tax year 2016, dated 07.05.2018 were well within the time limit of six year after the expiry of the tax year concerned, expiring on June 30, 2022 as set by Supreme Court in the case of M/s Panther Sports.

Further by virtue of above quoted provisions i.e. the explanation and first proviso to sub-section (3) of Section 174 of the Income Tax Ordinance, the proceedings u/s 161 were pending as on 30.06.2022. Once notices issued within the 6 years’ time period, the taxpayer is bound to maintain record till decision of the proceedings, FTO order added.

Copyright Business Recorder, 2024