News

FTO orders action against ‘highhanded’ FBR officials

By Sardar Sikander Shaheen

ISLAMABAD: Federal Tax Ombudsman Abdul Rauf Chaudhry has ordered action against the officials of the Federal Board of Revenue (FBR) for blocking tax refund, amounting to millions of rupees, to a foreign company for the past 13 years and resorting to delaying tactics to cover up malpractices and harassing the complainants.
In vide judgement in Review Application Number.49/2013, the FTO has taken serious notice of “gross maladministration of tax officials.” He has directed the FBR to take action against the concerned officials. However, no action has so far been taken despite lapse of nearly one year. According to details, the order issued by the FTO shows that in a case of two non-resident contractors, Ghazi Bhrotha Contractors, the Regional Tax Office Peshawar had been collecting substantial deduction of tax from contract receipts of the contractors.
After completion of the project, the foreign contractors declared huge losses in their returns of income and consequently claimed refund of Rs784 million for assessment years 1996-97 to 2002-03. “Instead of processing their refund claim, the concerned tax officers created huge demand to cover up the refund claim by treating the taxpayers as AOP (Association of Persons.) This assessment was annulled by the Income Tax Appellate Tribunal on the ground that assessment was unlawful and arbitrary. The High Court also endorsed the decision of the Tribunal, dismissing the departmental reference.
The taxpayers again applied for refund but RTO Peshawar transferred the case to RTO Abbottabad to delay the refund claim. The RTO Abbottabad transferred the case to LTU (Large Taxpayers Unit) Islamabad, where the chief commissioner refused to issue refund despite taxpayers’ repeated visits to his office and their meeting with chairman and member FBR,” the FTO observed in his decision.
Instead, the unlawful sales tax demand was created by the LTU Islamabad which was more than the refund claim but this demand was also deleted by the Appellate Tribunal. On complaint, the FTO had directed the department to issue lawful refund to the complainant. In the meantime, the representation filed by the FBR to the President of Pakistan was also rejected.
“Instead of issuing refund, the LTU Islamabad again raised income tax demand as high as Rs.3.7 billion on the pretext that the taxpayers did not deduct tax on the interest of foreign banks. This was done by the department’s officers after almost 13 years just to cover up the refund amount and to harass the foreign investors,” the FTO Abdul Rauf Chaudhry observed in his judgement.
Once again, the third cycle of appeals started and the Appellate Tribunal annulled the orders of the FBR being unlawful and tax demand was quashed. The FBR then filed reference in the High Court apparently just to delay the claim of refund. In the meantime, LTU Islamabad transferred the case to RTO Rawalpindi, then it was transferred to RTO Peshawar again and RTO Peshawar transferred the case back to LTU Islamabad, which was the fifth transfer of the case. On review petition by the contractors /complainants, the FTO, in Review Application Number.49/2013, has taken serious notice of this “highhandedness and gross malpractice/maladministration,” and directed the FBR to take disciplinary action against officers concerned and to issue refund with compensation without delay.
“In this case, the foreign investors were not only entangled in three cycles of arbitrary and unnecessary litigation up to the High Court, their case was transferred five times unlawfully to block genuine refund claim, right under the nose of FBR,” the related judgement states.

Courtesy www.dailytimes.com.pk

 

Back to Top