ISLAMABAD: The Federal Tax Ombudsman (FTO) has expressed serious concern over the repeated changes in tax jurisdiction for an overseas Pakistani, with the sole purpose of recovering taxes through the attachment of his bank account, even after an ex-parte amendment order.
According to the FTO order, the complainant is an overseas Pakistani who has been permanently living in Germany for the past 20-25 years, and he has never been a tax resident of Pakistan nor had any source of income in Pakistan.
The complainant stated that he had purchased the property with foreign income earned from his business in Germany.
Furthermore, the complainant had filed a declaration under the “Tax Amnesty Scheme 2018” on July 26, 2018, which predates the date of the disputed assessment on March 22, 2021. He had declared cash and prize bonds, which were utilized for the same property in the reconciliation of the net wealth filed with the revised wealth statement on October 26, 2020. All these documents are available on his online profile.
The complainant further stated that for Tax Year 2018, the original assessment order under Section 122(1) of the Income Tax Ordinance, 2001 (the Ordinance) was amended, ex-parte on March 22, 2021. The amendment treated properties purchased worth Rs. 6 crore as concealed income, and a tax of Rs. 2 crore was imposed and directly withdrawn from his bank account.
Upon reviewing the taxpayer’s tax profile, it is evident that his address is in Rawalpindi, indicating that the jurisdiction of the case falls under the Regional Tax Office (RTO) in Rawalpindi.
During the hearing, the complainant confirmed that the jurisdiction of his case belongs to RTO Rawalpindi. He requested that reassessment proceedings be completed in the same office where the return was filed, the amendment was made, the appeal order was passed, and tax recovery was made from the bank through coercive measures.
Based on the aforementioned facts, the complainant’s stance regarding the jurisdiction of the case is correct. It is perplexing that while conducting the ex-parte assessment and affecting recovery from the bank, RTO Rawalpindi was satisfied with its jurisdiction. However, once the case was set aside and the possibility of a refund arose, the case was being transferred to another jurisdiction. Therefore, the tax authority is directed to handle the case within RTO Rawalpindi and refrain from transferring it to any other RTO.
The FTO office has observed that remand back proceedings have been pending since the order passed by the Commissioner of Inland Revenue (Appeals). These proceedings have not been completed by the tax authorities. The complainant has already faced hardship due to the ex-parte amendment order and the subsequent recovery of tax through the attachment of his bank account. The taxpayer had to go through the appeal procedure to obtain some relief. Therefore, in this case, the tax authorities should have promptly completed the reassessment proceedings to provide the taxpayer with the necessary relief, which has not been done.
The findings of the FTO office revealed that the transfer of jurisdiction at this point in time and considering the aforementioned facts constitutes maladministration under Section 2(3)(i)(b) of the FTO Ordinance, 2000.
The FTO has directed the Federal Board of Revenue (FBR) to ensure that the jurisdiction of the case is not transferred arbitrarily and unilaterally. Additionally, the Commissioner of Inland Revenue (CIR) for RTO Rawalpindi has been directed to expedite the reassessment proceedings as per the law and in light of the directions provided in the appeal order.
