How revenue of billions is lost in a unique manner

ISLAMABAD: Alleged corruption, compromises and incompetence have led to heavy loss of revenue worth billions of rupees as there are innumerable tax cases where the taxpayer surrenders against tax assessment but yet not pays even a single penny to the public kitty.
Sources in the Federal Board of Revenue (FBR) say that this particular category of serious tax evasion involves billions and billions of rupees. It is said that basically this novel way of alleged corruption pertains to the Inland Revenue Service. Only in one big city, the estimated loss in 44 cases in this account is Rs2.7 billion.
However, this estimated loss will only be confirmed once the Director General Audit and Inspection completes his probe in these 44 cases.Generally the officers of the FBR are known for making and minting money through under invoicing, over invoicing, duty drawbacks in customs and through under assessment of income, unlawful adjustments of input tax, fake and flying invoices, illegal issuance of income tax and sales tax refunds.
However, the top mandarins in the FBR headquarters in Islamabad have come to know of what they call “a new scandal” where despite dismissal of taxpayers’ first appeal for having been withdrawn, the assessed tax is not paid.
According to a source in the FBR’s Directorate of Internal Audit, no less than the Board’s chairman Tariq Bajwa came to know about this issue but despite his directions passed several months back, the required information is not yet provided to him.
In the month of July 2014, the sources said, the chairman FBR had ordered a special inspection assignment to the DG Internal Audit to investigate the withdrawals of appeals by taxpayers from Commissioner (Appeals-II) of the big city without payment of taxes at Rs2.7 billion.
However, despite lapse of nine months, DG Internal Audit has failed to submit the report to the Board. The DG Internal Audit, when approached, said that in the next few days the report would be submitted to the FBR chairman. He added that besides some administrative issues, the assigned job required detailed probe owing to which there has been a delay of months.
He said that recently a report in this connection was submitted to him but he was satisfied with the work and found it incomplete. The DG Internal Audit said that he wants that the responsibility be fixed on concerned officers besides ascertaining the veracity of allegation.
The DG believed that there may be cases of corruption and irregularity but not to the extent of what is believed in the FBR headquarters. The DG assured that the report could be shared even with the media as soon as it is ready.
According to sources, the revenue of Rs2.7 billion was created in 44 cases. In all these cases, the taxpayers had two options either to pay assessed taxes or to file appeals before the appellate authorities.
The taxpayers, being aggrieved with the assessment orders, filed appeals against the assessment orders before the Commissioner (Appeals-II) u/s 127 of Income Tax Ordinance, 2001. However, the taxpayers withdrew appeals without payment of taxes.It is said that the incumbent or the subsequent assessing officers had rectified, revised orders and deleted demand of Rs2.7 billion in 44 cases.
“This is an excellent example of haemorrhaging of revenue, which necessitated action against all the responsible officers,” a source said, adding, “This is just a tip of the iceberg. The scale of this scam all over Pakistan is huge.”