Saturday December 02, 2023

FTO laments FBR’s harsh treatment of aged taxpayer

September 17, 2022

ISLAMABAD: An aged woman who is a compliant taxpayer was burdened with multiple notices for audit for the tax year 2016.

She was engaged in the textile manufacturing business and a final show cause notice was served on her for compliance. However, the complainant applied for an extension which was rejected and an ex-parte order was passed creating a demand of Rs2.7 million. All the relevant details of purchases and expenses were not only filed but despite being duly examined by the officer and the ex-parte order was passed without considering the record.

The complainant took up the matter with the Federal Tax Ombudsman. In response, the chief commissioner – IR contended that the case of the complainant was selected under Section 214C of the Income Tax Ordinance, 2001. Subsequently, the ACIR issued a notice to produce records for audit but the taxpayer didn’t fulfil its statutory duty and later a show cause notice was also issued. As the taxpayer failed to make any compliance, the order was passed under Section 121(1) on the basis of failure to provide an explanation.

According to the findings of FTO, the complaint was filed against the unfair treatment meted out to the complainant by passing harsh ex-parte order when the complainant was regularly complying with the departmental notices issued for multiple years from time to time. It is also pertinent to mention that complainant’s case was selected for audit in 2018 and the order was passed on 28th June 2022, i.e. when the case was getting time barred on 30.6.2022.

It was a very unfortunate departmental practice to sleep over the audit cases till the last minute and summarily dispose of them when they are getting time-barred, the Tax Ombudsman further observed. This results not only in prolonged agony for taxpayers, but also did not result in any meaningful audit, as these cases were disposed of mostly either ex-parte or without examining any details & documents.