FTO directs stop unlawful recovery from taxpayers’ bank accounts

FTO directs stop unlawful recovery from taxpayers’ bank accounts

Federal Tax Ombudsman (FTO) has directed the tax authorities to stop unlawful recovery from bank accounts of taxpayers.

The FTO issued the order dated September 30, 2022 in a complaint against non-issuance of refund amounting to Rs23.25 million for tax year 2016 along with compensation.

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According to the complainant, which is an Association of Person (AOP), filed return for tax year 2016. Later on, a tax office of the Federal Board of Revenue (FBR), amended the assessment order by making an addition of Rs1,754 million and rs164.21 million.

Being aggrieved, the complainant filed appeal before the Commissioner (Appeals), Gujranwala who modified the order and annulled the addition of Rs164 million, with the directions that the unit office for further necessary verification and confirmed the addition of Rs1,754 million.

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The tax office, recovered an amount of Rs23.25 million through attachment of bank accounts on the very next day without passing appeal effect order. Statedly, recovery was also made from bank accounts of some un-concerned persons.

The complainant filed appeal before appellate tribunal Lahore, who order granted stay order with certain observations.

The FTO in its findings revealed that the recovery of Rs23.25 million had been made from the complainant AOP and certain other unconcerned whereas no demand was in the field at the time of making such recovery. “This act of department tantamount to maladministration.”

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It is also found that recovery from the bank accounts of unconcerned person is also an act which tantamount to maladministration.

The FTO in its recommendations to the FBR to ensure that an internal fact finding is conducted to see as who had recovered the amounts from bank account without giving appeal effect and without having legally recoverable tax demand on record.

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FBR has been asked to issue clear directions to all field formations: forestalling unlawful recovery in the absence of any legally recoverable tax demand; and recovery from the accounts of unconcerned persons/entities.