ISLAMABAD: A taxpayer has discovered thousands of fake transactions in his profile. The taxpayer moved to the Federal Tax Ombudsman (FTO) for relief after disappointment from the tax authorities.
According to the case, Muhammad Umer Aziz, the complainant is a Deputy Secretary in the Ministry of Law and Justice and filing income tax returns declaring income from salary only. Reportedly he has discovered thousands of unknown entries appearing in his tax profile.
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In panic he contacted Commissioner-IR, Regional Tax Office (RTO) Islamabad but no response was received.
He had filed a complaint to FTO against tampering of his tax profile which was disposed of vide Complaint No. 0719/ISB/IT/2017 dated January 31, 2018 with the recommendation to update complainant’s tax profile.
Even after lapse of over almost five years the recommendation does not seem to have been implemented.
According to the complainant that there were approximately 23,800 fake entries in the complainant’s name including import declarations and withholding transactions under various sections of the Income Tax Ordinance, 2001.
These are probably due to the fact that a test National Tax Number (NTN) had been allotted to the complainant. Any person who doesn’t have an NTN or anyone who doesn’t want to disclose his NTN, could insert this test number and got away with it.
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This situation speaks volumes about systemic inefficiency and neglect of the Federal Board of Revenue (FBR) and Pakistan Revenue Automation Authority (PRAL) employees, which needs to be addressed.
In this case both the organizations submitted their response which was found to be unsatisfactory by the FTO. The ombudsman observed that this case reflects quite threatening details, which if not addressed might keep on exposing FBR to similar hazards in the future.
Another letter was therefore issue on December 06, 2022 seeking PRAL’s response on the following issues; i. FBR’s IT system had created a Test/Trial NTN against
the CNIC of a Federal Government servant Muhammad Umar, Aziz.
ii. Admittedly over 50,000 tax transactions made by unrelated persons have been reported against one Test NTN or CNIC.
iii. Aforesaid thousands of Benami transactions made by unrelated persons in the name of Muhammad Umar Aziz might have compromised huge revenue especially when and wherever Transactions were;
• made by non-taxpayers
• made by inactive taxpayers
• made by active taxpayers to conceal their own identity
Upon summing up the details of the case, the FTO observed that after considering the above-mentioned details and perusing the record the picture that emerges is alarming.
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It is observed that this complaint has exposed the systemic maladministration of the FBR, its field formations and PRAL, which is summed up as under;
(i) There is utter lack of coordination between the FBR and PRAL. Commissioner North Zone, RTO Islamabad could not get the required information from PRAL.
(ii) Lack of ownership by various arms i.e. FBR Headquarters, Commissioner-lR, PRAL etc is causing huge revenue leakage and compromising confidentiality.
(iii) The in-house safety checks seem to be non-existent loopholes or irregularities continue unabated and surface only on pointation by taxpayers/complainants.
(iv) The irresponsible attitude of the officers in general and that of PRAL’s in particular is obvious through statements like “No IT registration trails are available in the system” and “it is not possible to check if the taxpayers have taken advantage of complainants’ name in the ATL” etc.
(v) PRAL’s reply dated 14th December, 2022 is merely an eye wash. The details shared appear to be grossly deficient and incomplete. Out of thousands of engineered transactions only 29 persons/entities have been thus far identified who have admittedly misused the so called “Golden NTN”. The loss against said 29 entities has been worked out at Rs. 1.849 million. Such an over simplistic explanation for a tricky and massive misuse of this IT pitfall is too naive to be accepted on the face of it.
The FTO directed the FBR to:
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i) direct Member (Information Technology) to thoroughly investigate this matter and order an IT audit of all fake transactions to be conducted by Directorate General l&I-IRs, so as to gauge the extent of revenue leakage and fix responsibility on the individuals concerned etc;
ii) direct Member-IR (Operations) to issue instructions to all field formations for taking action under the law against those withholding agents identified through above referred investigative IT audit, who have misused the identity of the complainant and recover the short paid tax;
iii) GM PRAL’s explanation may be called for not responding to the situation, raised by this office and earlier by concerned IR field formation.
