The Federal Tax Ombudsman (FTO) has termed slacked audits and non-speaking rejection orders in the trail of audit proceedings as a violation of the Federal Board of Revenue’s (FBR’s) own policy and evidence of maladministration.
The Tax Ombudsman made the remarks while disposing of a complaint filed against the Commissioner-Inland Revenue (IR) Appeal and Assistant Commissioner-IR Audit for passing an arbitrary, harsh ex-parte order which ignored all the grounds of appeal.
The complainant is an individual engaged in textile manufacturing whose case for Tax Year 2015 was selected for audit by the Board. Due to non-compliance, the final showcase notice and ex-parte orders were passed, demanding a sum of Rs. 3.2 million from the complainant. Bank accounts were attached and recovery of tax was also made through attachment.
Being aggrieved, the complainant filed an appeal to Commissioner IR Appeals-VII, who vide his order dated 7th June 2022, rejected the appeal on the ground of non-availing opportunity of hearing given by the department. As no other grounds were adjudicated by Commissioner-IR Appeal, the complainant filed an appeal with FTO.
While concluding the investigation, FTO observed that the case was selected for audit of Tax Year 2015 in the year 2017. The order was finalized on 28th June 2021 based on a hurriedly issued show cause issued on 20th June 2021 when the case was getting time-barred.
Conduct of Commissioner-IR Appeal
FTO stated that C.No.I(I)Chief(Legal-I) 2018, issued specifically for audit of cases of Tax Year 2015, directs to take approval from FBR for conducting audit which was not finalized within one year from the date of selection.
On the other hand, he rejected the appeal with the sole remark that sufficient opportunity was provided by the officer before passing an ex-parte order. However, the notices were also not properly served & merely placed on IRIS.
FTO has further observed that the Commissioner-Appeal should have either examined the evidence as per law or if it was evident that the notice was not validly served, the order could have been remanded back to the officer for denovo proceedings after providing the proper opportunity of hearing, which was not done.
Based on the above argument, FTO concluded that the act of non-consideration of all grounds of appeal by the Commissioner-IR (Appeals) points toward maladministration.
Accordingly, FTO has recommended FBR to direct the Commissioner-IR Appeal-VII, Karachi to rectify the order on his motion or an application filed by the complainant and consider all grounds of appeal as per law and after providing the opportunity of hearing.