The Large Tax Offices (LTOs) and Regional Tax Offices (RTOs) failed to timely issue fresh orders in the favor of the business community in hundreds of cases where illegal assessment orders were cancelled or annulled by the Commissioner Appeals.
The Federal Tax Ombudsman (FTO), after completing its own motion investigation against the Federal Board of Revenue (FBR) in this regard, observed that these were wrong cases framed by the FBR’s field formations against the taxpayers and Commissioner Appeals have cancelled such illegal orders.
FTO’s own motion investigation concluded that “FTO Secretariat has unearthed hundreds of cases wherein unjustified delay beyond the statutory timelines stand established at various LTOs, Corporate Tax Offices (CTOs), and RTOs”.
According to the order of the FTO, Section 124 of the Income Tax Ordinance 2001 (the Ordinance) deals with giving appeal effect to the various appellate orders by field formations of FBR. Different timelines have been prescribed for giving appeal effect under various situations.
In cases covered under Subsection (1) appeal effect is to be given within two years from the end of the financial year in which the appellate orders of CIR (Appeal), Tribunal, High Court or Supreme Court, as the case may be, was served on the Commissioner.
As per Sub-section (2) where a case is set aside by various appellate authorities, appeal effect is to be given within one year from the end of the financial year in which the CIR/CIR (Appeals), as the case may be, was served with the appellate orders.
Sub-section (4) provides that where direct relief is provided in an order passed u/s 129 and 132 of the Ordinance, Commissioner shall issue an appeal effect order within two months of the date the Commissioner is served with the order.
While investigating various individual complaints it is commonly observed that the said timelines are not adhered to by the department/authorities and in this connection disciplinary proceedings have also been initiated in some cases against Commissioners on the recommendations of the FTO Secretariat. Neglect and inattention in the implementation of provisions of Section 124 is observed repeatedly therefore, an own motion investigation was initiated by the FTO.
The CIR LTO Islamabad requested for extension in time for the submission of the required information which was allowed till 15th December 2021. It was stated that the instant own motion investigation was also not backed by any specific complaint. Since the stay was granted by Islamabad High Court, the proceedings on this own motion investigation may be adjourned.
The findings of the FTO order revealed that the negligence, inattention, delay, incompetence and ineptitude in the discharge of duties and responsibilities on the part of the LTO, Islamabad for non-giving appeal effect to appellate orders u/s 124(1) and 124(4) of the Ordinance, within the prescribed period and concealing this aspect during FTO’s investigation is tantamount to maladministration in terms of Section 2(3)(ii) of the Ordinance, 2000. The above is also indicative of the fact that FBR lacks any monitoring mechanism to check such lapses.
FTO has recommended the FBR develop a proper IT-based mechanism to monitor the timely giving of appeal effect by the officers to orders of Commissioner (Appeals), Appellate Tribunal, High Court and Supreme Court under section 124 of the Ordinance, as per law.
FTO has further directed the Directorate General Intelligence and Investigation Inland Revenue to conduct an inspection of all cases not shared by LTO Islamabad with the FTO office and fix the responsibility for non-compliance and report compliance within 60 days.
