FTO Orders FBR to Reverse Illegal Change of Jurisdiction of 80-Year Old Citizen

While disposing of a complaint, the Federal Tax Ombudsman (FTO) took cognizance against the illegal transfer of jurisdictions and directed FBR to transfer the jurisdiction of an eighty years old complainant from LTO Lahore to LTO Karachi and to revisit the impugned order for the tax year 2016 in terms of section 122A of the ordinance.

Brief facts of the case were that Complainant was an eighty years old retired pensioner, Ex-President of a commercial Bank, and had been residing in Karachi since 1984.

He had been receiving a pension from American Express Bank, New York in US dollars which was drawn through Bank Al-Habib since 1993. He sent an email to FBR to inquire about the taxability of the pension and asked whether it was required to be declared in Asset Scheme 2019 and whether it could be invested in Pakistan Banao Certificate.

FBR replied in writing that it was not required to be declared in the Asset Declaration Scheme and also confirmed that he could invest in PBC,  despite confirmations from FBR in writing, LTO, Lahore issued an assessment order for the tax year 2015 creating tax liability of  Rs. 44 million and another order for the tax year 2016 creating tax liability of Rs. 33 million.

Whereas the old aged taxpayer provided all the evidence of his retirement from American Express Bank, New York, receipt of monthly pension till date through banking channel which was declared in wealth statement for Tax Year 2016 on account of pension received as foreign remittance and deposited in HSBC Middle East Bank /Habib Bank AG Zurich, Dubai and evidence of receipt of the gift from her wife (a return filer) and the assessment order by CIR (Appeals-I) and the complainant had already filed an appeal before Income-tax Appellate Tribunal, Lahore, But so far no response had been received.

It was pertinent to mention in FTO’s findings that In terms of Section 209(5) of the Ordinance, the Commissioner shall have jurisdiction in respect of any person carrying on business if the person’s place of business is within such area. Thus, in terms of the above provision, the jurisdiction of the Complainant lies with Karachi but unfortunately, the complainant was being assessed in Lahore.

The Complainant agitated the issue of jurisdiction in writing but the Assessing officer bulldozed the submission of the complainant as well as the letter issued by his own boss Chief International Taxes for transfer of jurisdiction and issued orders for Tax Year 2016 creating huge tax liability without lawful jurisdiction.

The FTO’s findings further stated that;“ Objections to jurisdiction are to be decided before proceeding in the matter by adjudication authority (1999) 80 TAX 115(H.C. Lahore). As a result, the show cause notice under section 122(9) for Tax Year 2016 becomes defective and if the notice is prima facie defective and error is incurable, the entire proceedings including the assessment order for Tax Year 2016 are null and void.

Even otherwise on merit, the Complainant provided sufficient documentary evidence to prove his innocence. This was a classic case of maladministration where a taxpayer has been burdened with a huge amount of tax only because of fact that his case was lying with LTO Lahore. Such type of unlawful acts do not inspire the confidence of the taxpayers; rather they create mistrust between the FBR  and a taxpayer.

Accordingly, Tax Ombudsman directed FBR to transfer the jurisdiction of the complainant from AEOI Zone Lahore to AEOI Zone Karachi and to revisit the impugned order for the tax year 2016 in terms of section 122A of the ordinance and also to call for an explanation CCIR, LTO Lahore to call for explanation of the AD CIR, Range-2, AECI Zone LTO Lahore, who without settling the issue of jurisdiction, completed the impugned assessment proceedings.

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