FTO: Tax Officer’s Non-Compliance with Stay Order is Maladministration

LAHORE: The Federal Tax Ombudsman (FTO) has ruled that a tax assessment officer’s failure to comply with a stay order constitutes maladministration.

According to details, the tax department’s assessing officer attached the taxpayer’s bank accounts nearly two years after the assessment order was issued, without providing any tax demand notice.

The taxpayer appealed the tax department’s demand. The commissioner appeals then suspended the demand’s recovery, acting under legal authority. The commissioner observed that the assessing officer could not arbitrarily estimate income without determining the actual taxable income.

The commissioner further noted the tax officer’s responsibility to identify any unreported income sources. As a result, the assessment order was nullified, and the case was sent back for a new assessment.

The taxpayer challenged the remand order before a tribunal, which overturned it, deeming the remand unjustified. However, the tax department disregarded the stay order and did not release the taxpayer’s bank accounts.

The taxpayer then lodged a complaint with the FTO, who declared the non-compliance with the stay order as maladministration.

The department appealed to the President of Pakistan, arguing that the FTO had overstepped his authority by interfering with tax assessment and legal interpretation. The President reversed the FTO’s order, leading to a higher appellate forum review.

The higher appellate forum sided with the FTO, stating that the FTO’s finding—that the tax officials’ refusal to honor the stay order was unreasonable, unjust, and oppressive—was valid and qualified as maladministration.

The forum concluded that such recommendations were within the FTO’s jurisdiction. Consequently, the higher appellate forum overturned the President’s decision as unlawful and upheld the FTO’s decision. The FBR was directed to implement the FTO’s recommendations.