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

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

According to reports, the tax department’s assessing officer seized 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, and the commissioner of appeals suspended the demand’s recovery under legal authority. The commissioner noted that the assessing officer could not have levied any income on an estimated basis without first determining the actual income offered for taxation.

The commissioner further stated that the tax officer was required to identify any income sources not disclosed by the taxpayer. As a result, the assessment order was overturned, and the matter was sent back for a new assessment.

The taxpayer challenged the remand order before a tribunal, which overturned it, stating that remanding the matter to the department was unjustified. However, the tax department ignored 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, claiming that the FTO had overstepped its authority by interfering with the tax assessment and legal interpretation. The President of Pakistan overturned the FTO’s order, and the case was eventually heard by a higher appellate forum.

The higher appellate forum sided with the FTO, noting that the FTO’s finding indicated that the relevant tax officials’ failure or refusal to honor and implement the stay order was improper, arbitrary, unjust, and oppressive, and thus constituted maladministration.

The higher appellate forum determined that such recommendations fell within the FTO’s powers. Consequently, the President of Pakistan’s decision was overturned for not being in accordance with the law, and the FTO’s decision was upheld, directing the FBR to ensure that the FTO’s recommendations are followed.