The FTO had taken punitive action against IR officials of RTO, Multan, accused of taking bribes from taxpayers and asked the Chairman NAB to initiate a criminal investigation.
The Punjab chapter of NAB had already ordered persons concerned to attend inquiry proceedings under Section 19 of the National Accountability Ordinance of 1999. A tax employee filed a writ petition before the LHC seeking stay, contending that his appeal was pending before the President.
According to official documents, M/s Umer Trading through Javeria Sohail Amin, M/s Jeddah Traders and Zamindara Corporation of Gaggoo Mandi, Burewala through Sohail Amin registered their complaints to the FTO through their counsel Waheed Shahzad Butt, against maladministration of RTO Multan officials.
The case is first of its kind where the FTO forwarded a copy of his recommendations to the Chairman NAB for initiating a criminal investigation. At the same time, the FTO also directed the FBR to take disciplinary action against the relevant RTO-Multan officials involved in demanding bribes from taxpayers, sources said.
These complaints are against illegal and arbitrary demand of tax Rs 21,418,998 ostensibly raised under Section 161 of the Income Tax Ordinance, 2001, extortion of Rs 200,000 as bribe and raising a further demand for additional tax of over Rs 3,000,000.
According to the FTO's findings, although complainants' grievance to the extent of illegal tax demand had been redressed after the intervention of the Federal Tax Ombudsman, the alleged acts of omission and commission committed by officials of RTO, Multan, tantamount to maladministration as defined under Section 2(3) of FTO Ordinance 2000.
The FTO has recommended the FBR to take necessary corrective/disciplinary action as provided under section 13 of the FTO Ordinance against the relevant officials, and give compliance report within 30 days. On merit, the Dept first defended the action under Section 161 as justified, denying that the Complainants had been discriminated against in any manner but during the course of complaint proceedings successor Commissioner IR himself vacated/deleted the whole demand of tax under section 122A well before disposal of complaints by the FTO.
This contention of the complainant ultimately proved correct, when, during the course of investigation, the department vacated the orders passed by Inland Revenue Officer (IRO). The concerned IRO initially justified the tax demand raised by him, as also his refusal to rectify the tax demand. However, when confronted with the evidence that he himself at one stage had advised the Commissioner Inland Revenue, Saleem Raza Asif, and his successor, Basharat Ahmad Qureshi that the tax demand raised under Section 161 of the Ordinance was not tenable in law and needed to be struck down, IRO acknowledged that the tax demand was indeed bereft of any objective basis and need to be vacated, FTO order added.
The said tax employee IRO had also filed a Writ Petition before the LHC seeking stay of investigation by the NAB authorities, but the said writ was disposed of by a Division Bench of LHC. The same tax employee, IRO of RTO, Multan, moved a writ petition against the FTO order, seeking a stay of disciplinary action/inquiry initiated by the FBR, which had now been dismissed by the Chief Justice Lahore High Court.