Bank attachments: Absence of grievance redressal system irks taxpayers

LAHORE: Absence of grievance redressal mechanism for benefit of persons whose funds were wrongfully appropriated by tax officials in the form of bank attachment is causing hassle for taxpayers, said sources.

The sources added that most of the amounts recovered from bank accounts of taxpayers have never been due and such confiscation was altogether illegal and unlawful. Such powers tantamount to abuse of authority or reckless disregard of need to exercise diligence by tax officials whose action resulted in confiscation of funds of taxpayers from their bank accounts.

There is lack of prescription of standards of diligence to be employed tax officials while exercising coercive powers to realize tax demand under the provisions of Income Tax Ordinance, they said.

According to the sources, tax authorities were found exercising no practice of issuing demand notices to taxpayers and third parties to frustrate their right to seek remedy against such demand in order to meet recovery targets.

Unfortunately, they added, there is no system of institutional checks in place against such practice to uphold rights of taxpayers to avail legal remedies against such demands. The Federal Board of Revenue (FBR) is endowed with duty to facilitate taxpayers and establish mechanism to address their grievances and complaints against vast powers of tax officials to adopt coercive measures to affect recovery of tax liability by attaching bank accounts, which are holding money as third party on behalf of taxpayers.

Most of the tax officials are found abusing the power of attaching bank accounts to meet collection targets by adopting abhorrent procedures of not serving notices in a timely fashion on taxpayer or third party in order to pre-empt opportunity for such persons to verify or challenge such demand and seek redressal against it, said the sources.

They said the Board is planning to initiate inquiry to determine whether there existed a practice across tax jurisdiction in Pakistan whereby tax officials were denying taxpayers and third parties due notice of demand under provisions of the Ordinance to frustrate their right to seek remedy against such demand in order to meet recovery targets.

It may be noted that former Chairman FBR Shabbar Zaidi had issued his first directive to the field formations in May 2019 that there would be no bank account attachment unless taxpayer’s chief executive officer/ owner is informed at least 24 hours prior to attachment and the approval of the chairman FBR is obtained. However, the FBR on Monday withdrew instructions. Resultantly, now the tax officials are not legally bound to take prior approval of the FBR chairman and give 24-hour prior intimation to the CEO/ principal officer/ owner of companies before their bank accounts attachment.

It is interesting to note that the Regional Tax office (RTO) Lahore had booked a banker for allegedly hindering tax recovery from one of its account holders through freezing of account in April last year. It was followed by the Corporate Tax Office (CTO) Islamabad, which had also lodged a similar FIR for tax recovery in the federal capital in the same period.

Copyright Business Recorder, 2023