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LAHORE: The Regional Tax Office (RTO) negligence has led to the invalidation of default surcharge notices issued to a power generation company. This shocking revelation highlights the department’s lack of accountability and transparency in its dealings with taxpayers.

Sources reveal that the tax department failed to adhere to procedural requirements, resulting in the notices being declared “without lawful authority and jurisdiction.” The department’s negligence includes failure to adjudicate the quantum of default surcharge and issuance of separate proceedings under Sections 161 and 205 of the Income Tax Ordinance, 2001, which is not permissible. Also, the department did not consider the taxpayer’s compliance history, said the sources.

Taxpayers have long complained about harassment and unfair treatment by tax authorities. This incident vindicates their stance, as the company’s representatives welcomed the development. The incident raises questions about the department’s ability to manage tax affairs efficiently.

The relevant appellate forum set aside the impugned show-cause notices and subsequent orders. The forum held that the tax officer’s negligence and lack of jurisdiction rendered the notices invalid.

Experts say this incident underscores the need for tax authorities to ensure fairness and transparency. “This is a clear case of departmental negligence, which can erode taxpayer confidence,” noted tax expert, Ashfaq Khan. While expressing concerns, he said this incident reinforces the need for reform.

Financial analysts believe this is a wake-up call for the tax department to streamline its processes and ensure adherence to the law. They said the department’s negligence has resulted in unnecessary litigation and financial burden on taxpayers. To prevent such incidents, they added, the tax department must ensure proper training for officials, streamline procedures, and enhance transparency and accountability.

Pakistan’s business community demands a business-friendly environment to promote economic growth. The tax department’s negligence hinders this goal. Immediate action is necessary to address these issues and ensure accountability.

As one tax practitioner noted, “the tax department must prioritize fairness, transparency, and efficiency to regain taxpayer trust.” Only then they can create in Pakistan a conducive environment for businesses to thrive. The present case serves as a stark reminder of the need for reform within the tax department,” they stressed.

Copyright Business Recorder, 2024

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