Non-compliance of attachment notice: CRTO Islamabad begins prosecution proceeding

ISLAMABAD: The Corporate Regional Tax Office (CRTO) Islamabad has started prosecution proceedings against one of the highest taxpayer banks of Pakistan for alleged non-compliance with the attachment notice for tax recovery from the National Highway Authority (NHA).

In this connection, an FIR number 01-2022 has been lodged against the bank and its top officials. The prosecution proceedings have been initiated under section 196 (prosecution for obstructing an income tax authority) and section 199 (prosecution for abetment) of the Income Tax Ordinance, 2001 by the CRTO against the senior officials and Branch Manager Islamabad of a top bank on the allegations of non-compliance of the attachment notice under section 140 (recovery of tax from persons holding money on behalf of a taxpayer) of the Income Tax Ordinance in case of the NHA which is a state enterprise.

The CRTO has taken up the matter with the special judge Customs and Excise Rawalpindi, who has issued notice to the tax department and the bank officials for hearing/ appearance on April 12th 2022

Experts told Business Recorder that the field formations of the FBR have intensified recovery proceedings against the registered taxpayers for meeting the assigned revenue collection targets during the remaining period of financial year 2021-22. Huge Tax demand against NHA was created and recovery proceedings were initiated to recover by way of attachment of all bank accounts of NHA including a bank branch at Sector G 9/1 Islamabad.

On receiving the attachment notice the bank informed the concerned tax officials that the NHA bank accounts with the branch were already attached in other proceedings by courts including Peshawar High Court (PHC) in pending civil litigation by the contractors against NHA. The tax officials allegedly insisted that state recovery has priority and wanted the bank to transfer funds.

It was further informed to recovery officials that an amount other than attached by courts can be given for which approval from bank high ups is being sought. However the tax officials engaged in recovery did not agree with the bank’s viewpoint. The initiation of criminal proceedings against the bank is a result of adamant behaviour and on ground as to how recovery by tax authorities be denied. Resultantly, prosecution proceedings were initiated against the bank’s officials, expert added.

When contacted, sources told this scribe issue mainly related to the payment of advance tax liability of Rs 10 billion by the NHA. The authority filed a writ petition with the Islamabad High Court (IHC) with the plea that the authority does not fall under the definition of a company. The court directed the authority to pay Rs 5 billion advance tax and remaining Rs 5 billion in instalments, being a corporate entity. The tax department initiated prosecution proceedings against the bank without first prosecuting NHA, when the amount was not transferred and the special judge summoned the department and bank on April 12, they added.

Copyright Business Recorder, 2022