ATIR’s landmark decision: FBR told to refund Rs88m recovered ‘illegally’

ISLAMABAD: In a landmark judgement, Appellate Tribunal Inland Revenue (ATIR) Islamabad has directed the Federal Board of Revenue (FBR) to immediately refund the amount of Rs88 million illegally recovered from a taxpayers’ bank account and investigate the conduct of the involved officials.

In this regard, the ATIR Islamabad has issued a detailed judgement against the relevant officials of the FBR.

The tribunal cannot be a silent spectator in this case where the revenue officer misused his power and made an unlawful recovery and acted against the judicial conscience. The coercive action against the recovery of disputed tax demand cannot be restored unless the case has been decided by the tribunal, which is an independent forum, the ATIR order stated. The ATIR has referred a case of highhandedness, by Chief Commissioner, Commissioner and Deputy-Commissioner Inland Revenue of Corporate Tax Office Islamabad for recovery of funds through bank account attachment, to Registrar Islamabad High Court (IHC) for initiating contempt of court proceedings.

According to the judgement of the ATIR, the ATIR has referred the matter to the chairman FBR to look into the conduct of officers including CCIR; CIR (Enforcement) and DCIR, within the purview of Section 7 of the FBR Act, 2007 and the directions that chairman FBR shall pass a speaking order within a period of 30 days, under intimation to the Registrar, ATIR, Islamabad and a copy of the order has also been delivered to the Registrar (Judicial), IHC, with a reference that the IHC may be graciously pleased to deal with the question of contempt proceedings within the meaning of Section 3 of the Contempt of Court Ordinance, 2003 against the FBR officers.

When contacted Lahore-based tax lawyer Waheed Shahzad Butt told this correspondence that earlier former FTO Mushtaq Sukhera has ordered recovery from personal salaries of two FBR officers in a case of unlawful recovery through bank attachment of a taxpayer. In most cases recovery moves show administrative excesses for improper motives and inefficiency in the discharge of duties and responsibility and as a consequence unlawful recovery of funds through snatching of bank accounts of innocent taxpayers of Pakistan by the FBR field formations to show performance.

Butt added that earlier former FTO (not belonging to FBR) has held that non-compliance of appellate order, disobeying and disregarding it, by the assessing officer is tantamount to indiscipline, insubordination, and maladministration, making the officer liable to suitable disciplinary action but all in vain FBR is least interested to follow the law in the tenure of present FTO (belonging to FBR), the tax lawyer added.

The ATIR order states “The relevant facts, in this case, are that the appeals were pending before this Tribunal. Stay against recovery of tax, granted earlier, was extended for 30 days. Before the expiry of the 30-day stay, the Applicant vigilantly moved another Stay, which was taken up by on 22.09.2022 (Thursday). Since the stay granted earlier through the Previous Stay Extension Order had not lapsed, this Tribunal adjourned the case in the presence of the parties and fixed applications for 26.09.2022 (Monday), which was the first working day after the expiry of the Previous Stay Order.

On 26.09.2022 this Tribunal again extended the stay for 40 days. The department was well aware of the forgoing facts, despite this, the assessing officer issued the notice dated 26.09.2022 u/s 140 to the Banks, attaching the bank accounts and requiring them to pay a sum of Rs168,575,684. The banks complied with the direction of the Recovery Officer (RO). All this happened on the same day on 26.09.2022 in the presence of the stay order/application for extension of the stay order and recovered amount from the different bank accounts of the applicant.

The RO has recovered the demand illegally because of which the power/authority of the Tribunal has been rendered nugatory. The notice, as evident from the electronic record, was served upon banks before 10:30am, and the total amount was recovered before 12pm on 26.09.2022 prior to the decision on an application for the extension of stay. Hence, the recovery proceeding and recovery had been completed by the time the stay application was taken up by Tribunal at 12:05 pm. When the application was taken up, the DR present in the Court apprised the bench that recovery proceedings had already been affected so the applicant was not entitled to interim relief.

The ATIR order states, this Tribunal has inherent powers to ensure that the taxpayer is not left high and dry only on account of illegal and highhanded actions on the part of revenue and the RO. The lower authorities are bound to obey the order passed by this Tribunal unless and until it is not reversed or suspended by the Superior Courts.

FBR vide Circular-Letter No:7(20)S(IR-Operations) 202 dated 12.10.2021 categorically asked the concerned CCIR to avoid unnecessary hazards of litigation and coercive measures for the recovery of disputed tax demands until the case has passed the test of appeal at the level of learned CIR(Appeals).After the insertion of Article 10A in the Constitution, fair trial and due process are fundamental rights of every citizen for determination of civil rights and obligations.

We are living in a democratic setup and the taxpayers deserve to be respected for their contribution to national development. Public servants are expected to discharge their functions dutifully but not unreasonably. The officers are supposed to work diligently but not harassingly, the ATIR order added.

Copyright Business Recorder, 2022