FBR field formations accused of creating fake demands against taxpayers

LAHORE: Field formations of the Federal Board of Revenue (FBR) are involved in creating fake demands against taxpayers without sharing audit reports with them, said sources.

They said the department prefers to seek taxpayer evidence in support of the exempt income claimed in their controversial tax returns without sharing desk audits with them. The sources said the field formations create fake demands in tonnes while most of them are challenged and turned down by the courts, costing millions of rupees to both the taxpayers and the Board in terms of litigation.

For the tax year 2021-22, they said, the Board had assigned a target of Rs 85 billion to the Large Tax Office (LTO) Lahore and the LTO staff had generated 90 percent fake demands to appease the Board pressure.

Most of the tax officers do not take the burden of visiting the premises of taxpayers to verify facts on the ground and instead they rely on the tools provided in the software to create frivolous demands. One officer pointed out that the unscrupulous elements at the level of field formations generate a demand of Rs 20 million against a tax return of Rs 2 million and the taxpayers are found shedding tears while pointing out that the actual worth of their business was less than the demand created.

So much so, said the sources, the field formations also demonstrate a lack of responsibility by not filing copies of tax notices, audit reports as well as the response from the taxpayers in the appellate forums, which leads to the wastage of plenty of time of these forums in the adjudication of tax matters. Meanwhile, both the department representatives and their legal councils express their inability to confirm in most of the cases whether the audit report was shared with a taxpayer before charging a demand.

Not only this, the field formations of the Board are taking up the already decided matters before the courts, which is tantamount to defeating the spirit of the courts to dispose of legal matters at the earliest. The Business Recorder has already pointed out that the Board was maintaining no data bank of tax matters adjudicated by the courts of law and both the departmental representatives and their legal councils are found unaware of whether the court already took up a particular decision or not.

It may be noted the superior court has been directing the Board that when revenue cases are fixed courts, a senior officer from the department should be in attendance along with the relevant file/information to attend to any query that may arise during the proceedings. However, the appellate forums are not getting desired assistance from the field formations. In a recent such issue, said sources, the superior judiciary has directed to bring the matter to the notice of the chairman and the secretary ministry of finance and direct the field formations to show seriousness towards issues arising out of tax audits and attend the appellate forums with required revenue record to support their endeavor of taking up revenue matters at the earliest in the larger interest of taxpayers.

Copyright Business Recorder, 2022