Federal Tax Ombudsman (FTO) Dr Shoaib Suddle has decided to investigate a sensitive matter that whether confidential data in tax returns of all NTN holders including corporate sector/non-residents can easily be accessed by any person having email ID of e-Intermediary (EI) with any mobile phone SIM.
It was learnt that a Lahore-based tax lawyer Waheed Shahzad Butt had filed a complaint with the FTO office about the unsafe data of taxpayers for remedial measures. FTO Office has admitted the complaint of Butt for detailed investigation and allocated complaint number: 0507/ISB/2013. FTO office is expected to call the FBR, Pakistan Revenue Automation (Pvt.) Ltd. (PRAL) as well as the complainant to explain the issue whether confidential and classified data pertaining to tax returns of all NTN holder of Pakistan is unsafe and any person having email ID of E-Intermediary (EI) with any mobile phone SIM (even not in the name of user) may have free access to the sensitive information related to taxpayer of Pakistan including non-residents taxpayers without their consent, knowledge and permission.
When contacted, an official explained that all the e-intermediaries are authorised to file the retunes on the behalf of their clients. It is the responsibility of the e-intermediaries to make sure that he has dully fulfilled all legal formalities for filing of returns. Every e-intermediary can prepare, file, revise, modify and submit returns of his clients. If such kind of act has been committed by a legal practitioner or tax consultant, it is a tax fraud. If someone obtains the user ID and password or make the taxpayer as his client without his formal consent, he is committing a fraud. There is a mandatory condition for the e-intermediaries to submit an undertaking on the behalf of their clients for using their user ID and passwords. It is responsibility of the e-intermediary to obtain written authorisation from the client to file tax declaration on his behalf. Thus, if return has been filed without the consent of his client it is illegal or unlawful activity. The official further explained that following notes are given on the Computer Screen when the e-Intermediary adds a taxpayer as his client:
He said that it is responsibility of the e-intermediary to obtain written authorisation from his client to file Tax declarations on his behalf. In the next stage, EI obtain the authorisation code from client in order to activate him in his client list.
Before transmitting the return electronically, the e-Intermediate gives following certificate: "Transmission Certificate by e-Intermediary"; I, in my capacity as e-Intermediary of the above said client do hereby state that I have received a signed Authority Letter and retained the duly completed return/certificates/statements/annexure/etc and the same is/are transmitted to Authorised Officer of FBR, it added.
Thus, any e-Intermediary adding any client or transmitting declarations to FBR on behalf of his clients without their written consent/authorisation is involved in unlawful activities.
And such person commits an offence punishable on conviction with a fine or imprisonment not exceeding one year, or both. Necessary Provisions of Income Tax Rules (Rule 73) regarding the furnishing of documents to the Commissioner has also explains responsibilities of the e-intermediary, official added.
To demonstrate unsafe system of the FBR, Waheed Shahzad Butt filed tax returns and statements electronically on behalf of the FTO Secretariat and claimed a deposit of income tax of Rs 25 Billion which was duly accepted and properly acknowledged by the FBR and system issued computerised return acknowledgement receipt to the taxpayer electronically.
Resultantly the office of FTO becomes highest taxpayer of Pakistan as evident from the e-slip electronically issued by the FBR having proper Electronic Document Number (EDN). In another demonstration Butt also showed himself as an Employee of the FTO Secretariat and generated the employer statement reflecting payment of Rs 25 million and Rs 5 million withholding tax deposited against payment made by FTO Secretariat to Waheed Butt. On the basis of NTN of the FTO Office, Waheed obtained the activation code from the FBR system and filed tax returns of the FTO Office without any permission and consent from the concerned government office ie, FTO Secretariat. There is no check or precautionary measure in the system to ask the concerned NTN holder to first clear the EI before allowing access to the classified data of the NTN holder. The system duly accepted all tax returns and statements electronically without any confirmation from the FTO Office.
The system has not obtained any clearance from the FTO Office that someone is filing returns or statements on the behalf of the NTN holder. He used unsafe [email protected] as his email address and Principal Activity of the FTO office was shown as Growing of Cereals. Business address has been mentioned as "FBR, PRAL, Zindabad, Barang. Quite surprisingly a refund of Rs 99 has been requested to be credited in the bank account of FTO Office maintained at State Bank of Pakistan, Quetta Branch having account number 00000000000001. The system duly accepted the data and issued computerised return acknowledgement receipt to the taxpayer electronically. It appeared that there is in build system to first verify the authenticity of the e-Intermediary before allowing all kinds of access to the confidential and classified data of the NTN holder. During this whole process, the FBR system has not inquired about the e-Intermediary using the sensitive data of the FTO office. Waheed brought the whole episode to the notice of the FTO Office for necessary further action in this regard, sources said.
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