Federal Tax Ombudsman (FTO) has granted stay of 60 days against recovery of tax in the light of provisions of Federal Ombudsmen Institutional Reforms Act, 2013 (FOIRA) and ruled that continuation of recovery proceedings was contrary to the provisions of Section 18 of FOIRA, 2013.
Sources told Business Recorder that while deciding a case in a complaint against alleged departmental maladministration, the FTO order observed that the allegations of maladministration as mentioned in the complaint depict existence of prima facie arguable case in favour of the Complainant. The facts also reflect that the balance of convenience leans in favour of grant of injunction likewise, if the injunction is refused then the Complainant shall suffer an irreparable loss.
Explaining the provisions of the FOIRA, a tax lawyer said that the Revenue Division tax employees including appeal hierarchy cannot exercise jurisdiction to entertain a matter pending with the FTO under complaint or review under the FOIRA. All tax employees including those performing appellate functions as also the Tribunals or Authorities administering/adjudicating "Relevant legislation" under the FTO Ordinance, 2001 could not entertain tax-related matters already taken up and decided by the FTO under the FOIRA.
The FTO order states, "M/s HPPL filed a complaint against the order of amendment dated 03.04.2015 u/s 122(5A) for Tax Year 2010 on the grounds that the order is perverse, arbitrary, unreasonable, discriminatory, contrary to the law, rules, regulations and is based on irrelevant grounds. The complaint was forwarded to the Deptt for comments on 24.04.2015 and in response Chief Commissioner contended that the amendment was made considering facts of the case and relevant provisions of law through a speaking order against which remedy of appeal was available under relevant legislation. According to the Deptt no maladministration was involved in the case.
In the meanwhile, Deptt issued recovery notice u/s 138(1) of the Ordinance on 19.05.2015 wherein directed the Complainant to make payment of the tax due by 25.05.2015 failing which proceedings may be initiated against him under rules to recover the said amount by one or more the modes like attachment and sale of movable or immovable property, appointment of receiver, arrest and detention for a period not exceeding six months. In response, the Complainant vide letter dated 25.05.2015 addressed to CIR through DCIR, E&C-03, Zone-III, contended that since the complaint against unlawful tax demand was pending before the office of FTO, no adverse action can he initiated against the Complainant during its pendency in terms of Sections 18 and 24 of FOIRA. In view thereof recovery proceedings be held till the completion of complaint proceedings.
On 25.05.2015 the Complainant filed an Application for stay of recovery proceedings wherein a notice was issued to the department for comments. A day later, the deptt issued notice u/s 140 read with Rule 29 of the Income Tax Rules, 2002 on 26.05,2015 for attachment of bank accounts of the Complainant. The Complainant then filed second Application for detachment of the bank accounts on 27.05.2015 which too was also forwarded to the Deptt for comments by 02.06.2014. Misc application was fixed for hearing on 29.05.2015. However, the Deptt detached the bank accounts on 29.05.2015 and informed the same vide DCIR letter No 2043/J dated 01.06.2015. Though, the grievance of the Complainant to the extent of detachment of bank accounts stood resolved but the initiation of recovery proceedings during the pendency of aforementioned applications.
The Complainant applied for the stay of recovery proceedings vide Miscellaneous Application dated 25.5.2015 which was forwarded to the Chief Commissioner vide this office letter dated 25.05.2015 served through our dispatch Rider in the relevant jurisdiction on 25.05.2015. Under the circumstances, continuation of recovery proceedings vide notices dated 26.05.2015, a day later was contrary to the provisions of Section 18 of FOIRA, 2013 reproduced below:
Section 18: Bar of jurisdiction- No court or authority shall have jurisdiction to entertain a matter which fails within the jurisdiction of an Ombudsman nor any court of authority shall assume jurisdiction in respect of any matter pending with or decided by an Ombudsman".
Allegations of maladministration as mentioned in the complaint depict existence of prima facie arguable case in favour of the Complainant. The above mentioned facts also reflect that balance of convenience leans in favour of grant of injunction likewise, if the injunction is refused then the Complainant shall suffer an irreparable loss. Accordingly, recovery proceedings are hereby stayed for a period of 60 days or the date of decision of the complaint, whichever is earlier, the FTO Order added.
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