The Federal Board of Revenue (FBR) has decided to suspend three senior income tax officials of Karachi, who sanctioned Rs 138.460 million refunds on bogus 'tax deduction certificates' issued by some stock exchange members.
Sources told Business Recorder on Saturday that the FBR has constituted a high-level committee headed by Mukhtar Ahmed Gondal, director-general, Large Taxpayer Unit (LTU) Karachi, to probe this mega tax fraud.
The director-general Intelligence and Investigation had recommended to the board that immediate action be taken against a former commissioner of Income Tax, Companies Zone-IV, Karachi; ex-additional commissioner Companies Zone-IV, Karachi and Ex-DCIT, Companies Zone-IV, Karachi.
The FBR would also obtain tax record from Regional Tax Office (RTO), Karachi, for fixing responsibility on Pral, stock exchanges and identification of banks. On the findings of the DG Intelligence, the FBR has initiated disciplinary proceedings against the suspected income tax officials.
The DG Intelligence had apprehended that Board's immediate attention is needed in this regard, otherwise its negative fallout might cause irreparable loss in meeting the revenue target. In view of seriousness of the case, the board is under the process of suspending these three officials. The constitution of committee would help in eradicating unnecessary delay in scams of similar nature.
According to sources, the former officials of Enforcement Zone, Companies-IV Karachi used illegal 'tax deduction certificates' issued to some stock exchange brokers for claiming refund.
The Vigilance Wing of DG Intelligence detected that the three ex-income tax officials of Companies Zone-IV caused huge loss to the exchequer by issuing bogus income tax refunds to hundreds of individuals during 2006-07. The involved officials issued illegal refunds to individuals who were out of the Companies Zone-IV, Karachi, jurisdiction.
Sources said the illegal refunds were issued in such a manner that all the ingredients of an organised tax fraud were properly managed. The DG Intelligence had detected that refunds were issued on the basis of certificates u/s 164 of Income Tax Ordinance, 2001 to selected brokers/individuals for trading in shares. Under the law, members of the stock exchanges are not authorised to issue such certificates.
The individuals whom refunds had been issued did not fall under Enforcement Jurisdiction of Companies Zone-IV, Karachi. The National Tax Numbers (NTNs) of these individuals are in serialised sequence, pattern of tax years is identical, refund cheque numbers are in serialised sequence, dates of refunds are identical, whereas members/brokers issued unauthorised certificates to individuals/brokers under section 164. Interestingly, refunds have been issued to individuals, who are residents of other cities/stations and their particulars do not match with the NTN Master Index, sources added.