Newly-appointed Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has issued his first major directive to the field formations that there would be no bank account attachment unless taxpayer's chief executive officer/owner is informed at least 24 hours prior to attachment and the approval of the chairman FBR is obtained.
After assuming the charge of the post of the Chairman FBR at the FBR House here on Friday, Shabbar Zaidi issued first directive to the Chief Commissioners of Inland Revenue of Large Taxpayer Units (LTUs) and Corporate Regional Tax Office (RTO) and Regional Tax Offices.
Tax experts said that the directive would address the complaints of business community about the unnecessary attachments of the bank accounts for recovery of the disputed amounts from the bank accounts of the taxpayers without fulfilment of legal process. In many cases accounts have been attached without prior notice of the CEO/principal officer/owner of the business community.
According to a latest order of Lahore High Court (LHC) on attachment of bank accounts, it has been directed time and again that notice under section 140 of the Income Tax Ordinance 2001 being ultimate coercive measures should carry details of the assessment order, fact about its finality and the measures for recovery of tax taken before issuance. The matter should be taken up with the FBR chairman and the concerned Members, who shall issue appropriate instructions to all taxation officers.
Under the section 48 (recovery of arrears of tax) of the Sales Tax Act 1990, where any amount of tax is due from any person, the officer of Inland Revenue may attach and sell or sell without attachment any moveable or immoveable property of the registered person from whom tax is due and recover such amount by attachment and sale of any moveable or immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company bank or financial institution fails to make payment under such guarantee, bond or instrument.
Inland Revenue officials are legally empowered to attach bank accounts or stop clearance of imported goods or manufactured goods under section 48 of the Sales Tax Act 1990.
Similarly, under section 140 (recovery of tax from persons holding money on behalf of a taxpayer) of the Income Tax Ordinance 2001, for the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person owing or who may owe money to the taxpayer; or holding or who may hold money for, or on account of the taxpayer; holding or who may hold money on account of some other person for payment to the taxpayer; or having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice.
The Assistant Attorney General shall ensure that the matter should be taken up with the FBR chairman and the concerned Members, who shall issue appropriate instructions to all taxation officers within three weeks. The petitioner has assailed notice dated April 10, 2019 under section 140 of the Income Tax Ordinance 2001 issued to a bank for attachment of the petitioner's personal account. It is asserted that the petitioner is a taxpayer but is not carrying any business.
LHC also observed that it has been directed time and again that notice under section 140 of the Income Tax Ordinance 2001 being ultimate coercive measures should carry details of the assessment order, fact about its finality and the measures for recovery of tax taken before issuance, but the impugned notice is silent.
The counsel for the respondent has apprised that Chief Legal FBR was consulted on direction of this court for regularizing the procedure of recovery strictly in accordance with law, particularly direct invocation of section 140 without restoring to procedure under section 137 and section 138 of the Income Tax Ordinance 2001. Even such notices are issued during the period of limitation for filing of appeal, the LHC order added.
Meanwhile, the business community appreciated the decision of chairman FBR, saying that in past, the tax offices often misused the relevant sections of the Income Tax Ordinance, 2001 to harass the taxpayers for mostly undue tax recoveries.
They said that it was long-lasting demand of the business community to restrain field formations from attaching bank accounts of the taxpayers but the FBR despite giving only verbal assurance never issued any official directives to ease the concerns of businessmen.
Moreover, they said that the initiative of newly-appointed chairman FBR would help regain the trust and confidence of taxpayers and hoped that under the leadership of erudite chairman, the board would now create new venues for tax collection instead of squeezing already taxed persons.
Association of Builders and Developers of Pakistan (ABAD) while appreciating the said decision of chairman FBR requested the government to appoint more people from private sector to head government departments like FBR, CDA, SSGC, etc.
Chairman ABAD Muhammad Hassan Bakshi said that the vision of PTI government also need to be lauded for taking bold decision to appoint chairman FBR from private sector despite strong opposition within the FBR.
He said that such bold steps were needed to create business-friendly environment because Pakistan was facing huge tax deficit and added that such steps would increase the trust of business community and encourage voluntarily enhanced contribution in tax.