PTBP Web Desk

The Inland Revenue tax officials have come under severe criticism for allegedly harassing small taxpayers by issuing illegal penalty notices to those who dare to file complaints with the Federal Tax Ombudsman (FTO) against the Federal Board of Revenue (FBR). This malpractice has been highlighted by the FTO, which is alarmed by the frequency and severity of these punitive actions.
The FTO expressed shock at the multiple notices received by taxpayers who sought justice against the maladministration of the tax machinery. It has become apparent that taxpayers are regularly punished simply for committing the “crime” of filing complaints with the FTO office.
Reacting to these reports of malpractice, the FTO initiated an own-motion investigation under Section 9 (1) of the FTO Ordinance. The investigation aimed to address the systemic issues within the Inland Revenue department and protect the rights of taxpayers.
In its directives to the tax authorities, the FTO emphasized the seriousness of the issue, stating, “The instant OM pronouncement should be read carefully by the FBR top management for the chances of slippages are now minimal. Chasing taxpayers without sound legal footing tantamount to harassment, and this impression needs to be dispelled at once. If any taxpayer is pursued subsequent to filing of complaint before this forum in any unlawful manner, it shall be an earnest endeavor to identify such authorities and give appropriate findings accordingly.”
The FTO criticized the lack of proper application of mind by tax officers, leading to mechanical and often punitive actions. When issues are highlighted, errors are frequently attributed to technical oversight or system glitches. For instance, the rejection of refund requests has been blamed on technical oversights, while the hasty issuance of penalty notices has been linked to lists provided by the Database Administrator (DBA). Requests from taxpayers for filing sales tax returns for earlier months have often been ignored, demonstrating a severe lack of professionalism and further widening the trust deficit between taxpayers and the department.
The FBR has been instructed by the FTO to ensure that taxpayers are not subjected to undue harassment following the filing of complaints. Investigations revealed that taxpayers and complainants face the wrath of tax authorities through multiple frivolous notices under various statutory provisions. This adverse behavior is intended to discourage complainants from seeking redress through the FTO office.
Such treatment significantly erodes public confidence and negatively impacts trust in the institution of the FTO. For example, during the investigation of complaint No.0776/KHI/IT/2022, it was noted that after filing the complaint, the taxpayer received multiple penalty notices despite having pending requests for filing sales tax returns for earlier periods. These requests had been pending for more than four months, yet penalty notices were issued for already filed returns.
Moreover, during the pendency of the complaint, the concerned unit officer passed an order rejecting the refund without affording the complainant an opportunity for a hearing. Such unreasonable attitudes and victimization of complainants further erode public trust in the efficacy of the FTO in redressing taxpayer grievances.
The FTO’s findings underscore a systemic issue within the Inland Revenue department, where harassment of small taxpayers appears to be a common practice. The issuance of illegal penalty notices not only penalizes individuals unjustly but also discourages them from seeking justice through the proper channels.
The FTO has called for immediate action to rectify these issues and restore trust in the tax administration system. It is crucial for the FBR top management to address these lapses and ensure that taxpayers are treated fairly and justly.