WAHEED SHAHZAD BUTT VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2012 P T D 1488
2012 P T D 1488
[Federal Tax Ombudsman]
Before Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman
WAHEED SHAHZAD BUTT
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.627/LHR/IT(483)1310 of 2011, decided on 28/05/2012.
Income Tax Ordinance (XLIX of 2001)---
---Ss. 153(1) (b) & 153(6)--- Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)(ii)--- Public interest complaint---Corporate tax payers--- Web portal of the Federal Board of Revenue (FBR) ---Tax computation defects in the electronic Income Tax Return--- Complainant contended that for corporate tax payers deriving income by providing/rendering services chargeable under Ss. 153(1)(b) & 153(6) of the Income Tax Ordinance, 2001, the electronic Income Tax Return (IT-1) for Tax year 2010 placed on the Federal Board of Revenue (FBR) web portal gave misleading information to taxpayers and tax payable by them was not being correctly computed; that the electronic Income Tax Return understated a taxpayer's due income tax liability for the tax year 2010 and was not designed to take into account receipts/income liable to tax under normal tax regime, besides the income taxable under the minimum tax regime--- Validity--- Defectively designed electronic return for corporate taxpayers (service sector) showed incompetence, inefficiency and inaptitude on the part of the concernedofficials and was tantamount to systematic mal-administration under S. 2(3)(ii) of the Federal Tax Ombudsman Ordinance, 2001--- Federal Tax Ombudsman recommended that the Federal Board of Revenue to ensure that in the future a fool-proof electronic Return was placed on the Federal Board Revenue's official web portal; to direct field formations to determine revenue losses that occurred due to defective e-Return, and to take steps to retrieve the loss, without charging any penalty or default surcharge to the concerned taxpayers.
Muhammad Munir Qureshi and Hafiz Ahsan Ahmad Khokhar, Advisors Dealing Officer.
Waheed Shahzad Butt for the Complainant.
Mirza Nadeem Munawar Baig Chief IR Operations, Basit Saleem Shah Secretary IR (General), Mujahid Naeem Manager Automation PRAL Departmental Representatives.
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---The complainant, a practicing income tax lawyer, filed the instant public interest complaint, highlighting tax computation defects in the electronic Income Tax Return (IT-1) placed on the F.B.R. web portal required to be e-filed by service sector corporate taxpayers, in Tax Year 2010.
2.The complainant contends that for corporate taxpayers deriving income by providing/rendering services chargeable under section 153(1) (b), read with section 153(6) of the Income Tax Ordinance, 2001 (the Ordinance), the electronic Income Tax Return (IT-1) forTaxYear2010 placed on the FBR web portal gave misleading information to taxpayers and tax payable by them was not being correctly computed. Specifically, the electronic IncomeTax Return understated a taxpayer's dueincometaxliabilityforTaxYear2010andwasnotdesignedtotake into account receipts/income liable to tax under Normal Tax Regime, besides the income taxable under the Minimum Tax Regime. ThematterwasbroughttothenoticeoftheFBRbythecomplainant but the Department did not give him a satisfactory response, compelling him to refer the issue to the Hon'ble Federal Tax Ombudsman as it involved FBR's maladministration in failing to design an error-free Return.
3.The complaint was sent to the Secretary, Revenue Division, for comments which were filed on 19-1-2012 and on 16-4-2012.
4,In response, Mr. Basit Salim Shah, Secretary, IR (General), FBR, submitted that 9887 taxpayers had filed their Returns showing income from services sector (AOP: 1436, Business Individual: 3828, Company: 2707 and Salary Individual: 1916) for the Tax Year 2010. He further submitted that directions had been issued to field formations to carry out the desk audit in all cases for the purpose to point out any short payment in order to award against any possible loss of revenue.
5.It is pertinent to mention that earlier a similar nature Complaint No 158/ISD/IT(88)1346/2011 was decided by this Office with the Recommendations that
"FBR to -
(i)ensure that in future a fool-proof electronic Return is placed on the FBR's official web portal:
(ii)direct field formations to determine revenue loss that has occurred due to defective e-Return;
(iii)take steps to retrieve the loss, without charging any penalty or default surcharge to the concerned taxpayers; and
(iv)report compliance within 30 days."
Findings:--
6.The defectively designed electronic Return for corporate taxpayers (services sector) shows incompetence, inefficiency and inaptitude on the part of the dealing officials and is thus tantamount to systemic maladministration under section 2(3)(ii) of the FTO Ordinance, 2000.
Recommendations:--
7.Being an identical nature complaint, the Recommendations already issued in Complaint No.1346 of 2011 shall apply in this case. F.B.R. to submit a compliance report within 15 days.
M.W.A./111/FTOOrder accordingly.