ALI MANSOOR KHAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2015 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2401 (2015)

Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)--

----Ss. 2(3) & 10(1)---Jurisdiction of the Federal Tax Ombudsman---Scope--- Maladministration--- Fraudulently prepared document---Complaint against unauthorized CNIC access and unilateral issuance of NTN and subsequent amendment therein by the Department--- Contention of complainant was that the Regional Tax Office (RTO) issued a National Tax Number (NTN) on his name when he had not submitted any application for the same, and thereafter modified the same on basis of dubious documents-Validity-Objection to the Federal Tax Ombudsman's jurisdiction in the matter was misconceived as the present matter was much more than a simple case of forgery and certain Departmental functionaries had deliberately violated strict protocols for issuance of NTN and their motivation was wholly suspect, and such actions were contrary to the law and attracted provisions of S.2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000, and violation of prescribed protocols was tantamount to maladministration and placed well within jurisdiction of the Federal Tax Ombudsman-Federal Tax Ombudsman observed that circumstances and highly suspect sequence of events, in the present case, raised many questions and strongly suggested foul play by the PRAL/Department functionaries and there existed a need that the Department take concrete steps to ensure that others were spared such harassment and that fraud perpetuated in the Department due to documents contrived fraudulently, came to an end---Federal Tax Ombudsman recommended that the Department conduct inquiry to determine as to how and by whom defective. NTN certificate was issued in the name of the complainant; and devise fool-proof Standard Operating Procedures with the consultation of the National Response Centre for Cyber Crimes (NR3C) wing of the Federal Investigation Agency to stop use of fraudulently prepared documents in the PRAL; and devise a policy to validate all NTNs on the PRAL database through a system of biometric verification-Federal Tax Ombudsman further recommended that copy of the present complaint and all documents be forwarded to FIA for initiating criminal investigation into forgery of complainant's signature---Complaint was disposed of, accordingly.

Muhammad Munir Qureshi, Advisor Dealing Officer.

Waheed Shahzad Butt for the Complainant Authorized Representative.

Ms. Attiya Ali Khan, Secretary (IT-Wing), FBR, Lahore Department Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.----This is a complaint under section 10(1) of the Establishment of Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against unauthorized CNIC access and unilateral issuance of NTN and subsequent amendment therein.

2. The complainant contends that PRAL/RTO Faisalabad allegedly, unilaterally issued an National Tax Number in his name on 14-3-2010 when he had not submitted any application and later, on 25-8-2011, modified the same on the basis of dubious documents. Furthermore, the amended NTN Certificate showed him, wrongly, to have been associated with one, Messrs Al-Khawan Enterprises, Faisalabad. The complainant says that he is a resident of Model Town, Lahore, and has never been employed in Faisalabad or conducted any business there, alone or in partnership/collaboration with any other person(s). He says that he accidentally discovered that he was borne on the FBR income tax rolls when he enquired about applying for an NTN certificate after getting a job in a Lahore based construction company executing various contract projects within the province of Punjab, including the 'Ring-Road' project where the complainant is presently employed as Project Manager. On informal enquiry from dept'l officials the complainant found that he already had an NTN allotted in his name that was issued by FBR/PRAL, Faisalabad, although he had not applied for one. After making further enquiries he came to know at the TFC Lahore counter, that a number of PRAL employees at RTO Faisalabad had been proceeded against for their involvement in corrupt practices including preparation of fabricated, tax related documentation and were eventually dismissed from service.

3. The complainant contends that he has been a victim of unscrupulous elements within PRAL/RTO-Faisalabad who connived first unilaterally issuing an NTN certificate perforce in his name even though he had never applied for one and subsequently, on the basis of a fabricated 'change of particulars application,' wrongly showed him to have been associated with one, Messrs Al-Khawan Enterprises, Faisalabad. After issuing the changed NTN from Faisalabad, FBR/ PRAL attempted to issue a STRN certificate in his name (fake 'application' dated 25-8-2011) from RTO, Lahore but the attempt failed.

4. The complainant alleges that with the collusion of corrupt elements, the Deptt at Faisalabad and Lahore have been deliberately issuing NTN and STRN certificates of individuals without their knowledge after getting their CNIC and other details through various sources, including monthly/annual statements of withholding taxes. These victimized individuals were not hitherto borne on the tax rolls of the Deptt. NTN and STRN were made out without their knowledge and were not delivered to the actual persons in whose names they had been made out but retained by these corrupt PRAL/Departmental elements to be subsequently used in various schemes like contrived/bogus income tax/sales tax refunds etc.

5. The complainant stated that he informed CEO PRAL through the in-charge NTN Cell, TFC, Lahore vide his letter dated 24-3-2014 of the above development(s) and requested that the fraudsters be tracked down and action taken against them, including lodging of FIR against the main culprits, but to no avail. In this context three reminders were also sent to FBR/PRAL including a final request moved on 13-11-2014. When the complainant did not receive any response from FBR/PRAL, he sought the intervention of the Federal Tax Ombudsman and filed a complaint before him under section 10(1) of the FTO Ordinance on 16-1-2015.

6. When confronted, FBR/PRAL filed a reply denying the complainant's allegations. Reference was made to a written request by the complainant, statedly on Rs. 20 stamp paper,' attested by the oath commissioner, for issuance of NTN. This was statedly followed up by first manual and then an online request on the prescribed application form for recording a change in his particulars by including the name of Messrs AL-KHAWAN Enterprises, Faisalabad on the NTN certificate issued to him. FBR/PRAL denied that the PRAL officials dismissed at Faisalabad had anything to do with the complainant's case. Additionally, FBR/PRAL pointed out that even if no application had been filed by complainant, the NTN certificate could have been legitimately issued as a result of complainant's compulsory NTN registration after he had taken up employment with Messrs J.S. Bank Lahore whose Head Office was at Karachi.

7. The Deptt. also stated that as per information available the complainant maintained an account in the Bank of Punjab and had made significant cash withdrawals there-form on which a tax deduction at source of Rs.25,895 had been made and this needed to be explained in the context of the alleged NTN/STRN applications filed by him.

8. The complainant -contested the veracity of the applications (NTN/Change in Particulars/STRN) referred to above. He stated that the so called stamp paper application attributed to him was prima facie, a bogus document. He stated that his signature on the stamp paper had allegedly been forged. The stamp paper was undated/unnumbered and very importantly, there was no stamp vendor's certification on the backside of the stamp paper. Furthermore, the complainant contends that this alleged signature on the change in particulars application form dated 12-8-2011 is also a forgery. His cell No.(0308-2366981), email address: (tax-law <mailto:>) Bank Account (MCB, Dhuddiwala Branch, Faisalabad) cited on the TRF-01 application form dated 25-8-2011 are all statedly wrongly cited. As regards the cash withdrawals from his BoP account. It is stated by the complainant that PARL was trying to confuse matters by suggesting a link between the NTN issued to him perforce on 14-3-2010 and the cash withdrawals from BoP in the period 31st December, 2014 to 18-3-2015. The complainant stated that the BoP account is his personal account that was opened on 19-9-2012. Till December, 2014 it had minimum balance and only after joining SARCO (Pvt.) Ltd. in February, 2014 that significant transactions came to be recorded in the said account. This is for the reason that Mr. Ali Mansur having been appointed as Project Manager SARCO (Pvt.) Ltd. (Lahore Ring Road Project) was operating an Imprest account for the Company and Company funds pertinent to the Ring Road, project were routinely routed through the said account (crossed cheque transaction only). He said that salary received by him from his employer, Messrs Sheikh Abdur Razzaq and Company (Pvt.) Ltd. (SARCO) was also deposited in this account and tax withheld under section 149 of the Income Tax Ordinance, 2001 reflected therein as accepted by Deptt. This answers the PRAL query regarding source of funds in the BoP account.

9. As FBR/PRAL did not accept the complainant's contention that his signatures had been forged on the undated Rs.20 stamp paper application and the subsequent application for a change in NTN particulars, the complainant sought the opinion of a professional handwriting expert after informing this office in the matter. He submitted samples of his handwriting/authorized signatures along with the so called, original stamp paper application for issuance of NTN and the application for change in NTN particulars. The expert compared the complainant's authorized signatures with the signatures on the contested documents and concluded that the signatures on these documents were not consistent with the complainant's signature.

10. The handwriting expert's report was sent to FBR/PRAL on 24-4-2015. A reply was filed in response on 18-5-2015 in which FBR/ PRAL contended that as the complainant alleged that his signatures on the cited applications had been forged, the FTO did not have jurisdiction to investigate the complaint as forgery was a criminal offence cognizable only under the P.P.C. by a court of competent jurisdiction.

11. During the complaint investigation proceedings the DR suggested that an application from a taxpayer for issuance of NTN need not be the only source of to initiate the NTN registration process. The DR opined that monthly/yearly tax withholding data routinely transmitted by withholding agents to FBR field formations can also result in compulsory registration of persons earning taxable income and issuance of NTN to them. In the case of the present complainant the DR pointed out that Mr. Ali Mansur took up employment with Messrs J S Bank on 14-11-2008 at 'Lahore whose Head Office was at Karachi and it was conceivable that periodic Statements sent out by the J S Bank Head Office to the competent authority in the field formations could have led to his compulsory registration.

12. Both sides heard and available record examined.

13. The Dept'l objection to FTO's jurisdiction is misconceived. This is much more than a simple case of forgery. Certain FBR/PRAL functionaries have deliberately, brazenly, violated the strict protocols instituted for issuance of NTN, for recording a change in NTN particulars and for issuance of STRN and their motivation is wholly suspect. Their actions are contrary to the law and attract the provisions of section 2(3) of the FTO Ordinance, 2000. The violation of prescribed protocols being CONTRARY TO LAW is tantamount to maladministration and hence placed well within the jurisdiction of the FTO.

14. The Dept'l suggestion that Dept'l monitoring of tax withholding data transmitted periodically by withholding agents could have led to compulsory registration of persons earning taxable income in some cases and resultant issuance of NTN to them is of course correct. However, when this happens the person who has been so registered becomes aware that he has been compulsorily registered as he invariably receives a copy of the NTN certificate by post from PRAL. In the case of the complainant he never received any such intimation from PRAL directly and there is no credible evidence with PRAL that he did. That is why he started making enquiries about issuance of NTN on his own when he took up employment with S.A.R.C.O. (Pvt.) Ltd. on 11th February, 2014 after leaving J.S. Bank on 30-1-2009. It is to be noted that the complainant did not receive any NTN from FBR/PRAL when he was employed in J.S. Bank at Lahore.

15. The so called NTN application that the Deptt. says the complainant filed on Rs.20 stamp paper does not inspire any confidence at all. The most glaring defect in this "application" is the fact that the stamp paper bears no particulars of the stamp vendor without which the stamp paper is just a sheet of colored paper and has no value as a legal document. Furthermore, the "application" bears no Diary number. Additionally, the signatures affixed on the "application" have been rejected by the handwriting expert as having any similarity to the complainant's authorized signature and the Deptt. has not countered that firm finding with any credible rebuttal except to state that this was forgery issue.

16. So far as complainant's nexus with the so called Messrs Al-Khawan Enterprises, Faisalabad is concerned the complainant has categorically denied any connection whatsoever and has filed an affidavit to support the denial. On the other hand the Deptt. has not filed a shred of evidence of show that the complainant had any interaction at all with Messrs Al-Khawan Enterprises, Faisalabad. Mere assertion by the Deptt., unsupported by any corroborating evidence whatsoever, inspires no confidence in the Dept'l stance.

17. When the complainant made informal inquiry from the Deptt. about obtaining an NTN, he was told that NTN had already been assigned to him. The Deptt. states that the NTN was issued in consequence to application filed by complainant "on Rs.20 stamp paper attested by Oath Commissioner." However, this so called "explanation" is not plausible as discussed supra. This is for the obvious reason that when the complainant came to know that he already had an NTN in his name although he had never applied for one, it would be absurd for him to "apply" for another NTN on the ground that "he had not received the NTN that he had applied for earlier."

18. Letter dated 27-1-2015 by Mr. Hassan Subhani, Incharge NTN Cell, Lahore to The Senior Manager Operation/Chief Manager Operation (PRAL), IR Operation, Islamabad with copy endorsed to TC-I, FBR consequent to notice dated 20-1-2015, issued to PRAL by the regional office of the FTO, Lahore, is very revealing and extract there-from is reproduced below:--

"Subject: COMPLAINT AGAINST ISSUANCE OF ILLEGAL NTN ON FAKE DOCUMENTS-MISUSE OF CNIC OF INNOCENT CITIZENS OF PAKISTAN

Refer to subject cited above;

We have received FTO Order C.No.66/LHR/2015 dated 20-1-2015 by FTO advisor and letter C.No.4(66)/To-I/2015 dated 23-1-2015 by the Second Secretary (TO-I) FBR Islamabad.

In this regard, applicant (Ali Mansoor Khan) has filed first complaint on dated 24-3-2014 and second complaint filed on 26-5-2014 to PRAL head office through incharge NTN cell Lahore. But no such action taken against these complaints, now once again he submitted complaint on dated 14-11-2014 to PRAL head office through Incharge NTN Lahore.

Keeping in view the attached complaint, matter was discussed in detail with CMO-PRAL then as per ordered by CMO-PRAL initial inquiry conduct against fake documents. After detail scrutiny from system it was found that NTN-3518722-7 having CNIC-3520288870001 of Messrs Al-Khawan Enterprises processed and delivered from RTO Faisalabad. For fact collection direction was issued to Sr. DBA Faisalabad by MO PRAL (IR-Central) for early submission of relevant documents to him.

In the above said inquiry from e-mails and Telephonic conversation, it was found that this NTN application received. and processed from Faisalabad NTN cell by PRAL DEO Zahid Sarfaraz and Imran Hussain. It is also inquired about current status of DEO, it was found that both persons terminated from services on issuance of such matters. Where NTN of Messrs Al-Khawan Enterprises was processed and Approved by NTN cell Head Office Islamabad.

(E-Registration process applied history attached for information).

The documents were forwarded along with applicant complaint to CMO PRAL (as per telephonic ordered) for further decision and security, FTO complaint is also forwarded for decision and reply."

19. The above letter throws much light on the inner working of PRAL but unfortunately when approached by this office for a response in the matter, PRAL unjustifiably, summarily brushed it aside. It is not understandable why the Deptt. has acted in this manner when Mr. Hassan Subhani was very much in the PRAL loop in RTO Lahore that had territorial jurisdiction over the complainant as he was based in that city. His indication that two PRAL employees, Messrs Zahid Sarfraz and Imran Hussain, dismissed for their involvement in corrupt practices, were also involved in submitting a fraudulent application for a change in complainant's NTN particulars cannot be brushed aside lightly. His letter to higher authorities in PRAL is self explanatory and clearly shows that he knows what he is talking about. Submission of a subsequent clarificatory statement by PRAL denying involvement of Mr. Zahid Sarfaraz and Imran Hussain in complainant's NTN issue does not 'clarify' anything especially when a demand for their appearance before the FTO to personally 'clarify' various matters raised in the complaint has been abruptly turned down by PRAL with the terse remark that following their dismissal FBR/PRAL had no further contact with them. It is noteworthy that as per activity report submitted by FBR/PRAL, one of these two individuals, Mr. Zahid Sarfaraz, was closely involved in the processing and issuance of NTN to the complainant. In fact, Mr. Zahid Sarfaraz is clearly involved in every step leading to issuance of complainant's unsolicited NTN and he himself "received" the NTN certificate when the same was finally "issued." It is equally noteworthy that perusal of documents annexed with FBR's letter C. No. 4(66)/ TP-I/2015 dated 30-1-2015 reveals that when the fake application for a change in complainant's NTN particulars was approved on 25-8-2011, an Electricity bill for the month of October 2010 was attached with the bogus application as required supporting documentation. Notwithstanding an objection raised by an FBR functionary that the electricity bill was outdated, changes in the NTN certificate were still approved by the concerned PRAL officials in the absence of a valid electricity bill and PRAL has no plausible explanation for this lapse.

20. PRAL has suffered adverse comment from the FTO earlier as well. The fact remains that despite huge investment in PRAL infrastructure, it remains highly deficient in implementing protocols ostensibly set up to efficiently process and dispose of taxpayers queries relating to various issues and problems that they routinely face in their dealings with the Deptt. The present complainant too has obviously suffered at PRAL's hands but the organization obstaintely refuses to acknowledge any shortcoming or wrongdoing on its part. As a result, it refuses to take corrective action.

21. Again, the alleged submissions of a seriously flawed sales tax STRN application by complainant at Lahore after allegedly filing a flawed NTN application at Faisalabad, is not credible to say the least. From the ambient circumstances in this case, it appears that the real objective of some elements in PRAL was to obtain an STRN in complainant's name. Had it actually materialized, the STRN would have been misused to the detriment of the complainant.

FINDINGS.

22. The circumstances and highly suspect sequence of events discussed supra raise many questions and strongly suggest foul play by PRAL functionaries. There is need that the Deptt. accepts these happenings and takes concrete steps to ensure that others are spared such harassment and the fraud that is being perpetrated in the Deptt. due to documents contrived fraudulently comes to an end.

Recommendations:--

23. FBR to---

(i) conduct enquiry to determine how, and by whom the defective NTN certificate was issued in complainant's name;

(ii) devise a fool proof SOP with the consultation of National Response Centre for Cyber Crimes (NR3C) wing of FIA to stop the use of fraudulently prepared documents in PRAL;

(iii) devise a policy to validate all NTNs on the PRAL data base through a system of biomatric verification; and

(iv) report compliance within 60 days.

24. A copy of the above Findings/Recommendations, along with copy of complaint and all documents presented/obtained during investigation be forwarded to ',IV for initiating criminal investigation into the forgery of complainant's 5ignatures on the so called stamp paper application for NTN and the change in NTN particulars application.

KMZ/87/FTOOrder accordingly.