Multiple Fake Transactions Discovered In Tax Payer Profile:FTO Orders Investigation

Islamabad: Thousands of fraudulent transactions discovered in taxpayer profile. The taxpayer sought relief from the Federal Tax Ombudsman (FTO) after getting disappointed by the authorities.

According to the reports, Muhammad Umar Aziz, a Deputy Secretary in the Ministry of Law and Justice and filed income tax returns declaring income from salary only. Reportedly, he has found multiple Fake entries appearing in his tax profile.

After getting disappointed he made a call to Commissioner-IR, Regional Tax Officer (RTO) Islamabad but unluckily did not get any response.

Moreover, he had a Complaint to the FTO about tampering with his tax profile, and it was dismissed. A complaint with the recommendation to update the complaints tax profile was filed on January 31, 2018 complaint number 0719/ISB/IT/2107.

Though the complaint was launched five years back still, no action has been taken by the authorities.

According to the complainant, under various sections of the Income Tax Ordinance 2001, there were approximately 23,800 fake entries made in the complainant’s name. Including import declarations and withholding Transactions.

However, these are due to the fact that a test National Tax Number (NTN) was allotted to the complainant. All situation depicts the negligence and inefficiency of the Federal Board of Revenue (FBR) and Pakistan Revenue Automation Authority (PRAL) employees.

In this instance, both organizations provided a response, which was unsatisfactory for the FTO. The Ombudsman noted that this case reflects some serious details.  In case, if not addressed that may expose FBR to similar hazards in the future.

On December 6, 2022, another letter was issued seeking PRAL’s response on the following issues:

1. FBR’s IT system had established a Test/Trial NTN against.
2. Reportedly, nearly 50,000 tax transactions made by unrelated persons have been reported against one Test NTN or CNIC
3. Multiples of Benami transactions made by unknown persons in the name of Muhammad Umar Aziz might have compromised a massive revenue specifically when and wherever transactions were:

• Made by inactive taxpayers
• Made by Mon taxpayers
• Made by active taxpayers in order to conceal their own identity

However, it has been noticed that the complaint has exposed the systemic and official maladministration of the FBR. The summary of its field formation and PRAL is as follows:

1. There is a lack of coordination between the PRAL and FBR. Commissioner North Zone, RTO Islamabad could not get the necessary information from PRAL
2. Lack of ownership by various people under the system including FBR headquarters, Commissioner-IR, PRAL, and others. They are causing a huge revenue leakage and compromising confidentiality
3. The overall in-house safety checks seem to be non-existent loopholes or irregularities continue unabated and surface specifically on taxpayers
4. Statements like “no IT registration trails are available in the system” and “it is not possible to check if the taxpayers have taken advantage of the complainant’s”, name in the ATL”.
5. PRALs reply on 14th December 2022, is merely an eye wash. The details shared appear to be incomplete. Out of multiple engineered transactions, only 29 entities have been this far identified who have reportedly misused the “Golden NTN”.

The FTO directed the FBR to:

1. Direct members (Information Technology) are restricted to investigate this matter and order an IT officer of failed transactions to be conducted by Directorate General I&I-IRS. Hence, to gauge the extent of revenue leakage and fix responsibility on the related individuals.
2. Direct member IR (operations) to issue instructions to all filed cases to take action under the law against withholding agents.
3. GM PRAL’s explanation may be invited for not responding to the situation, raised by this office and earlier by the concerned IR field formation.

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