ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a new recovery procedure for the Inland Revenue field formations to prevent the unlawful attachment of taxpayers’ bank accounts. In this regard, the FBR has issued fresh instructions to the field formations.
As per the FBR’s directives, superseding the Board’s prior instructions and in consideration of the interim order of the Islamabad High Court in Writ Petition No.229812016, the following instructions are to be followed by field formations for tax recovery and the submission of reference applications or civil petitions for leave to appeal.
Concerning Inland Revenue officers, the Zonal Commissioners must ensure that the relevant officer exercises jurisdiction over a taxpayer. All notices should be appropriately served as outlined in the Income Tax Ordinance, 2001. They are required to ensure that orders under any provisions of the said Ordinance are issued after providing adequate opportunities for the taxpayer to be heard, and recovery measures under sections 138 or 140 are to be initiated only after the statutory time provided under section 137 (2) of the said Ordinance for tax payment has elapsed.
No further proceedings for tax recovery should occur when a court order restraining tax recovery from any court of law, such as the Honorable Supreme Court or Honorable High Court, is received. If the restraining order is received after the initiation of recovery measures under any provisions of the said Ordinance but before the actual recovery of the tax amount, no further action shall be taken for tax recovery, as per FBR’s stance.
Similarly, no additional proceedings for tax recovery should be undertaken when a stay order from the Appellate Tribunal Inland Revenue (Tribunal) or the Commissioner Inland Revenue (Appeals) is received. If the stay order from the Tribunal or the Commissioner IR (Appeals) is received after the initiation of recovery measures under any provisions of the said Ordinance but before the actual recovery of the tax amount, no further action shall be taken for tax recovery.
Proceedings under the provisions of sections 138 and 140 are distinct and are governed by separate rules under the Income Tax Rules, 2002. The rules in Chapter – XVI of the said rules outline the procedure for recovery of tax under the provisions of section 138. In contrast, the rules in Chapter XVIA of the said rules detail the procedure for recovery of tax under the provisions of section 140.
However, without prejudicing departmental appeals or reference applications before appellate authorities or courts of law, a notice under section 138 (1) shall invariably be issued, allowing taxpayers seven days to make tax payments before recovery proceedings under section 140 of the said Ordinance.
If there is no restraining order by any court of law or no stay order by the Commissioner IR (Appeals) or the Tribunal, the recovery of tax through bank attachment under section 140 of the said Ordinance shall only be initiated with the prior approval of the committee to be constituted at the formation level. The committee shall consist of two senior Commissioners headed by the Chief Commissioner of Inland Revenue.
Moreover, when proposing to file reference applications and civil petitions for leave to appeal before higher courts, Zonal Commissioners are expected to exercise discretion in cases where a question of law is involved.
