FBR to Investigate Misuse of Individuals’ CNIC for Purchase of 20 Vehicles

The Federal Board of Revenue (FBR) will investigate the case involving Benami transactions carried out by gangs who fraudulently misused CNIC of a taxpayer to purchase vehicles from Pak Suzuki Motor Company Limited.

In this regard, the FBR has received strict orders from the Federal Tax Ombudsman (FTO) on Tuesday. The FTO has categorically conveyed to the FBR that the failure to investigate the original source of investment against purchase of vehicles from the manufacturer of vehicles (Pak Suzuki Motor) on misuse of CNIC of the complainant causing administrative excesses tantamount to maladministration.

The complaint was filed against the Commissioner (Appeal) Sukkur in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) for an alleged illegal appellate order dated 13.02.2023 confirming the assessment orders of DCIR imposing tax liability of Rs. 4,008,450 & Rs. 5,415,100 for tax years 2020 & 2021 respectively against purchase of 20 vehicles misusing the CNIC of the complainant.

FTO has recommended FBR to direct the Commissioner (Appeals) Sukkur to rectify the impugned order dated 13.02.2023 on his own or on an application from the complainant on its merit in accordance with the law.

The Director General Anti-Benami Initiative, FBR to investigate the cases involving Benami transactions wherein the fraudsters have fraudulently misused CNIC of an innocent taxpayer and report compliance within 45 days.

FTO further informed the FBR that all these twenty vehicles were not purchased by the complainant but the CNIC of the complainant was misused by various car dealers and individuals mostly residing in Karachi by using the CNIC of the complainant of district Kashmore. On the contrary, the department did not bother to investigate the details of the investment from Pak Suzuki, the manufacturer of these vehicles. Not a single letter was issued to the manufacturer to confirm the nature, type and source of payment against the purchase of these vehicles.

The AR of the complainant neither argued the merit of the case before DCIR nor before the Commissioner’s Appeal. As a result, the complainant has imposed tax liability for tax years 2020 & 2021 respectively against concealment of income (unexplained source of investment on purchase of twenty vehicles).

Whenever the legislature confers a wide-ranging power, it must be deemed to have assumed that the power will be firstly, exercised in good faith; secondly, for the advancement of the objects of the legislation; and thirdly in a reasonable manner.

Section 24A of the General Clauses Act 1897 reiterates the principle that statutory power is to be exercised reasonably, fairly, justly and for the advancement of the purposes of the enactment. In the instant case, these principles were not followed and a person was penalized for the fraudulent activities of fraudsters.