Karachi: In a significant ruling, the Federal Tax Ombudsman (FTO) has held the Federal Board of Revenue (FBR), particularly the Commissioner Inland Revenue, Refund Zone, RTO-II, Karachi, guilty of maladministration for unlawful recovery through bank attachment and an inordinate delay of more than six years in issuing appeal effect.
The decision was passed on a complaint filed by AQP, a services provider and registered taxpayer, pertaining to Tax Year 2014.
The FTO noted that an assessment order under Section 122 of the Income Tax Ordinance, 2001, dated 27 August 2018, created a tax demand of Rs. 19.19 million, out of which over Rs. 5.2 million was forcibly recovered by attaching the complainant’s bank account.
Subsequently, the Commissioner Inland Revenue (Appeals-V), Karachi, vide Order-in-Appeal No. 22 dated 12 February 2019, annulled the assessment order and directed the department to re-examine the case in accordance with law.
Despite clear appellate directions, the department failed to issue the appeal effect for more than six years. When the appeal effect was finally issued on 24 November 2025, the recovered amount was not credited, resulting in denial of lawful refund.
The FTO also expressed serious concern over repeated non-appearance of departmental representatives during hearings held on 28 November, 5 December, and 12 December 2025, which further demonstrated administrative negligence.
Terming the conduct as blatant maladministration, the FTO observed that such prolonged inaction caused severe financial loss and mental distress to the taxpayer and undermined the credibility of tax administration.
Key Directions Issued by FTO
The FTO has recommended that the FBR:
- Fix responsibility for the unjustified six-year delay in implementing appellate orders;
- Initiate action for non-compliance with FTO hearing notices;
- Rectify the appeal effect by allowing credit of the forcibly recovered tax amount;
- Ensure immediate disposal of refund for Tax Year 2014; and
- Submit a compliance report within 45 days
