Income tax laws being misused by taxation officers: LHC

LAHORE: The Lahore High Court has observed that Section 140 of the Income Tax Ordinance 2001, which allows recovery of tax from a bank account of a taxpayer, is being recklessly used by the taxation officers to achieve their revenue targets.

Justice Shahid Jamil Khan heard a petition of a businessman challenging unilateral recovery of Rs8.1 million from his bank account by the Federal Board of Revenue (FBR) under the head of income tax.

Petitioner Sardar Waseem Ilyas pleaded through a counsel that the Inland Revenue department of the FBR issued his company a notice for the recovery of income tax.

He said an appeal was filed against the recovery notice that was still pending before the commissioner Inland Revenue.

The counsel stated that the FBR also issued a recovery notice under section 140 of the ordinance to banks and withdrew the amount from personal bank accounts of the petitioner, which was an illegal act.

He argued that the respondent illegally withdrew the amount from the petitioner’s personal bank account without any prior intimation mandatory under the law.

The counsel pleaded that the right of petitioner to hold its lawful property cannot be infringed or compromised without the authority of the law. Since the respondent usurped the lawful property of the petitioner, therefore, the impugned action of recovery of tax cannot hold field as a lawful action.

He argued that the forceful recovery by the respondents was in sheer violation of the mandate of section 140 of the income tax ordinance.

He asked the court to declare action taken by the FBR authorities for recovery of the disputed tax demand as unlawful.

Dr Shazia Gull, the commissioner of Inland Revenue of Lahore, appeared before the court and attempted to justify the impugned action under section 140. She said a notice was served on the petitioner before making recovery from the bank account of the petitioner.

She also presented a copy of the prior notice served to the petitioner under section 139 of the ordinance.

However, Justice Khan observed that the opening part of the notice under section 140 did not show relevant details of the notice issued under section 139.

The judge remarked that it has been observed in a number of judgements and orders that after the insertion of Article 19-A in the Constitution, the dissemination of necessary information to the person who is proposed with an action is mandatory.

The judge would resume further hearing on Nov 30.

Published in Dawn, November 23rd, 2023