LAHORE, PAKISTAN: Negligence by the Regional Tax Office (RTO) has resulted in the invalidation of default surcharge notices issued to a local power generation company, raising concerns about accountability and transparency within Pakistan’s tax department.
According to sources, the tax department’s failure to follow proper procedures led the appellate forum to declare the notices “without lawful authority and jurisdiction.” Specifically, the department did not correctly determine the surcharge amount and inappropriately initiated proceedings under Sections 161 and 205 of the Income Tax Ordinance, 2001. Additionally, they neglected to consider the company’s history of compliance, further underscoring procedural lapses.
The company’s representatives welcomed the decision, highlighting that taxpayers frequently face harassment and undue treatment from tax authorities. “This case validates the long-standing grievances of taxpayers,” they stated. Business Recorder
The appellate forum set aside the show-cause notices and related orders, citing the tax officer’s negligence and lack of jurisdiction. Experts believe this incident reveals significant flaws in the tax department’s operations, emphasizing the need for reform. Tax expert Ashfaq Khan remarked, “This negligence erodes taxpayer confidence and underscores the need for procedural fairness and transparency.”
Financial analysts argue that the incident should prompt the tax department to improve processes, reduce litigation burdens, and enhance officer training. They emphasize that such negligence not only places financial strains on taxpayers but also creates an unwelcoming business environment.
Pakistan’s business community urges the tax department to foster a business-friendly climate, crucial for economic growth. Reforms focusing on fairness, efficiency, and accountability are essential to rebuilding trust and supporting business development, experts insist.
