Pakistan Case LawMARIUM ATIF Versus SECRETARY, REVENUE DIVISION, ISLAMABAD
The complaint challenged an assessment order dated 23.06.2025, which imposed tax liability on the complainant for a vehicle purchase allegedly made using her misused CNIC. The core legal question was whether the tax department committed maladministration by failing to verify the actual source of funds and ownership of the vehicle before finalizing the assessment. The Ombudsman held that the department failed to exercise due diligence, as a simple inquiry with the manufacturer would have revealed the true purchaser. This lack of investigation constituted administrative excess and ineptitude. Consequently, the complaint was allowed, and the Federal Board of Revenue was directed to revisit the impugned assessment order, initiate legal proceedings against the individual who misused the CNIC, and investigate the current vehicle owner. The Ombudsman established the principle that statutory powers must be exercised reasonably, fairly, and justly, and that an administrative failure to verify third-party information before imposing tax liability, resulting in the penalization of an innocent person for another's fraud, constitutes maladministration under the relevant regulatory framework.
- Does the failure of a tax authority to verify third-party information before finalizing an assessment constitute maladministration?
- What is the scope of the duty of tax authorities to exercise statutory powers reasonably and fairly under the General Clauses Act 1897?
- Can a taxpayer be held liable for tax on a vehicle purchase if their CNIC was used by a third party without their consent?
- Section 10(1), Federal Tax Ombudsman Ordinance 2000
- Section 10(4), Federal Tax Ombudsman Ordinance 2000
- Section 2(3)(i), Federal Tax Ombudsman Ordinance 2000
- Section 2(3)(ii), Federal Tax Ombudsman Ordinance 2000
- Section 122(1), Income Tax Ordinance 2001
- Section 111(1)(b), Income Tax Ordinance 2001
- Section 231B, Income Tax Ordinance 2001
- Section 9(1), Federal Ombudsmen Institutional Reforms Act 2013
- Section 24A, General Clauses Act 1897
FINDINGS/RECOMMENDATIONS
M. ZAFAR UL HAQ HIJAZI, FEDERAL TAX OMBUDSMAN.--- The above-mentioned complaint was filed against the Commissioner Zone-II, RTO-II Karachi in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), for an alleged illegal assessment order dated 23.06.2025 imposing tax liability of Rs.67,350 for the tax year 2019 against concealment on the purchase of a Toyota Corolla Model 2018, misusing the CNIC of the complainant.
2.The Complainant, a salaried individual, filed her return of income for tax year 2019, declaring income of Rs 400,000. Based on third-party information related to the purchase of a Toyota Corolla, vehicle worth Rs.2,049,000 in her name during tax year 2019, the DCIR initiated proceedings and passed an assessment order under section 122(1) read with section 111(1)(b) of the Income Tax Ordinance, 2001 (the Ordinance) imposing tax liability of Rs.67,350 for tax year 2019 on 23.06.2025 despite the written denial by the complainant against the purchase of the said vehicle. As per the complainant, she had neither booked nor paid any amount against the purchase of this motor vehicle. This vehicle was booked in her name by misusing her CNIC; hence this complaint.
3.The complaint was referred to the Secretary, Revenue Division for comments, in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response, the Commissioner, Zone-1, RTO-II Karachi vide letter dated 13.10.2025 submitted comments stating that on the basis of third-party information, the deemed assessment order was amended as the complainant claimed tax deduction of Rs.40,000 under section 231B of the Ordinance but failed to declare the corresponding motor vehicle in the wealth statement. The Unit Officer initiated proceedings and passed the assessment order under section 122(1) read with section 111(1)(b) of the Ordinance, after providing a proper opportunity of being heard.
4.Both parties' arguments considered.
5.In order to investigate the misuse of CNIC against the purchase of a Toyota Corolla, a vehicle worth Rs.2,049,000, it is utmost necessary to find out the individual who actually made payment to Indus Motor Company Ltd. against the purchase of this vehicle. Accordingly, information was acquired from Indus Motor Company Ltd., which provided information vide letters dated 16.10.2025 and 28.10.2025 as shown below:
"Order No. 1237114, Name: Mrs. Mariyum Atif, Model Corolla GLi 1.78 / 2018, Silver color, Chassis No. NZE170R-4155309, Engine No. 7329324, Booking date 23.02.2018, Dealership Toyota Eastern Motors, Karachi.
Payment made: Rs. 500,000 vide pay order No. 00593722 dated 23.02.2018 and Rs 1,594,000 vide pay order No. 00698564 dated 06.06.2018, both drawn on Sindh Bank Limited Muhammad Ali Society Branch, Karachi."
This information was sent to the concerned bank i.e. Sindh Bank Limited, Muhammad Ali Society Branch, Karachi, to find out details of the individual who actually paid the amount against the purchase of this vehicle.
6.The Operation Manager and Branch Manager, Sindh Bank vide letter dated 05.11.2025 submitted that both the above-mentioned pay orders payable to M/s Indus Motor Company Ltd on account of Marium Atif were issued from Account No. 0333-401138-4300 maintained in the name of Mr. Farrukh Saleem, CNIC 42301-7495044-1, Address; House No. 50/2, Mohalla Lane 16, Phase 7, DHA Karachi (a taxpayer of RTO-1 Karachi). Furthermore, this account was closed on 24.07.2019. This forum called Mr. Farrukh Saleem, CNIC 42301-7495044-1, to explain his position vide letter dated 11.11.2025, but he failed to respond to date, meaning thereby he has nothing to offer in his defense. Hence, it is established beyond any iota of doubt that Mr. Farrukh Saleem is the person who intentionally gained a financial benefit by misusing the CNIC of the complainant and would be liable for criminal proceedings. The Complainant has every right to pursue this fraud case before any competent forum against Mr. Farrukh Saleem, son of Mazhar Hussain, CNIC 42301-7495044-1 Address: House No. 50/2, Mohalla Lane 16, Phase 7, DHA Karachi
7.In addition, information was also acquired from the Excise and Taxation Authority, Government of Sindh and the Excise and Taxation Officer, Motor Registration Wing, Civic Centre Karachi vide letter ETO/MRA(OR-C)/13695 dated 26.11.2025 submitted that the vehicle was booked in the name of Mrs. Marium Atif by M/s Toyota Indus Motors Company Ltd. but the vehicle in question was initially registered in the name of Mr. Amjad Ali son of Kamal Khan Noonari, CNIC 41308-9473934-9, Noonari House Bathoro Road, Tando Muhammad Khan, Transfer date: 16.05.2019. However, presently, the ownership stands in the name of Mr. Ahmed son of Muhammad Suleiman, CNIC 44107-2778564-7, Village Malho Junejo, PO Umerkot Thatharai Teh District Umerkot. Taxpayers Profile Inquiry from the FBR database reflects that Mr. Amjad Ali son of Kamal Khan Noonari, CNIC 41308-9473934-9, is a taxpayer of RTO-II Karachi, whereas no record exists in the FBR database against Mr. Ahmed son of Muhammad Suleiman, CNIC 44107-2778564-7, Village Malho Junejo, PO Umerkot Thatharai Teh District Umerkot who is the present owner, meaning thereby, Mr. Ahmed son of Muhammad Suleiman, CNIC 44107-2778564-7, is not registered in income tax.
8.As can be observed from the above detailed discussion, the said vehicle Corolla GLi 1.78 / 2018, Silver color, Chassis No. NZE170R-4155309, Engine No. 7329324 was not purchased by the complainant, but the CNIC of the complainant was misused by Mr. Farrukh Saleem, CNIC 42301-7495044-1, Address: House No. 50/2, Mohalla Lane 16, Phase 7, DHA Karachi, who fraudulently. Used the CNIC of the complaint to acquire the said motor vehicle. On the contrary. unfortunately, the Department did not bother to investigate the details of the investment from M/s Toyota Indus Motors Company Ltd - the manufacturer of this vehicle before concluding the assessment proceedings against the complainant. Not a single letter was issued to the manufacturer to confirm the nature, type and source of payment against the purchase of this vehicle.
9.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; 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 an innocent person was penalized for the fraudulent activities of fraudsters.
FINDINGS:
10.The above trail of facts proves that verification proceedings conducted by this forum could have been easily done by the assessing officer at amendment assessment stage. Thus, departmental failure to investigate the original source of investment against purchase of vehicle Corolla GLi 1.78 / 2018 from the manufacturer of vehicles (M/s Toyota Indus Motors Company Ltd.) on misuse of CNIC of the complainant, caused administrative excesses, inattention and ineptitude, tantamounting to maladministration in terms of section 2(3)(i) & (ii) of FTO Ordinance.
RECOMMENDATIONS:
11.FBR to direct:
MQ/10/FTO Complaint allowed.
Judges on this bench
- M. Zafar-Ul-Haq Hijazi97 judgments
- Federal Tax Ombudsman30 judgments