The Federal Board of Revenue (FBR) has filed a case with the Special Judge seeking to prosecute Habib Metropolitan Bank executives for tax evasion.

According to sources, the Large Taxpayer Office (LTO) Islamabad has filed a case against Habib Metropolitan Bank executives before Special Judge Customs, Taxation, and Anti-smuggling Rawalpindi/Islamabad.

The FBR said in their complaint that the five accused individuals, including Manager Operations Muhammad Arsalan Khan, Majid Ali Khan, and Kashif Ahmed, were holding money on behalf of the taxpayer company-in-default, M/s Tahir Builders (Private) Limited.

For the tax year 2016, an income tax claim of Rs. 267.9 million was due and receivable from the taxpayer under section 122(5A) of the Income Tax Ordinance, 2001.

On 6 June 2022, the recovery notice u/s 140 read with rule 69 of the Income Tax Rules, 2022, was served on Manager Operations Habib Metropolitan Bank, Muhammad Arsalan Khan, for the collection of the taxpayer’s tax dues.

However, despite receiving the notice u/s 140 of the Income Tax Ordinance 2001, bank officials Muhammad Arsalan Khan, Majid Ali Khan, and Kashif Ahmed did not debit block the taxpayer’s bank account maintained at their branch with malafide and criminal intent, allowing the taxpayer to remove and transfer the funds available in its account in order to avoid recovery of tax dues dishonestly and fraudulently.

This enabled the taxpayer to transfer Rs. 20.05 million from its account on the same day, June 6, 2022. As a result of their intentional non-compliance with notice u/s 140 of the ITO-2001, Muhammad Arsalan Khan, Majid Ali Khan, and Kashif Ahmed have caused significant damage to the national exchequer.

The FBR noted that the aforementioned bank personnel, in collusion with the taxpayer, impeded FBR employees from carrying out their statutory duties and are subject to prosecution under sections 191 and 196 of the Income Tax Ordinance 2001.

The other two accused persons, Mohsin Ali Lathani, President Habib Metropolitan Bank Limited, and Hasnain Rizvi, Chief Compliance Officer, were in full knowledge of the fact and willfully and knowingly aided and abetted the accused Muhammad Arsalan Khan, Majid Ali Khan, and Kashif Ahmed in committing the offences and as such are liable to be prosecuted u/s 196 and 199 of the Income Tax Ordinance 2001 for aiding and

In light of the above, it is respectfully requested that the above-mentioned accused people be called by notice/arrest warrant and their trial be initiated in accordance with section 203 read with sections 191, 196, and 199 of the Income Tax Ordinance 2001.

According to FBR sources, retrieving tax dues from defaulting taxpayers is a time-consuming and arduous process that begins only after exhausting all appeal channels.

Banks hold money on behalf of taxpayers and serve as the financial system’s gatekeepers. Once the department is in a position to collect unpaid taxes, banks have a responsibility to play in ensuring that recovery is effective under fiscal regulations.

Their timely compliance with the letter and spirit of tax laws is critical to FBR’s overall enforcement drive, but when these gatekeepers are corrupt or compromised, the opportunity to recover tax dues slips away and may not come again for years due to lengthy litigations and stays liberally granted by our judicial system, without looking deeply into the facts of each case.

If this kind of bank activity is tolerated, there will be no recoveries, and the department will have to make an example of the dishonest and careless bankers who have caused damage to the public exchequer.

It is vital for establishing the FBR’s writ, and hence we have determined to go all out against such bankers so that this does not happen again. There is no place for mercy, especially with such flagrant disregard for tax regulations, according to sources.

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