Overview
- The FTO accepted a complaint on June 1, 2026 and found that officials obtained Rs1,500,000 from a Haripur surgical hospital owner during monitoring under Section 175C and then stopped proceedings without adjudicating tax liability.
- The office held that Section 175C only gives authorities investigatory powers to gather information and cannot by itself authorize coercive recovery or collection of tax.
- The FTO rejected the department’s claim that the payment was truly voluntary and said the circumstances show a coercive imbalance between revenue officers and the taxpayer.
- The ombudsman recommended that the Federal Board of Revenue open a fact‑finding inquiry, fix responsibility where officers exceeded lawful authority, and issue administrative guidance on accepting deposits during inquiries.
- Tax lawyers from the Lahore Tax Bar Association say the case reflects a wider pattern of misuse of Section 175C and urged FBR leadership to stop the practice, while no formal public response from the FBR has been reported so far.