ISLAMABAD: The Karachi-based Intelli­gence and Investigation department of the Federal Board of Revenue (FBR) has unearthed a scandal involving illegal transfer of over Rs20 billion to bank accounts and its withdrawal in Malakand division of Khyber Pakhtunkhwa without payment of taxes, it emerged on Thursday.

The tax-evaded funds were transmitted into bank accounts in the areas of Swat, Buner and Batkhela in Malakand division, a tax-free area of KP between 2014 and 2018.

The tax intelligence department has lodged a first investigation report (FIR) against the people allegedly involved in the scam.

A well-placed source in the department told Dawn that the pattern of transactions showed that funds were routed in these accounts without any economic justification, and that the funds were many a time deposited and also withdrawn through cash.

The initial investigations into the case show that the amount was transferred in three cases involving 10 to 15 people.

The source, however, did not disclose the names of the tax evaders involved in the scam.

The only action that was taken against these people was to attach their properties and bank accounts. “The FIA is further investigating into the scam,” the source said, adding that in some suspects were already on bail.

According to the source, the tax intelligence department has established that most of the amount was transacted for the purposes of “smurfing the money for tax evasions”. “We have established tax evasion against these people,” the source said, adding that investigation was in an advance stage.

In some cases, tax evaders have stayed the tax officers’ investigation proceedings which were finally vacated by the court on the plea that no immunity is available in the cases of money laundering and terror financing, even in the areas of the recently merged Federally Administered Tribal Areas (Fata) and the Provincially Administered Tribal areas (Pata).

After the court had vacated the stay, the source said, the tax department would now seek details about the source of income from the remaining people. However, it was found that these people did not cooperate with the tax department earlier in sharing the source of their income though several notices were issued to them.

The source said that no records of these people were available with the income tax department, which showed that the money transmitted had not been declared.

To identify usage of money withdrawn from bank through cash, the source said that the FIA had also initiated a probe into the scam. The agency will now determine whether the money was being raised through crime for money laundering and terror financing.

According to the source, the FIA has approached the people allegedly involved in the scam.

The Directorate of Intelligence and Investigation through a statement confirmed that illegal and tax evaded-money had been deposited in banks in far-flung, tax-exempted areas to avoid taxes or to conceal the money’s true source and identity of culprits.

Published in Dawn, December 13th, 2019