The negligence of income tax department has caused a huge loss to the national kitty by not collecting 'additional taxes' under various provisions/sections, incorrect application of Income Tax Ordinance 2001, non-recovery of surcharges and leakage of revenue by the income tax officials during 2003-2004. The losses were also incurred due to wrong deductions of Workers Welfare Funds (WWF). Income tax officials have committed omissions in issuance of rebates, allowances and exemptions.
Other irregularities were detected in the calculation of tax, grant of credits, adjustment of refund, arrears and rectification, resulting in loss of Rs 395.2 million.
The total loss due to miscellaneous irregularities in Northern Region, Eastern Region, Southern and Corporate Regions comes to Rs 7421.5 million in 2003-2004.
The Central Board of Revenue (CBR) has detected these irregularities during the internal inspection and audit of the Commissionerates of Income Tax in 2003-2004.
SERIOUS IRREGULARITY: The income tax circles deleted substantial amount of arrears without obtaining 'incorporation certificates' from other circles as required under the law. The CBR has noted with great concern that assessing officers are indifferent and negligent in issuance of incorporation certificates pertaining to arrears received on transfer. This is very serious irregularity committed by the income tax assessing officers pointing towards strict action by the tax authorities.
The CBR has noted that heavy loss of revenue has been reported because arrears' demand was not brought forward or arrears demand has been deleted. This is highly objectionable form of revenue leakage for which possibility of mala fide intentions and collusive designs cannot be over-ruled.
The Regional Commissioners of Income Tax (RCITs) should take serious notices of this irregularity and fix responsibility for taking disciplinary action against the involved income tax officers, the internal inspection team concluded.
Official sources told Business Recorder on Tuesday that section 205(1) and 205(4) of the Income Tax Ordinance 2001 and section 31B, 31BB and 31BBB of the Wealth Act, 1963 prescribe mandatory levy of additional tax for delayed and short or non-payment of tax. In 2003-2004, the total loss on account of this was Rs 46626.4 million against Rs 908.9 million in the corresponding period last fiscal.
They said that every person responsible for paying any sum is obliged to deduct/collect tax as per specified rates and deposit the same in the national exchequer. However, the authorities have detected revenue loss of Rs 4006.6 million, which should have been charged under section 205(3) for default of the provisions of section 148, but was not charged by the income tax officials.
Region-wise analysis showed that 99.76 percent loss of revenue on account of non/short levy of additional tax under section 205(3) has been found at the Central Region, Northern Region and Southern Region.
Similarly, additional tax is charged u/s 205(1) if any assessee to whom provisions of sections 53/147 are applicable, fails to make payment of advance tax or makes short-payment, additional tax at the rate of 18 percent per annum is to be charged under Income Tax Ordinance 2001.
This additional tax was found to have been either not levied or short-levied to the tune of Rs 92.8 million. The analysis showed that 57.79 percent detection of loss of revenue pertaining to non/short levy of additional tax u/s 205(1) was seen in northern region.
Officials said that every person, who files return of total income, is required under section 137 of the Ordinance 2001 to pay his admitted tax liability on or before the date of furnishing the return. In case an assessee fails to pay the tax, he becomes liable to payment of additional tax at the rate of 18 percent per year on the amount of tax not paid. Income tax officials failed to charge this mandatory 'additional tax' in many cases and the loss of revenue was calculated to the tune of Rs 34.8 million. On finalisation of an assessment, the income tax officers issue demand notice under section 137(2) of the Income Tax Ordinance 2001, requiring the assessee to make payment of tax determined. In case, the assessee fails to pay this 'tax, penalty imposed or instalment allowed', he is liable to pay additional tax at the rate of 18 percent per annum on the amount of such tax, which is not timely paid. This mandatory additional tax was not charged in several Income Tax Circles, resulting in loss of Rs 456.9 million.
The income tax officials have caused loss of Rs 35.2 million due to short-levy of additional taxes under sections 31B, 31BB, 31BBB of the Wealth Act, 1963.
Officials said that in addition to the income tax charged for any year, surcharge is payable on income exceeding a prescribed limit at the rates specified in the income tax ordinance. The income tax officials have nor levied surcharge properly during 2003-2004, which resulted in loss of Rs 44.5 million.
The CBR has detected a number of discrepancies in charging Workers Welfare Fund resulting in loss of Rs 24.5 million in 2003-2004, officials added.
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