Income Tax Ordinance, 2001: Undoing the legacy - IV

CHAPTER 4, PROCEDURE FOR ASSE-SSMENT, Part 1 - Procedure
62. The following persons shall file a return of income for every year in the prescribed form;
(1) All persons whose net annual income exceeds Rs 400,000;
(2) All persons whose incomes are exempted under Part 2 of Chapter 2 of the Act, unless exempted by the Board;
(3) Every person to whom a notice is issued by the Taxation officer in the prescribed form requiring him to file the Return of Income within one month of receiving the notice or, with the permission of the Additional/Deputy Commissioner, earlier.
(4) In all other cases, as the Board may prescribe.
63. Where a return is filed by a person under section 62 and he discovers an omission or a wrong statement therein, he may file a revised return before any order or any notice is issued to him under any clause of section 65.
64. The return shall be filed under section 62 before the following dates in the financial year following the year:
(1) where the net annual income is less than Rs 500,000 or where it is filed under Section 62(2), by the end of September;
(2) where the net annual income is less than Rs one million, by the end of October;
(3) where the net annual income is Rs one million or more, by the end of December.
65. (1) If the Taxation Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence, that a return filed under section 62 is correct and complete, or that it requires rectification of any mistake apparent from record, he shall, within one year from the end of the financial year in which the return is filed, assess the income of the assessee on the basis of such return or such rectification, as the case may be, and determine the sum payable by the assessee or refundable to the assessee.
(2) An assessee may object to the order made under clause (1), by making an application to the Taxation Officer within one month in which the order is served on him and the Taxation Officer after considering such objections shall assess the income of the assessee and the tax payable by him or refundable to him, within one year from the end of the financial year in which such objections are received.
(3) Where in the opinion of the Taxation Officer -
(a) the return filed under section 64 is required to be examined; or
(b) particulars of any income are required to be investigated; or
(c) particulars of any income have not been furnished or have been wrongly furnished, he may serve on the assessee a notice requiring him to produce or cause to be produced such accounts, documents, statements or information as the Taxation Officer may require, after recording the reasons for issuing the notice in writing.
(4) The notice under sub-clause (a) of clause (3) shall be issued before the expiry of two years from the end of the financial year in which the due date as mentioned in section 64 falls.
(5) The notice under sub-clause (b) or (c) of the clause (3) shall be issued before the expiry of four years with the approval of the Additional/Deputy Commissioner and eight years with the approval of the Commissioner, from the end of the year to which the particulars of the said income, in the opinion of the Taxation Officer, relate.
(6) Where a notice under clause (3) has been served on the assessee, the Taxation officer shall, after the hearing such evidence as the assessee may produce or the Taxation Officer may require to be produced and after taking into account all relevant materials which he has gathered, make an assessment or revise the assessment of the income of the assessee and determine the sum payable by him or refundable to him within one year from the end of the financial year in which the notice is served.
(7) Where the assessee fails to respond to the notice under clause (3) or to comply with all the terms of the notice, the Taxation Officer after taking into account all the relevant materials he has gathered, shall assess the income to the best of his judgement and determine the sum payable by the assessee.
(8) Where as a result of -
(a) any mistake apparent from record; or
(b) any order passed under any provision of the Act including Chapter 9, any order passed under the Act is required to be rectified, the Taxation Officer shall pass such an order of rectification within one year from the end of the financial year in which such mistake or order is intimated to the assessee;
Provided that where such an order affects the assessee in any adverse manner, he shall be given a reasonable opportunity of being heard.
(9) If the Commissioner, either of his own motion or on an application made by the assessee, considers that any order passed by the Taxation Officer is erroneous or prejudicial to the compensations of revenue or of the assessee, he may, after giving the opportunity of being heard to the assessee, call for and examine the record of any such proceedings and make or cause to be made such enquiry as he deems necessary, and, pass such an order as is justified including an order enhancing, reducing, modifying or cancelling the assessment or directing a fresh assessment:
Provided that no such order, either by the Commissioner himself or through the Taxation Officer, shall be passed after the expiry of two years from the end of the financial year in which the order being revised by the Commissioner was passed.
Part 2 - Special cases
66. (1) Where a person dies, his legal representative or the executor shall be liable to pay any sum, which the deceased would have been liable to pay under the Act if he had not died.
(2) Any proceeding taken or which could have been taken against the deceased before his death shall be continued or initiated, as the case may be, against the legal representative or the executor, and all the provisions of the Act shall apply to him accordingly.
(3) The liability of a legal representative or the executor shall be limited to the value of the estate of the diseased:
Provided that, if he creates a charge on or disposes of or parts with any part of such estate, he shall also be personally liable to that extent.
67. (1) Every representative assessee shall be deemed to be an assessee for the purposes of the Act.
(2) Assessment shall be made in the name of the representative assessee in respect of the income for which he is the representative assessee.
(3) The representative assessee shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially and any sum payable under the Act in respect of such income shall be recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him.
(4) Every representative assessee who, as such, is liable to pay any sum under the Act as estimated by him or intimated to him by the Taxation Officer, shall be entitled to recover the sum so payable from the person on whose behalf it is paid, or to retain out of any moneys that may be in his possession or may come to him in his representative capacity, an amount equal to the sum so payable.
Part 3 - Settlement of Cases
68. There shall be a settlement committee consisting of one Chief Commissioner and two Commissioners of Inland revenue as prescribed by the Board for the settlement of the cases in accordance with the provisions of this Chapter.
69. An assessee who is aggrieved against the assessment of any part of his income or any liability under any provisions of the Act, may, within one month of receiving such order, make an application in such form and in such manner as may be prescribed, to the settlement committee to have the case settled in accordance with the provisions of this Chapter.
70. After examination of the records and the report of the Taxation Officer and after giving a reasonable opportunity of being heard to both the assessee and the officer either in person or through the authorised representative, the committee shall pass such order, as it thinks fit.
71. Every order passed under section 70 shall provide for the terms of settlement including any demand for tax, compensation or penalty or whether prosecution proceedings are required to be initiated or not and any other matter to make the settlement effective.
72. The settlement shall be void if the committee subsequently finds that it has been obtained by fraud or misrepresentation of the facts and in that event all the provisions of the Act shall apply as if no such application was ever filed.
73. Any sum due under the provisions of this Chapter shall be recovered under the provisions of Part 6 of Chapter 6 likely any other dues under other provisions of the Act.
74. Where there is a mistake apparent from record, the settlement committee may rectify the order under section 70, as it thinks fit but not after one year of passing such an order.
75. Every order of settlement passed under section 70 shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided under this Chapter, be reopened in any proceedings under the Act or under any other law for the time being in force.
76. Any proceedings under this Chapter before the settlement committee shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196, of the Pakistan Penal Code (XLV of 1860).
CHAPTER 5
ENFORCEMENT
77. Where the Commissioner, in consequence of information in his possession, has reason to believe that -
(1) any person has failed to comply with any requirements of a notice under section 12 of the Act; or
(2) any person is not likely to comply with any requirements of a notice under section 12 of the Act; or
(3) any person is in possession of money, valuables or asset which he has not disclosed or in respect of which he is not likely to have any satisfactory explanation, then, he may authorise any inland revenue authority to
(a) enter and search any building, place, vessel, vehicle or aircraft where such books of accounts or documents or such money, valuables or asset or such person whose personal attendance is required are likely to be available;
(b) break open the lock of any door, box, locker, safe, almirah, or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;
(c) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account or documents or money, valuables or assets;
(d) seize any such books of account or documents, or money, valuables or assets;
(e) place marks of identification on any books of accounts or documents or make or cause to be made extracts or copies therefrom; and
(f) make a note or an inventory of books of account or documents, or of money, valuables or assets found therein.
78. The authorised officer may requisition the services of any police officer or of any officer of the Federal Government, or of both, to assist him for the purposes of section 77 and it shall be the duty of every such officer to comply with the requisition.
79. The authorised officer may serve an order on the owner or the person who is in immediate possession or control of such books of accounts, documents, money, valuables or assets that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this section.
80. The authorised officer shall have all the powers provided under section 12 for making such investigation as may be required and any statement made by any person during such investigation may be used in evidence in any proceeding under the Act.
81. Where any books of accounts, documents, money, valuables or any assets are found in the possession or control of any person, it shall be deemed to be true and belonging to that person or owned by that person unless the explanations offered by him are satisfactory in the opinion of the authorised officer.
82. Where on the basis of books of accounts, documents, money, valuables, assets or any other evidence found during the search or thereafter, the authorised officer is of the opinion that any income was required to be disclosed under the provisions of the Act but was not disclosed or where it was not required to be disclosed because the due date for filing the return of income was not over, it was not entered in the books of accounts regularly being maintained by the assessee, he shall pass an order of taxation such income as income from undisclosed sources for that year in which the search action was taken and determine the liability in respect of such income payable by the assessee within one year of taking such action.
83. The authorised officer shall apply the money, valuables or assets seized under section 77 or restrained under section 79 towards liability determined under section 82 or any other liability under any other provisions of the Act in the manner prescribed by the Board and release the balance to the person from whose custody it was seized alongwith the books of accounts or documents, if in his opinion these are not required or any other proceeding under the Act.
84. The person, from whose custody any books of accounts or documents are seized under section 77 or restrained under section 82, may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf.
85. The Additional/Deputy Commissioner shall exercise the following powers to collect information for the determination of income or any liability under the provisions of the Act in the case of the assessee or of any other case or in general-
(1) Where any books of accounts or documents, which are in his opinion relevant for any proceeding under the Act, have been taken into custody by an officer or an authority under any law for the time being in force, he may requisition such books of accounts or documents and require such officer or authority to deliver such books of accounts or documents to an inland revenue authority as authorised by him;
(2) he may require any person to furnish information regarding names and addresses of any other person or persons available with him or details of any transactions entered into by him or details of any books of accounts, documents, valuables or assets belonging to him or belonging to others but in his custody or in his knowledge;
(3) he may authorise any authority to enter any place at which a business or profession is carried on during the hours at which such place is open for the conduct of business or profession -
(a) to inspect such books of accounts or documents as may be available;
(b) to verify or check the cash, stock or other valuable article or thing found therein; and
(c) to collect such information as may be relevant to or useful for any proceeding under the Act.
CHAPTER 6
COLLECTION AND RECOVERY
Part 1 - General
86. Income tax on the income of the year shall be liable to be paid by 30th September of that year either by deduction or collection at source or payment in advance by the assessee according to the provisions of the Act.
87. Where any tax remains due to be paid or is required to be paid under any provision of the Act, it shall be payable by the assessee direct.
88. Payment of income tax by any mode shall not prejudice the assessment of any income under any provisions of the Act.
89. Where any tax, compensation, penalty, fine or any other sum is payable under any provisions of the Act, the Taxation officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.
90. The amount specified in the notice of demand under section 88 shall be paid within one month of the service of the notice or from the date of first appellate order, where an appeal is filed, as the case may be, at the place and to the person mentioned in the notice unless this period is reduced with the previous approval of the Additional/Deputy Commissioner of Inland revenue.
91. Where the assessee has failed to pay within the specified time any sum which is payable under any provisions of the Act, he shall be liable to pay compensation mentioned in section 88 at the rate of one percent of such sum for every month or part of a month of default to be compounded at the end of every financial year.
92. Where in consequence of any order passed under the Act, a refund becomes due to the assessee, it shall first be adjusted against any dues for any year under the provisions of the Act outstanding against the assessee and the balance, if any, shall be refunded to him forthwith.
93. Where the refund due under section 92 is granted to the assessee after one month of the order referred to therein, he shall be entitled to compensation at the rate of one per cent of such refund for every month or part of a month from the date of the order compounded at the end of every financial year.
94. Where the order giving rise to calculation of compensation under section 91 or 93 is revised under the Act, the compensation shall also be revised accordingly.
Part 2 - Deduction of Tax at Source
95. (1) Tax shall be deduced at the average rate on the salary assessable under Part 2 of Chapter 3 at the end of every month during which it is paid.
(2) An employee may submit in duplicate a declaration of his Net Annual Income of the year and of tax payments in the prescribed form and verified in the prescribed manner to the person responsible for deducting tax at source under clause (1) before the end of the year.
(3) The person responsible for deducting tax at source under clause (1) may increase or decrease the amount of any instalment to adjust any excess or deficiency of deduction earlier or to make it in accordance with the declaration under clause (2).
(4) Where, according to the assessee, there is no need to change the income or the other details declared in clause (2), the declaration filed thereunder shall be regarded as the return of income for the purposes of Chapter 4.
(5) One copy of the declaration filed under clause (2) shall be sent to the Taxation Officer along with the annual return prescribed to be filed by the person responsible for deducting tax under clause (1)
96. Tax shall be deducted at source at the rate of 10 per cent of the gross receipts from the following payments -
(1) compensation;
(2) winnings from lottery, crosswords or Enami (Prize) Schemes;
(3) any commission or brokerage;
(4) payments to non-resident sportsmen or sports association;
(5) payments out of investments made under section 58 and 59;
(6) commission, remuneration or prize (by whatever name called) on stocking, distributing, purchasing or selling of lottery tickets;
(7) rent under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee;
(8) fees for professional or technical services;
(9) any payment assessable as income from long-terms sources.
97. Tax shall be deducted at the rate of one per cent on any sum paid for carrying out any work which shall include -
(1) supply of labour;
(2) advertising;
(3) broadcasting or telecasting including production of programs for such broadcasting or telecasting;
(4) carriage of goods and passengers by any mode of transport other than railways;
(5) catering.
98. Notwithstanding anything contained in any provisions of this Chapter, where any sum chargeable under the provisions of the Act is payable to a non-resident, tax shall be deducted at the rate of 20 per cent of the sum payable.
99. (1) No person shall make deduction of tax from any sums payable to the Government or to a person whose income is exempted from income tax under Part 2 of Chapter 2.
(2) No deduction of tax shall be made in the case of any person, who is resident in Pakistan, if such person furnishes to the person responsible for deducting tax at source, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner saying that no tax shall remain due to be payable by him by the end of the year in which tax is deductible at source.
(3) The person responsible for deducting tax at source shall send the first copy of the declaration referred to in clause (2) to the Taxation Officer within three months of its receipt.
(4) Where the person responsible for paying any such sum chargeable under this Act to a non-resident, or the non-resident himself, considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Taxation Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted only on that proportion of the sum which is so chargeable.
100. The person responsible for deducting tax at source shall be the payer of such sum on which tax is required to be deducted at source under the provisions of this Chapter unless specifically prescribed by the Board but shall not include an individual or a Hindu Undivided Family.
101. Tax shall be deducted at source at the time of payment of the sum in cash or by issue of a cheque or draft or by any other mode or at the time of credit of such sum to the account of the payee or to any account, whether called "suspense account" or by any other name, whichever is earlier.
(To be continued)