Regional Tax Office (RTO) Rawalpindi has unearthed massive under-declaration of sales and concealment of income by a leading dealer of all major electronic brands in Attock. Sources said here on Monday that the Federal Board of Revenue (FBR) has received an incident report of the RTO Rawalpindi, exposing a major case of concealment and tax evasion to the tune of millions of rupees. It is a classic case of benami transactions. The taxpayer is maintaining various bank accounts which have not been declared by him in declarations. Many of such accounts are benami bank accounts opened in different names to evade the tax department.
Details of the case revealed that Electronics Company is a large retail store selling wide range of electronics and home appliances located at Kamra Road, People's Colony, Attock. The subject case was selected for audit for tax year 2014 wherein the taxpayer has made the following declarations: TY 2014 Net Sales: Rs 4,895,700 Cost of Sales Rs 4,308,216 Income from Business Rs 367,084 TY 2015 Gross Revenue: Rs 5,490,800 Cost of Sales / Services Rs 4,691,904 Income from Business: Rs 563,041 2. As per the IDR issued to the taxpayer, documents were requested but despite lapse of considerable time, the taxpayer failed to submit the record.
Subsequently, hearing notice was issued vide no. 796 dated 15.03.2016 wherein the taxpayer was asked to furnish the required documents necessary for audit, however, compliance was not made. Preliminary inquiry revealed that the taxpayer is a dealer of all major electronic brands in Attock operating in a large business premises, but making declaration of Net Sales deliberately below Rs 5 million to evade taxes and to avoid getting registered in Sales Tax also. As the taxpayer was deliberately delaying production of record for audit, and was attempting to conceal and hide the true record from tax authorities, hence, it was apprehended that important documents and record relating to business needed for audit may have got lost or destroyed. Therefore, permission to search the aforementioned premises u/s 175 of the Income Tax Ordinance 2001 was obtained from the Commissioner IR Zone III vide his letter no. 494 dated 24.03.2016. 4.
Search of premises of the taxpayer was carried out in accordance with section 175 of the Ordinance 2001 on 26.03.2015, along with a 3-member team from RTO Rawalpindi and with the help of local police, and record including folders, files, and receipt books, cheque books, miscellaneous documents, and a computer were impounded from the premises of taxpayer. The record was taken to the office.
Preliminary scrutiny of impounded record has revealed that massive under-declaration of sales and concealment of income is being committed by the taxpayer, and tax evasion to the tune of millions of rupees is being committed. Analysis of impounded record of the taxpayer has revealed the astonishing findings that the actual sales made during the tax year 2015 are found at Rs
109 million, whereas the sales declared by the taxpayer in the same period are at Rs 5.4 million. Declared sales in TY 2014 are at 4.8 million, whereas ongoing scrutiny of record so far have revealed that actual sales exceed Rs 50 million. Hence more than 10 times concealment of sales is established.
The report said that scrutiny of impounded record also revealed that the taxpayer is maintaining various bank accounts which have not been declared by him in declarations. Many of such accounts are benami bank accounts opened in the name of Khadim Hussain, Sher Ahmed, and Yasir Shahzad from where payments to electronic manufacturers located all over the country are being made. The list of undeclared bank accounts has also been identified by the said RTO. The RTO has also identified transport companies from the record, which carry the goods from manufacturers' premises. Further scrutiny of the record is under way, and findings will be shared by the RTO with the FBR.
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