DGI&I issues 1,100 assessment orders for Rs 861 million: notices sent to undocumented persons

The Directorate General of Intelligence and Investigation, Inland Revenue has issued 1,100 provisional assessments orders against undocumented individuals and income tax demand notices involving huge amount of over Rs 861 million across the country.
Sources told Business Recorder here on Saturday that the DG Intelligence IR has served another 55,000 notices to the undocumented persons to file their returns. In 1,100 new cases, assessment orders have been dispatched to the wealthy persons for recovery of evaded amount to the tune of Rs 861 million.
The directorate would shortly launch the next phase of the documentation drive by issuing notices of provisional assessments to the rich accountholders of banks and frequent travellers abroad under section 122 (c) of the Income Tax Ordinance 2001. The agency has identified account holders having millions of rupees in their bank accounts, but they have neither obtained the National Tax Number (NTN) nor filed their income tax returns. The directorate has detected several cases where certain individuals had declared income of a few lakh, but they are maintaining over and above Rs 50-60 million in their bank accounts, which is a significant amount.
Similarly, the directorate would issue provisional assessment notices to frequent travellers abroad for documentation purposes. The agency has obtained all necessary data of machine-readable passports of such wealthy persons. It is expected that thousands of provisional assessments orders would be issued during the current month against the accountholders maintaining huge amounts in their banks and foreign travellers, who have repeatedly travelled abroad during 2010. The income tax demands to be raised against more persons would be enormous in May-June 2011 based on profiles of undocumented persons.
In the next phase, thousands of owners of moveable and immovable assets would be documented and maximum amount of penalties/additional tax would be imposed on non-compliant persons as admissible under the law.
According to sources, Shahid Hussain Asad, Director General, Directorate of Intelligence and Investigation, Inland Revenue is regularly monitoring this documentation exercise to bring maximum wealthy persons into the tax net before next fiscal. The recent issuance of assessment orders to the tax dodgers is a major break through of the DG I&I IR in May-2011.
Details show that the FBR has recently finalised 1,100 provisional assessments orders and created income tax demands to the tune of Rs 861 million, which is huge amount to be recovered from wealthy persons. The level of tax evasion and concealment of income is evident from Rs 861 million which was concealed only in 1,100 cases. These included owners of properties and luxury vehicles and now accountholders of banks would be the prime target of the agency. The third-party information collected by the DG I&I IR disclosed that there are many account holders having Rs 40-50 or Rs 60 million and above in their accounts, but they have not disclosed the source of income or had shown very low income. In other cases, the utility bills of residential houses do not match with their declared income, which needs to be probed by the tax intelligence department.
The FBR data further disclosed that the accountholders of such huge amount have to explain their source of income. Otherwise, the FBR will not only issue provisional assessment orders against section 122 (c) of the Income Tax Ordinance 2001 against them but would also impose maximum penalty and prosecution against such undocumented persons. Sources said that the profiles of the undocumented persons also showed that many rich persons have paid lakhs of rupees as bills for staying in five-star hotels and purchasing luxury vehicles.
The national database of the directorate of intelligence IR showed some interesting cases which reflect the quantum of wealth in the country. The latest profiles of these persons showed that people are enjoying luxurious life, but are not prepared to file income tax returns. For example, a person has Rs 70 million in the bank account and has travelled 2-3 times aboard during tax year 2010. He also has purchased 3-4 new luxury cars and purchased a big house of Rs 30 million in a posh area of Lahore. He also paid Rs 65,000 as rent in foreign and local stays in hotels during one year. This individual remained out of tax net and now the agency would document him under section 122 (c) of the Ordinance 2001. The database of the agency also showed that another person had declared below 0.1 million rupees as income but his profile tells entirely a different story. The profile of this person showed that he purchased different properties of Rs 10 million, Rs 14 million and Rs 3 million, etc, in different areas during tax year 2010. The person purchased assets worth Rs 40 million which is a big amount. He has also purchased three luxury vehicles including a Land Cruiser. He has not filed income tax return, wealth statement and wealth reconciliation statement under Ordinance 2001. The database further disclosed that a person had purchased over 100 new locally manufactured cars over 1000 cc and owns property of over Rs 40 million. The person is declaring income of Rs 0.15 million only. Other profiles of undocumented persons showed that people have been making huge expenses, but not disclosing their sources of income. If the wealthy person justifies the expenses as per sources of income, the tax department has no objection on declaration of his actual income in the wealth reconciliation statement.
Sources said that even a person has travelled to USA and other countries and stayed at relative''s house abroad; he has to justify source of income which was used for purchasing several international air travel tickets in one year. As a result of enforcement exercise of the DG I&I IR, the people have started complying with the notices served under section 122 (c) of the Income Tax Ordinance 2001. These persons have started filing returns and wealth statements.
Sources said that if the undocumented persons continued to remain non-compliant, the FBR has complete profiles of such persons and the department would give maximum punishment to these tax dodgers and tax evaders. The FBR has once again advised the taxpayers to voluntarily file their returns to avoid huge penalty and attachments of their properties for recovery of the evaded amount under section 122 (c) of the Income Tax Ordinance 2001.