ISLAMABAD: The taxpayers have started filing applications for agreed assessment and the Regional Commissioners Inland Revenue are promptly constituting the Resolution Committees to consider the offer of agreed assessment.
Tax experts told Business Recorder here on Sunday that prior to amendment in the Income Tax Ordinance, 2001 through Finance Act, 2020, there was no legal provision for making 'agreed assessment'. Soon after insertion of Section 122D and framing of Rules, on 6th November 2020 and enabling application form on the IRIS, the taxpayers have started filing applications for agreed assessment and the Regional Commissioners have started constituting the Resolution Committees to consider the offer of agreed assessment.
Recently, FBR has instructed its field formations to establish oversight committees as envisaged in the law. Taxpayers may avail this opportunity by applying online to the settlement committee, conveying this intention to go for agreed assessment and tax payable thereon.
The Committee will decide case within 30 days of filing of application by taxpayer.
The first known precedent of applying to the Committee is that of United Industries Limited, a case falling under the jurisdiction of Large Taxpayers Office, Lahore. On December 23, 2020, they applied online for the resolution of their issue and the Chief Commissioner on the very next date not only constituted the Committee but also fixed early hearing wherein the taxpayer would be heard in respect of its reply to the show cause notice under section 122(9) and the offer of agreed assessment without paying any tax.
When contacted for comments, Shahid Jami, Tax Consultant observed that the legislation is a step in the right direction and in the next budget its scope should be extended to Sales Tax, Federal Excise and Customs as well.
He explained that presently the provision of agreed assessment is only in respect of proceedings under section 122(9) in the context of amendment by the Deputy Commissioner as a outcome of audit or on account of definite information acquired otherwise besides proceedings by the Additional Commissioner where the underlying assessment is considered as erroneous in so far as prejudicial to the interest of revenue.
However, proceedings under section 161 to adjudicate liability as Withholding Agent is not within the purview of agreed assessment though this is the provision which is mostly in vogue in the case of companies and other withholding agents who are subjected to proceedings for each Tax Year without any pre-requisite of selection for audit.
Jami observed that earlier Spokesperson of the FBR had claimed that this mechanism will decrease the pressure on available FBR resources which are being spent on litigation and will provide instant relief to the taxpayers as well as the Committees will decide the case within 30 days of filing of application by the taxpayer.
The Spokesperson had expected that a large number of taxpayers under scrutiny will avail this opportunity.
Jami explained that the mindsets of the field formations have always been different from the policymaker and success or failure of the new initiative would largely depend that how the Committees will proceed on the applications. If Committee consisting of very senior officers like Chief Commissioner, Commissioner and Additional Commissioner tend to endorse the show cause notice issued by the Deputy Commissioner without applying their independent mind on the reply and the supporting evidence thereof then the initiative is bound to fail.
He added that since this initiative is not applicable on cases having concealment or legal issues having bearing on other cases therefore there is very likelihood that most of the applications would be treated as falling in the aforesaid categories of exclusions.
Jami pointed out that presently there are some issues on the IRIS and the option of filing application is not appearing in respect of every case pending wherein notice under section 122(9) has been issued.
He observed that there is some pick and choose by the software which ought to be corrected at the earliest. Alternative can be providing a separate application in the IRIS not linked to the show cause notice, he added.
Copyright Business Recorder, 2020
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