Fake IT exemption certificates: FBR initiates countrywide probe against units

A case of fake income tax exemption certificate at Faisalabad has prompted the Federal Board of Revenue (FBR) to initiate country-wide investigation against units involved in submitting bogus certificates, requesting payments for providing services without deduction of tax, under section 153 of the Income Tax Ordinance, 2001.
Sources told Business Recorder here on Monday that the issue of fake income tax exemption certificates came to the light when a Commissioner Inland Revenue refused to verify the certificate with the comments that fake signature were made on the certificate. Moreover, the concerned Commissioner Inland Revenue has no knowledge about issuance of the said certificate being used to make payment without deduction of tax under section 153 of the Income Tax Ordinance, 2001. It is apprehended that similar kind of bogus certificates are being used in the field formations to claim exemption within the jurisdiction of other RTOs.
According to a communication of Shaukat Mahmood Chief Commissioner RTO Faisalabad to the FBR, the matter was brought to Board's knowledge for the reason that there might be other instances of production of fake Exemption Certificates at various stations and therefore, the Board may like to streamline the procedure minimising the use of such fake Exemption Certificate.
Details of the issue revealed that the Commissioner (IR) Zone-III, RTO Faisalabad has reported that a private limited company of Gujranwala produced an exemption certificate u/s 153(4) before a telecom company at Lahore requesting payment without deduction of tax issued. This certificate was issued vide No J-97(Sublime)/2014-15/17 9.7.2014 by Commissioner (IR) Zone-III, RTO, Gujranwala under the signature of Mehmood Aslam, Commissioner (IR).
On verification from Mehmood Aslam Commissioner (IR) Zone-III, RTO Faisalabad, it was found that a fake certificate has been produced by the concerned unit of Gujranwala before Telecom Company of Lahore. Reportedly, the Commissioner left the charge of Zone-I, RTO Gujranwala back in November 2012, whereas this certificate carries the date 9.7.2014. A copy of the certificate is enclosed for investigation as well as prosecution proceedings against the company concerned.
The matter is brought to Board's knowledge for the reason that there might be other instances of production of fake Exemption Certificate at various stations and therefore, the Board may like to streamline the procedure minimising the use of such fake Exemption Certificate, Shaukat Mahmood added.
Another letter of Mehmood Aslam, the concerned Commissioner (IR) to the FBR said that this is to state that the company of Gujranwala produced an Exemption Certificate u/s 153(4) issued from Zone-I, RTO, Gujranwala. This certificate was produced before a telecom company of Lahore for requesting payment without deduction of tax in view of the Exemption Certificate produced. Since this certificate carried my signature, it came to me for verification. It has come out that this is a fake certificate produced by the Company Ltd, Gujranwala before Telecom Company of Lahore. As a matter of fact, I have left the charge of RTO, Gujranwala zone back in November 2012, whereas this certificate carries the date 9.7.2014. A copy of the certificate has been communicated to the FBR for investigation as well as prosecution proceedings against the company concerned, Mehmood Aslam added.
The fake exemption certificate carrying bogus signature of Mehmood Aslam Commissioner Inland Revenue said that it is certified that the company is given exemption from deduction of tax under section 153(3) (b) of the Income Tax Ordinance, 2001 in respect of payments received by the company for providing or rendering any service. The certificate has been issued in pursuance of clause (xvii) of SRO.586(I)/91 read with clause 79 Part-IV of the Second Schedule of Income Tax Ordinance 2001 and is valid up to June 30, 2015 unless cancelled earlier. Tax already deducted/deductible before the issuance of this certificate will not be refunded to the taxpayer but deposited in the government treasury, it added.