The Directorate General of Intelligence and Investigation has sought powers for selection of cases for income tax audit under the Universal Self Assessment Scheme (USAS), creating a parallel investigation system in addition to audit under the Income Tax Ordinance - 2001.
Sources told Business Recorder on Saturday that the DG intelligence has requested the CBR to provide all investigative powers of the Ordinance, 2001 to their officials.
The intelligence directors may be given powers of section 177 except 177(1) of the Ordinance 2001. This would empower the intelligence agency to select a person for audit in accordance with the criteria laid down by the CBR.
Similarly, additional directors, deputy/assistant directors of the agency have sought powers of section 177 except 177(1) and 177(4) of Ordinance 2001. They would also be empowered to select cases for audit. A draft notification is under consideration by the board to amend the Income Tax Ordinance for extending these powers to the DG intelligence agency.
According to sources, section 177 is a major deterrent to check misuse of USAS and extending audit powers to the DG intelligence would create a parallel investigating system within income tax regime. It seemed to be a clear violation of the whole USAS where selected taxpayers were picked for audit.
Taxpayers, who are already afraid of audit and adjudication, would face intelligence agency apart from the income tax department. Secondly, whether the DG intelligence officials are equipped with the necessary expertise and knowledge to use powers of section 177 of the Ordinance, 2001.
Sources said that the basically intelligence officials wanted all the powers available to the commissioners of income tax for conducting investigation. The DG intelligence has also sought powers to amend an assessment order under section 122 of the Ordinance, 2001 by making such alterations or additions as the directorate considers necessary.
It has also requested powers to file an appeal to the Appellate Tribunal (section 131) and reference to the High Court (section 133) of the Ordinance, 2001. The DG intelligence also wanted powers to enter and search premises for audit of a taxpayer or a survey of persons liable to tax.
Without prior notice, directorate wanted full access to any premises, place, accounts, documents or computer. They can stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained and impound any accounts or documents and retain them for so long as may be necessary for examination or prosecution purposes.
Sources said the directorate has also demanded powers to issue notices to obtain evidence from any person whether or not liable for tax under section 176. The board may empower the directorate to impose penalty for concealment of income equal to the amount of tax, which the person sought to evade by concealment of income or the furnishing of inaccurate particulars of such income.
The directorate would also be empowered to impose penalty in cases where fails to maintain records. The DG intelligence officials have also demanded powers to impose penalty for non-compliance of notices and penalty for making false or misleading statements. The directorate has also sought powers to impose penalty upto Rs 10,000 where any person obstructs the taxation officer in discharge of their functions.
Another major power demanded by the directorate is to prosecute non-compliance with certain statutory obligations. Any person, who fails to comply with a notice; fails to pay advance tax and fails to comply with the obligation to collect or deduct tax and pay the tax; shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year or both.
If a person convicted of an offence fails to furnish the return of income or wealth statement to which the offence relates within the period specified by the court, the person shall commit a further offence punishable on conviction with a fine or imprisonment for a term not exceeding two years, or both. The directorate would also be empowered to prosecute for false statements in verification process under section 192 of the Ordinance 2001.
They would also be liable to prosecute persons, who failed to maintain record. If powers were extended to the DG intelligence, it could impose fine or imprisonment for a term not exceeding two years, or both.
Similarly, intelligence officials could also prosecute persons for making false or misleading statements and punish persons obstructing investigating officials. The directorate has also demanded powers to appoint any expert for the purposes of audit or valuation.
The intelligence officials of the agency have also demanded powers to proceed under the Ordinance 2001 for carrying out judicial proceedings. The DG intelligence has proposed the following amendments to the Income Tax Ordinance, 2001:
2. Definitions:
2(13) "Commissioner" means a person appointed to be a commissioner of Income Tax under section 208 and includes at taxation officer vested with all or any of the powers and functions of the Commissioner, and also includes a Director of Intelligence and Investigation.
2(17A) "Directorate-General of Intelligence and Investigation" means Directorate-General of Intelligence and Investigation-Central Board of Revenue.
2(48A) "Regional Commissioner" means a person appointed as a Regional Commissioner of Income Tax under section 208 and includes a Director-General Investigation.
2(65) "Taxation Officer" any Additional Commissioner of Income Tax, Deputy Commissioner of Income Tax, Assistant Commissioner of Income tax, Income Tax Officer, Special Officer, Additional Director of Intelligence and Investigation, Deputy Director of Intelligence and Investigation, Assistant Director of Intelligence and Investigation, or any other officer, however, designated appointed by the Central Board of Revenue for the purpose of this Ordinance.