Directorate General, Directorate of Intelligence and Investigation, Inland Revenue has made a major breakthrough in documentation drive by issuing provisional assessment orders against over 7,200 undocumented persons, raising income tax demands to over Rs 3 billion.
Sources told Business Recorder here on Tuesday that the DG Intelligence IR had estimated that the provisional assessments under section 122 (c) of the Income Tax Ordinance 2001 would reach around 2000 by the end of May 2011. There is a major increase in the provisional assessments from 1100 to over 7,200 framed against the undocumented persons as a result of concerted efforts of the Broadening of Tax Base (BDB) Units across the country.
The sudden jump in the number of provisional assessments under section 122 (c) of the Ordinance 2001 is due to finalisation of cases in the pipeline in the field formations. Out of huge amount of income tax demand raised to Rs 3 billion, Karachi office has framed cases involving Rs 600 million; Lahore Rs 700 million and other income tax cases of millions of rupees has been framed in remaining parts of the country.
The directorate has also issued 76,000 notices to the non-filers particularly those un-documented persons, whose complete profiles have been maintained by the agency. Over 9000 persons have filed their income tax returns, which are under scrutiny. The tax paid along with these 9000 returns is around Rs 40 million. The department is matching the information declared in the returns with the data available with the agency.
In case of any major misdeclaration or gross deficiencies in the returns, the FBR can amend the return under section 122 or conduct audit under section 177 of the Income Tax Ordinance 2001. The cases of gross difference in the actual income and declared in the return would be seriously viewed by the directorate.
Sources said that the return filers should submit accurate declarations in their returns to avoid any revision in returns or audit in the presence of third party information available with the agency. It is almost impossible to conceal income or misdeclare actual income due to maintenance of complete profiles of persons based on third party data available with the agency.
Most of the provisional assessments have been made against the un-documented persons including shareholders of blue chip companies. The agency has obtained data from the Central Depository Company (CDC) about the shareholders, who have shareholding in big companies.
The directorate has identified shareholders in such big companies, who have holding of above Rs 300,000, but neither obtained the National Tax Number (NTN), nor filing their income tax returns. The agency is surprised that a large number of persons in Karachi are holders of shares of big companies, but not in the tax record of the FBR.
According to sources, the FBR has disseminated the information to the field formations about such holders of stocks and shares for bringing them into the documented regime. Based on the information of stock investment, property, frequent travellers of aboard and other income/expenditures, the agency has managed to cross the figure of 7200 of provisional assessments by end May 2011.
Sources said that the profiles of all such kind of wealthy persons are now being maintained by the FBR and such un-documented persons cannot escape from the tax authorities. If such persons would voluntarily declare their income and file returns, they can easily avoid penalty and prosecution under the enforcement provisions of the law.
However, if they continue to resist, the FBR will not only impose maximum penalty, but also initiate prosecution against them. These wealthy persons might have disguised themselves as honest and good citizens, but un-documented persons would be declared as tax evaders and tax dodgers by the FBR. This would create huge embarrassment for them in the public.
The credit of FBR achievement goes to Shahid Hussain Asad Director General, Directorate of Intelligence and Investigation, Inland Revenue, whose personal efforts and effective interaction with the field formations has resulted in provisional assessments of over 7200 major cases on national level.