The Federal Board of Revenue (FBR) is providing an opportunity to the owners of offshore companies for submission of their response under section 176 of the Income Tax Ordinance 2001 where persons/companies have requested for additional time period for responding to the notices of the FBR. Official sources told Business Recorder that it is requirement of the law to provide an opportunity to the persons/companies in cases where they request for additional time period for submission of their response to the notices of the FBR.
Around 58 owners of offshore companies, whose names appeared in the Panama Papers, have submitted their responses. In many cases owners of offshore companies have requested for more time. The FBR has given additional time to them for submitting their response, senior officials added.
Responding to the reports that many people who FBR issued notices did not respond to these notices, FBR officials clarified that method of inquiry given under the law provides for 2-3 opportunities of hearing to the taxpayer. Afterwards, the law empowers FBR to take penal measures in cases where persons wilfully fail to comply with the legal notices. FBR is also empowered under the law to prosecute any person who fails to furnish information asked through a notice under section 176 of the Income Tax Ordinance, leading to imprisonment for a term of one year, in addition to the penalties. Hence, question of ignoring FBR's notices does not arise, as after affording reasonable opportunity of hearing, FBR will start imposing penalties, and cases of wilful default will be sent to the Trial Court for prosecution. These penalties will continue until the person complies and furnishes the required information to the tax authorities.
The FBR reiterated that it is strongly pursuing investigations in the cases of Panama and Bahamas leaks keeping in view all relevant provisions of law and is using all available channels of gathering necessary information and evidence. A case whether civil or criminal, cannot stand the trial in a court of law unless it is substantiated by strong documentary evidence. The unfounded criticism from certain quarters serves no purpose, rather establishes that the FBR is working on the right track on these investigations under the law and doing so with full force.
The financial investigations all around the world are based on documentary evidence, and in crimes of white-collar nature like this, evidence is in possession of numerous and scattered institutions and parties. The FBR has already initiated collection of evidence both from within and outside Pakistan, and notices under section 176 of the Income Tax Ordinance in this case have been used to gather evidence from different parties, including from the taxpayers involved directly.
Some quarters have claimed that action should have been initiated u/s 122(5) of the Ordinance, which is the section to amend the declarations, are merely based on lack of basic understanding of how tax laws operate. Show cause notices u/s 122(5) are only issued once investigation is concluded and complete evidence has been collected. Before collection of evidence and definite information against any resident person, notices u/s 122(5) cannot be issued. Notices issued under section 176 of the Income Tax Ordinance 2001which were served directly to the taxpayers are just one part of the investigation. Hence, conclusions drawn by some media reports on the basis of issuance of these notices seem quite rash and ill-considered. About the jurisdiction of the cases which currently lie with Directorate General of Intelligence & Investigation-Inland Revenue, the directorate of I&IR is legally empowered and authorised to issue such notices under the law, they added.