Sources told Business Recorder here on Saturday that the FBR has issued instructions to all the Chief Commissioners of Regional Tax Office (RTOs) for taking action against the newly documented persons, who have made glaring mistakes in the income tax returns. These un-documented persons were brought into the tax net following national documentation exercise of the Directorate General of Intelligence and Investigation Inland Revenue. In certain cases, the return filers have grossly violated the Universal Self Assessment Scheme (USAS). On the other hand, the FBR database and third party information confirmed massive under-declarations in the returns, which would be confronted through relevant assessment provisions of the Income Tax Ordinance 2001.
According to the FBR instructions issued to the RTOs on "Progress in cases where income tax returns have been filed by the taxpayers during Broadening the Tax Base (BTB) campaign", over and above 27,000 returns have been received/enforced as part of the Broadening of Tax Base efforts throughout the country. These cases are now needed to be properly pursued/securitised to exploit the actual tax potential in each case. Towards this end, the following strategy is to be adopted and progress reported to the Directorate General Intelligence IR:
Each income tax return should be compared/cross-matched with the information provided to the RTOs. List of cases where there is any glaring discrepancy should be reported to this Directorate General and notice u/s 122(9) of Income Tax Ordinance, 2001 should be issued for amendment of assessment, the FBR instructions added.
Sources said that under section 122 of the Income Tax Ordinance 2001, Commissioner may amend an assessment order by making such alterations or additions as the Commissioner considers necessary. Under sub-section 9 of section 122 of the Income Tax Ordinance 2001, no assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard.
Sources said that the FBR was able to enforce filing of returns by nearly 27,000 rich persons, who were not ready to operate into the tax net. These 27,000 persons were part of the overall documentation exercise of the FBR where tax activity has been generated in over 100,000 cases across the country. Among others, 27,000 persons have filed returns responding to the notices of the tax department. Besides, withholding agents have been forced to ensure compliance as per withholding tax provisions of the Ordinance 2001.
The intelligence agency of the FBR has started thorough security of the tax returns filed by the un-documented persons. In cases of glaring discrepancies in the income tax returns, the FBR has directed the field formations to amend the income tax assessment orders under section 122 (9) of the Income Tax Ordinance 2001. However, the FBR will provide full opportunity to the taxpayers to explain their position before amendment of assessment orders under section 122 (9) of the Income Tax Ordinance 2001.