FBR detects Rs230m alleged tax evasion

ISLAMABAD: The Federal Board of Revenue (FBR) has detected alleged income tax evasion of Rs230.46 million against director of a leading bank of the country and legal course of action will be taken against the alleged tax evader, The News has learnt.

According to official documents available with The News, FBR’s Intelligence & Investigation (I&I) Inland Revenues (IR) Lahore initiated a case against director of a leading bank of country belonging to a Middle Eastern country on the basis of receiving credible information that he had allegedly not shown his assets correctly. The same taxpayer is also one of the directors of a giant business entity of the country.

The scrutiny of tax records revealed that the taxpayer declared loan to a business concern of Rs398.29 (M) during 2011. A notice under section 176 of the Income Tax Ordinance, 2001 was issued to the bank manager where the taxpayer has maintained his bank account. Perusal of the bank statement of the said account reveals that an amount of Rs831.6 million has been paid by the taxpayer to a business concern during the tax year 2011; however, no amount has been received from the said company, meaning thereby advances receivable from the said company is Rs831.6 million, which is in excess to declared version by Rs433.4 million. 

Moreover, the taxpayer has shown increase in shares of the leading amounting to Rs433.4 million during the tax year 2011. A notice under section 176 of the Income Tax Ordinance, 2001 was issued to the company secretary of the said bank, who reported that no fresh shares of any kind have been issued to the director during tax year 2011. The taxpayer was asked to explain the above said anomaly, who contended that he paid Rs831.6 million to the business concern and received back Rs433.4 million in the shape of shares of the leading bank. 

He informed that said transfer of shares has been made through a share transfer company during tax year 2011 i.e, on or before 30.0.2011. The share transfer company was requested to provide details but no compliance was made by it. Moreover, perusal of audited accounts of the business concern revealed that shares were disposed of on 19.07.2011 after the end of tax year 2011. Hence the contention of taxpayer is misplaced and investment for the purchase of shares of one of the bank of Rs433.42 million warrants addition in the taxable income of the subject taxpayer u/s 111(1)(b) of the Income Tax Ordinance, 2001. Amended income comes to Rs444.6 million after adding proposed addition to the declared taxable income. After calculating income tax at the rate of 25%, surcharge under section 4A and penalty under section 182 of the Income Tax Ordinance, 2001, total liability comes to Rs230.46 million. Accordingly, investigation report has been sent to Chief Commissioner-IR, LTU Lahore for adjudication and consequent recovery of tax revenues.