Dar’s counter-chargesheet against JIT

ISLAMABAD: Finance Minister Ishaq Dar’s reply before the apex court on JIT report has enough material to invite trouble for the members of the JIT, who are alleged to have incriminated Dar by misreading his tax documents and deliberately ignoring the official record available before them.

In his 229-page reply containing all relevant documentary evidence, Dar showed that the JIT had received all his tax documents from 1981-2002 during the course of investigations, yet it gave adverse findings on the grounds that the finance minister had not filed tax returns during the same period.

He also charged the JIT with accusing him of evading tax through donations and charities whereas in actual he did not claim any exemption on such spending.“What is shocking is that the JIT has failed to mention in its report that the relevant record prior to 2002-03 had been provided by FBR during the course of investigation. On the contrary, the JIT has recorded the adverse finding that the relevant returns from 1981/82 to 2001/02 have not been filed. The perverse conclusion that this is tax evasion is clear evidence of mala fide, and an apparent attempt to mislead this Hon’ble Court amounting to contempt,” Dar through his counsel told the apex court.

Dar contended that on 3rd July, 2007 when he appeared before the JIT, he was informed that his tax returns from FY 2003 to FY 2006-2007 and for the period prior to FY 2001 have not been provided by FBR. The same evening he traced the documents from his personal record and sent the same to the JIT, which had received at 08:55 p.m. vide acknowledgement receipt.

Additionally Dar had not only apprised the JIT that according to his information, his entire record uptil 2001-02 including income tax/wealth statements, was taken into custody by NAB from FBR in the period subsequent to the 1999 coup but on 4th July 2017, FBR had launched a hectic search operation, as a result of which the old record prior to 2002-03 was located with the NAB authorities. The record was retrieved from NAB and submitted to JIT on 8th July, 2017 by the FBR, and duly acknowledged by it.

“Ignoring these facts, the JIT has recorded the totally incorrect, indeed perverse, finding that the returns had not been filed and that this amounts to ‘hiding of assets and tax evasion’,” Dar maintained.

Dar also took on the JIT for referring to his “donations” and “registered charities” as means to evade tax. He told the apex court that mala fide of the JIT is also evident from the fact that it has questioned even the substantial amounts given by him to registered charities, without even attempting to verify their work or ascertaining whether he had claimed any tax exemption. He said he did not claim any such exemption.

Dar annexed with his response, the financial statements of Hajveri Trust and Hajveri Foundation, detailing all donations received from him as well as humanitarian activities carried out by them, to dispel any doubts whatsoever with regard to allegations of tax exemption/tax evasion, which he insisted have been fabricated by the JIT.

Dar was also surprised that no question was put to him regarding any of the other adverse findings relating to his income/wealth yet the JIT reported that repeated opportunities were given to provide details of sources. He said it is factually incorrect and clearly mala fide.

Dar also produced before the apex court his Wealth Reconciliation Statement from 1983 to 2016, including the years 2003-2008 when he was tax nonresident in Pakistan, to establish that each and every rupee of his income and all his assets are duly explained and supported by documentary evidence, which has always been available with the concerned authorities.

JIT reported that Dar did not file income tax returns from 1981/82 to 2001/02 and added that being an expert in economics and part of ruling elite is, prima facie, tantamount to tax evasion. The JIT also found an exorbitant increase in Dar’s assets since year 2008/09 for which, according to the JIT, source of funds/income and details were not furnished despite repeated requests/opportunities.

JIT also concluded that Dar had invested GBP 5.5 million in BARAQ Holdings in UAE. Source of these funds was not disclosed by him despite repeated requests. Out of these funds, GBP 4.97 million were given by him to his son. The JIT added that after year 2008, he started receiving funds and payment of loans from his son which became a source of his assets build up in Pakistan.

Dar in his reply said that the JIT’s observation regarding “exorbitant” increase in assets was never put to him in writing or during his appearance before the JIT. “Had he (Dar) been asked, Respondent no.10 (Dar) would easily have explained the increase in assets since 2008/09,” his reply read.

Dar than explained to the apex court that the facts are that at the end of tax year 2008, his assets in Pakistan were worth Rs. 44,827,562. He was a non-resident for tax purposes in Pakistan for tax years 2003 to 2008. During this period, he earned remuneration for professional advisory services in the United Arab Emirates (UAE) as Finance Advisor to H.H. Shaikh Nahayan Bin Mubarak Al

Nahayan. In this capacity, Dar was the ex-officio President/CEO of BARAQ Holdings.  His resident status in UAE as Financial Adviser during this period is mentioned in the ‘iqama’ on his passport.

He added that during the period 2003-2005, a sum of GBP 8.2 million was earned as remuneration for professional advisory services and a sum of GBP 1.647 million was spent, which includes gift of GBP 1.56 million to his son. Accordingly, he had a closing foreign assets balance of GBP 6.553 million at the end of 2005, of which GBP 5.5 million was accumulated credit balance with BARAQ Holdings. Dar pointed out that the said credit balance with BARAQ Holdings has been misconstrued by the JIT as an investment, whereas the correct position is that it was accumulated unpaid remuneration for professional advisory services, and declared as such in his Statement of Assets and Liabilities for year ended 30th June 2005 filed with the Election Commission of Pakistan.

Out of this credit balance, he said, he had extended Qarz-e-Hasna/loan of GBP 4.97 million to his son uptil the year ended 30th June 2008, which was duly declared in the Statement of Assets and Liabilities for year ended 30th June 2008 to the Election Commission of Pakistan.

(Annex-L).

He said that as per section 11(6) of the Income Tax Ordinance, 2001, he was not legally obligated to declare his overseas income in his tax returns in Pakistan for the period during which he was tax non-resident, i.e. FY 2003 to FY

2008. He told the SC that this legal position was explained by him to the JIT on 3rd July, 2017 but was malafidely and incorrectly recorded in his Statement as a refusal to provide details of his remuneration as non-resident.

Dar said that his earnings mentioned above resulted in increase of foreign assets worth GBP 6.125 million by the end of tax year 2008. After the general elections in 2008, Dar explained, he formally resigned as Financial Adviser/President-CEO of BARAQ and took oath as Federal Minister on 31st March, 2008. Consequently, he became a tax-resident in Pakistan from FY 2008-2009 and onwards.

Later in accordance with the tax laws, he said that his overseas assets worth Rs. 837.15 million (GBP 6.125 million) were merged with local assets worth Rs 44.83 million in the wealth statement. After merging the overseas assets, and taking into account both income and expenditure during the year, including donations worth Rs. 50.3 million, net wealth at the end of tax year 2009 was duly declared at Rs. 831.68 million.

Referring to the details of income and wealth for the period 2009-2016, he explained that his net wealth of Rs. 881.98 million as on 30th June 2008 has instead reduced to Rs. 544.27 million as on 30th June 2016. 

Dar said that as against what the JIT concluded about his, there are no dichotomies, mis-declaration of assets, or hiding of assets whatsoever throughout the period of more than 34 years. “Hence, there is no basis for the perverse finding of tax evasion, which clearly reflects mala fide on the part of the JIT.”