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September 24, 2020

FBR submits final report before SC in Sarina Isa's case

Top Story

September 24, 2020

ISLAMABAD: The tax authorities have submitted conclusive report on Sarina Isa's tax case before Supreme Court on Wednesday.

Officials familiar with content of over 260-page lengthy report told this correspondent that tax authorities after evaluating all the relevant record asked Sarina Isa to pay a penalty of Rs35 million for her "tax liability."

FBR served four notices on Mrs Isa (from 25th June to August 21, 2020) where tax authorities asked her and her two children to explain position pertaining to their three London properties, revealed a senior official familiar with the content of this report annexed with a 164-page order written by Commissioner Zulfiqar Ahmed. The confidential report was submitted by FBR Chairman Javed Ghani to office of Chief Justice of Pakistan who is also chairman of Supreme Judicial Council, added the official. A senior official of FBR also confirmed to this correspondent that the final report has been presented before office of Chief Justice of Pakistan.

FBR’s report revealed that Mrs Isa had her legitimate declared income worth some Rs24 million collectively against total value of her three London properties amounted to Rs105 million currently, official citied more details.

Tax authorities, however, did not impose any tax penalty on children of Qazi Faez Isa’s son and daughter, official further said quoting content of this report. The FBR has also informed the apex court in this report that tax authorities would decide about next course of action on this case after Chief Justice’s next order, said another official who is familiar with the development. The FBR would most likely begin proceedings on “penalty issue” of Sarina Isa’s tax case as well, he added. But Sarina Isa in a statement issued here has denied any wrongdoings in the purchase of her three offshore properties, saying, “Zulfiqar Ahmed has now come up with a 164-page order and created an artificial tax liability of over Rs35 million. I do not even know if he wrote the order himself.” The gist of investigation, FBR’s notices and Sarina Isa’s responses, suggests that all according to tax authorities was not well with Sarina Isa’s tax matters. FBR’s report continued to reveal that Sarina Isa came up with a changed stance that she had paid the entire amount for the purchase of two properties, jointly bought with her children in 2013, another FBR official cited the report content. Under the circumstances and on the basis of her own admission in the reply dated Aug 10, 2020, her total investment works out as under total Rs104.7 million, FBR report stated that FBR team told Mrs Isa through a show cause notice. The tax authorities further asked Mrs Sarina that her three London properties worth Rs104,680,020 have to be justified against the declared investment of Rs2,404,320, revealed the report, according to FBR official.

The report continued to reveal that that FBR in its final show-cause notice served on Mrs Isa stated, “You [Mrs Sarina Isa] fail to respond to the question with regard to the actual percentage of your investment regarding three offshore properties, (therefore,) this office had to rely on the declarations coupled with your plea for the purchase of property in 2004 and thereafter in 2013.

“Commissioner Zulfiqar Ahmed’s order is a piece of fiction and I shall be filing an appeal against it. A fiction in which my agricultural land earning were disregarded; a fiction in which my salary paid by the Karachi American School since 1982 is also not considered; a fiction in which the sale proceeds and profits earned from the sale of two properties in Clifton have been disregarded,” Mrs Isa responded in her statement issued here.

“As per record, Sarina had total white/taxed sources only to tune of Rs9.4 million which already stands utilised towards the assets declared up to June 30, 2013, while three offshore properties were concealed and not disclosed in her wealth statement as on June 30, 2013,” read a show-cause issued to Sarina Isa. This show cause is clubbed with FBR final report. The FBR team conducted a forensic analysis of the report of Sarina Isa’s Standard Chartered Bank’s account opened on May 26, 2003, where total transactions of GBP 0.698 million were made from the year 2003 to June 2013. The team also conducted a forensic analysis of net assets worth Rs119.915 million of Sarina Isa for the tax year 2017-2018, officials told the Geo News. Mrs Isa’s responses annexed with the report revealed that Mrs Isa told the FBR that she did not know from where the tax authorities have taken the aforesaid figure of Rs9.4 million, as they did not provide its details nor as to how the FBR had determined the amount of Rs104,680,020. The report carried three details replies of Mrs Isa. According to her replies, the investigators wanted her to reconstruct her life, explained every rupee earned by her since she started working in the Karachi American School some 38 years ago.

“For the record, I once again repeat the request that you provide me the documents you [FBR] rely upon,” she wrote in her reply clubbed with the report. The Section 116(A) of the ordinance was inserted through the Finance Act, 2018 when, for the first time, “foreign income and assets statement” was required to be filed, Sarina further argued. Complied with this new legal requirement and filed her returns and statements with regard to foreign income and assets for tax year 2018 and again for 2019, paid requisite tax and the same were accepted by FBR, she stated in her reply.

According to Mrs Isa, the FBR intentionally disregarded the fact that the proviso to Section 111 of the ordinance, which accepts income derived from agriculture on which too, “agricultural income tax [is] paid under the relevant provincial law” was added through the Finance Act, 2013, revealed one of her replies. Therefore, previous agricultural income cannot be disregarded, irrespective of whether provincial income tax was paid thereon or restricted to adjustment to the extent of such payment, she further argued. Admittedly FBR Islamabad Commissioner has no territorial jurisdiction to act under the ordinance, Mrs Isa said adding that her tax jurisdiction was changed without her request and without informing her. “I continue to derive substantial amounts from my agricultural lands, and some of these amounts, I invest in saving certificates issued by the government and on profits derived there from income tax is deducted,” revealed an FBR official citing report’s content.