FPCCI slams ‘discretionary’ power of arrest for concealing income

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Tuesday slammed a proposed legal change that allows arrest of people concealing income on mere doubt by tax officers.

“Income tax is a civil liability and could not be treated as a criminal liability,” Naaser Hyatt, president of FPCCI said in a statement. “This has always remained a civil matter historically.”

The federal budget proposed amendments into section 203A that “opens doors to harassment of business, industry, and trade community,” Naaser said.

Under the proposed changes, an officer of Inland Revenue not below the rank of an assistant commissioner of Inland Revenue or any other officer of equal rank authorised by the Federal Board of Revenue (FBR) in this behalf, “who on the basis of material evidence has reason to believe that any person has committed offence of concealment of income or any offence warranting prosecution under this [income tax] ordinance, may cause arrest of such person,” said the finance bill.

Naaser said section 203A will add to the already existing harassment of businessmen by tax officials through issuance of several thousand notices. Finance Minister Shaukat Tarin’s timely intervention has resulted in withdrawal of big number of notices issued to the businessmen.

FPCCI president said businessmen must be respected for generating taxes and employment for the country. The business should be conducted in harmony instead of in conflicts and contradictions created by the tax officials and their discretionary powers.

“Section 192A (Prosecution for Concealment of Income) of the Income Tax Ordinance, 2001, already covers the subject sufficiently. There is no need of Section 203A and FPCCI demands it should be omitted and taken off the table in the final budget documents,” he said. FPCCI is looking forward to resolve this issue by withdrawal of the Section 203A on immediate basis.

Under the new section, all arrests made will be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898. Notwithstanding anything contained in sub-sections (1) and (2) or any other provision, where any person has committed offence of concealment of income or any offence warranting prosecution, the chief commissioner with the prior approval of the board may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the amount of tax due along with such default surcharge and penalty as is determined under the provisions of the ordinance.

“Where the person suspected of offence of concealment of income or any offence warranting prosecution under the ordinance is a company, every director or officer of that company whom the authorised officer has reason to believe is personally responsible for actions of the company contributing to offence of concealment of income or any offence warranting prosecution under the ordinance shall be liable to arrest provided that any arrest under this sub-section shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty imposed under the ordinance,” added the finance bill.