FBR files petitions against 14 non-filers in Special Court

ISLAMABAD: For the first time in the country’s taxation history, the FBR has filed petitions against 14 non-filers before the Special Court in order to prosecute retailers, jewellers and individuals who own multi-million rupees, but preferred not to come into the tax system.

In the court of Special Judge Customs, Taxation and Anti-Smuggling Rawalpindi/Islamabad, the FBR’s Regional Taxpayer Office (RTO) Islamabad filed complaint u/s 203 of the Income Tax Ordinance (ITO) to initiate criminal prosecution proceedings u/s 191 of the ITO 2001. The Special Court has admitted the cases for regular hearings and issued summons to all accused for presence on 14 January 2020.

While briefing about legal grounds, the top official said that under Section 191 of Income Tax Ordinance, 2001 legislature has empowered commissioner Inland Revenue to initiate criminal prosecution proceedings which is reproduced as under: “191. Prosecution for non-compliance with certain statutory obligations. —(1) Any person who, without reasonable excuse, fails to —

[(a) comply with a notice under sub-section (3) [and sub-section(4)] of section 114 or sub-section (1) of section 116;]”

This court has powerunder Section 203 of the Ordinance, 2001 to try offences punishable under different provisions of the Ordinance, 2001. In the filed complaints, the FBR has submitted that taxpayer is an individual, falling under the jurisdiction of RTO Islamabad and has been failed to file return of income for tax year 2018 as required u/s 114(1) of the Income Tax Ordinance, 2001.

The statutory notice u/s 114(4) of the Income Tax Ordinance, 2001 was issued through Iris on 30/08/2019 for compliance by 30/09/2019 but the taxpayer failed to comply with the notice within due date.

In order to provide the taxpayer with another opportunity and to meet the ends of justice, a reminder was issued on 19/11/2019 for compliance by 26/11/2019 which was properly served through Iris as well as manually but despite proper service, the taxpayer failed to file return of income as required under the law.

Subsequently, the taxpayer was issued a show cause notice for imposition of penalty u/s 182 (1) of the Income Tax Ordinance and penalty was imposed amounting to Rs20,000 for the default of non-filing of the return of income.

It is worth mentioning that Section 218(1)(d) of the ITO 2001 provides for ‘electronic’ service as ‘valid service’. The same is reproduced for ready reference:

“218. Service of notices and other documents.—(1) Subject to this ordinance, any notice, order or requisition required to be served on a resident individual (other than in a representative capacity) for the purposes of this ordinance shall be treated as properly served on the individual if –(d) served on the individual electronically in the prescribed manner.”

Hence, according to the FBR, it is established that the taxpayer has deliberately or wilfully committed an offence for which, law provides for prosecution u/s 191 of the Income Tax Ordinance, 2001.

In view of the above, this complaint is submitted under Section 203 of the Income Tax Ordinance, 2001(here in after referred to as ‘The Ordinance 2001’) for trial by this court under Section 203 of the Ordinance, 2001 for the prosecution of the accused under section 191 of the Ordinance 2001.

It is worthwhile to highlight that non-filing of tax return was made prosecutable offence u/s 191 of the Income Tax Ordinance 2001 by the legislature through Finance Act 2017. Since then, no such case was filed against the non- filers.

The official said that the FBR field formations believed that the initiation of criminal prosecution against the delinquent taxpayer would pave way in restoration of fiscal writ of the state as non-filing of tax return is globally viewed as a criminal act and is liable for severe punishment.

This policy of the state seems to have clear paradigm shift in accordance with the vision of the incumbent regime by adopting the western economic concept of “Hard Heads and Soft Hearts” which entails that state shall be very tough and hard headed on implementation of all taxation laws but shall be very soft hearted and flexible when it comes to provisioning of public goods and services, the FBR official said.