KARACHI: Commissioners of Inland Revenue have been empowered to make ‘best judgement assessment’ for taxpayers, who fail to file annual returns, for making payment of due taxes.
According to updated Income Tax Ordinance, 2001 issued by the Federal Board of Revenue (FBR), the tax law empowered the commissioner IR to make assessment and order a taxpayer for compliance under Section 121.
Section 121: Best judgement assessment.—
Sub-Section (1): Where a person fails to —
(aa) furnish a statement as required by a notice under sub-section (5) of section 115; or
(ab) furnish return of income in response to notice under sub- section (3) or sub-section (4) of section 114; or”;
(b) furnish a return as required under section 143 or section 144; or
(c) furnish the statement as required under section 116; or
(d) produce before the Commissioner, or a special audit panel appointed under sub-section (11) of section 177 or any person employed by a firm of chartered accountants or a firm of cost and management accountants] under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purpose of making assessment of income and determination of tax due thereon, the Commissioner may, based on any available information or material and to the best of his judgement, make an assessment of the taxable income or income of the person and the tax due thereon and the assessment, if any, treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.
Sub-Section (2): As soon as possible after making an assessment under this section, the Commissioner shall issue the assessment order to the taxpayer stating—
(a) the taxable income;
(b) the amount of tax due;
(c) the amount of tax paid, if any; and
(d) the time, place and manner of appealing the assessment order.
Sub-Section (3): An assessment order under this section shall only be issued within five years after the end of the tax year or the income year to which it relates:
Provided that where notice for furnishing a return of income under sub-section (4) of section 114 is issued in respect of one or more of the last ten completed tax years in pursuance of proviso to sub-section (5) of section 114 an assessment order under this section shall only be issued within two years from the end of tax year in which such notice is issued.
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