KARACHI: A commissioner of Inland Revenue has been empowered to alter annual income tax return of a person on detection of tax evasion or avoidance.
According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR), Commissioner IR has been empowered under Section 122 to amend assessments of taxpayers.
Section 122: Amendment of assessments
Sub-Section (1): Subject to this section, the Commissioner may amend an assessment order treated as issued under section 120 or issued under section 121, or, by making such alterations or additions as the Commissioner considers necessary.
Sub-Section (2): No order under sub-section (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer.
Sub-Section (3): Where a taxpayer furnishes a revised return under sub-section (6) or (6A) of section 114 —
(a) the Commissioner shall be treated as having made an amended assessment of the taxable income and tax payable thereon as set out in the revised return; and
(b) the taxpayer’s revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.
Sub-Section (4): Where an assessment order (hereinafter referred to as the “original assessment”) has been amended under sub-section (1), (3) or (5A), the Commissioner may further amend, as many times as may be necessary, the original assessment within the later of —
(a) five years from the end of the financial year in which the Commissioner has issued or is treated as having issued the original assessment order to the taxpayer; or
(b) one year from the end of the financial year in which the Commissioner has issued or is treated as having issued the amended assessment order to the taxpayer.
Sub-Section (4A): In respect of an assessment made under the repealed Ordinance, nothing contained in sub-section (2) or, as the case may be, sub-section (4) shall be so construed as to have extended or curtailed the time limit specified in section 65 of the aforesaid Ordinance in respect of an assessment order passed under that section and the time-limit specified in that section shall apply accordingly.
Sub-Section (5): An assessment order in respect of tax year, or an assessment year, shall only be amended under sub-section (1) and an amended assessment for that year shall only be further amended under sub-section (4) where, on the basis of definite information acquired from an audit or otherwise, the Commissioner is satisfied that —
(i) any income chargeable to tax has escaped assessment; or
(ii) total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or
(iii) any amount under a head of income has been mis-classified.
Sub-Section (5A): Subject to sub-section (9), the Commissioner may, after making, or causing to be made, such enquiries as he deems necessary, amend, or further amend, an assessment order, if he considers that the assessment order is erroneous in so far it is prejudicial to the interest of revenue.
Sub-Section (5AA): In respect of any subject matter which was not in dispute in an appeal the Commissioner shall have and shall be deemed always to have had the powers to amend or further amend an assessment order under sub-section (5A).
Sub-Section (5B): Any amended assessment order under sub-section (5A) may be passed within the time-limit specified in sub-section (2) or sub-section (4), as the case may be.
Sub-Section (6): As soon as possible after making an amended assessment under sub-section (1), sub-section (4) or sub-section (5A), the Commissioner shall issue an amended assessment order to the taxpayer stating –
(a) the amended taxable income of the taxpayer;
(b) the amended amount of tax due;
(c) the amount of tax paid, if any; and
(d) the time, place, and manner of appealing the amended assessment.
Sub-Section (7): An amended assessment order shall be treated in all respects as an assessment order for the purposes of this Ordinance, other than for the purposes of sub-section (1).
Sub-Section (8): For the purposes of this section, “definite information” includes information on sales or purchases of any goods made by the taxpayer, receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance, and on the acquisition, possession or disposal of any money, asset, valuable article or investment made or expenditure incurred by the taxpayer.
Sub-Section (9): No assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard.
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