A Commissioner Inland Revenue of the Federal Board of Revenue (FBR) has been vested with substantial powers under the Income Tax Ordinance, 2001, to scrutinize the asset details of individuals, including those pertaining to their families, by issuing notice.
Specifically, the commissioner is authorized to issue a formal notice requiring any taxpayer to provide a detailed wealth statement that includes information about the assets and liabilities of the taxpayer, as well as those of their spouse, minor children, and other dependents.
According to Section 116 of the Income Tax Ordinance, 2001, the commissioner may serve such a notice in writing, directing the individual to furnish the wealth statement by a specified date. The wealth statement must include:
(a) the total assets and liabilities of the individual;
(b) the assets and liabilities of their spouse and minor children;
(c) any asset transfers and their respective consideration values;
(d) total expenditures incurred by the individual and their dependents during the relevant period; and
(e) a reconciliation of wealth with income.
This statutory provision empowers the commissioner to seek complete financial transparency, even in cases where assets are held by family members or have been transferred to others. The notice issued by the commissioner is legally binding, and non-compliance can trigger further legal action, including penalties.
In addition, every resident individual who is required to file an income tax return must also submit a wealth statement and reconciliation for the corresponding tax year. Members of associations of persons (AOPs) are similarly required to comply with this obligation.
If a person later identifies an error or omission in their submitted wealth statement, they may submit a revised version—provided it is done before the issuance of a notice under Section 122(9). This allows the taxpayer to voluntarily correct their records without facing immediate penalties, although the reason for the revision must also be explained.
Finally, individuals under the final tax regime (FTR) are not exempt from these requirements. They, too, must file a wealth statement along with its reconciliation. Through these provisions and the issuance of timely notices, the commissioner ensures greater accountability, transparency, and adherence to tax regulations in Pakistan.