KARACHI: The tax authorities have powers to arrest tax evaders without warrants for concealment of income or assets.
Officials in the Federal Board of Revenue (FBR) said that the concealment of assets or income is now cognizable offence.
Law already provides for prosecution mechanism under sections 201 to 203A of the Income Tax Ordinance, 2001. These sections allow prosecution for offenses under Sections 191 to 200.
The Finance Act, 2021 introduced a new mechanism whereby the concealment of income is now cognizable offence. New sections 203B to 230I introduced to the ordinance.
In order to attract new mechanism the amount of concealed tax should be Rs. 100 million or above in case of filer and Rs. 25 million or above in case of no-filers. Moreover, this concealment should be established through an assessment or amended assessment under section 121 or 122 of the Ordinance consequent upon third party audit under section 177 or 214C of the Ordinance. The accused can be arrested, only after the written approval of committee consisting of Finance Minister, Chairman and senior most Member of the Board.
The post arrest procedure to be followed has been laid down in newly inserted sections 203B to 2031. This procedure is harmonized with the procedure laid down in Sales Tax Act, 1990.
In order to streamline actions referred above, the act of concealment has been defined under newly inserted clause (13AA) in section 2 of the Ordinance.
In order for an act to constitute concealment, it must be willful. Mere disallowance of an expense or rejection of an exemption claim cannot be construed as concealment if the taxpayer has taken a reasonably arguable position.
Furthermore, where notice for amendment of assessment has been issued confronting taxpayer regarding concealment of income, no separate notice will be required to be issued under section 111(5) of the Ordinance, as statute does not provide for any such notice.