This blog is written by Mr. M. Kaleem Majeed, Manager Taxation Advisory Services. Please read this blog and provide your valued comments.

COMMON TYPE OF NOTICES SENT BY FBR (PHASE-I)

“If you think compliance is expensive, try non-compliance as new taxes are still on the anvil”

NOTICE TO SUBMIT RETURN OF INCOME FOR ANY OF THE PREVIOUS 5-10 YEARS [SEC – 114(4)]

The Commissioner may, by notice in writing, require any person who, in the Commissioner’s opinion, is required to file a return of income under this section for a tax year or assessment year but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Commissioner may allow.

A notice under above sub-section may be issued in respect of one or more of the last five completed tax years or assessment years.

Provided that in case of a person who has not filed return for any of the last five completed tax years, notice under subject sub-section may be issued in respect of one or more of the last ten completed tax years.

CONSEQUENCES OF NON-COMPLIANCE

  1. Show cause notice for imposition of penalty u/s 182(1) of ITO, 2001

Such person shall pay a penalty equal to 0.1% of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50% of the tax payable provided that if the penalty worked out as aforesaid is less than twenty thousand rupees or no tax is payable for that tax year such person shall pay a penalty of twenty thousand rupees.

The expression “tax payable” means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or 122C.

  1. Show cause for best judgement assessment u/s121(1)/(ab)/(d) of ITO, 2001

The Commissioner may, based on any available information or material and to the best of his judgement, make an assessment of the taxable income/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.

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.

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.

  • Recovery of tax (if not already paid) out of property and through arrest of taxpayer u/s 138

M. Kaleem Majeed