July 9, 2003	Wednesday	Jumadi-ul-Awwal 8,1424

LAHORE, July 8: The new Universal Self-Assessment Scheme (USAS) put in place on July 1 gives a lot of discretionary powers to the “assessing” officer and is likely to encourage corruption.

“The new scheme will erode whatever is left of public faith in the country’s (income) tax system. It will help neither taxpayers nor collectors. It will help only those tax officers who are used to bend the laws for personal monetary gains,” the Lahore Tax Bar Association (LTBA) president, Mr Shafqat Chohan, said on Tuesday.

Talking to this reporter, he insisted that the “new USAS would not help the government increase its tax revenues as was expected by its finance managers.” He added the sections 122 (amendment of assessment), and 120(a) (provisional assessment or best judgement assessment) introduced in the Income Tax Ordinance, 2001, allowed vast discretionary powers to the AO (assessing officer).

While section 122 allows the AOs to amend a return filed under the USAS whenever and “as many times as they deem it fit”, section 120(a) provides that a return has to be “complete” but does not lay down any criteria for the same.

“These two sections leave taxpayers at the mercy of discretion of the AOs,” said Mr Chohan. “It cannot be called universal self- assessment scheme. It is a process of assessment (of income) that depends largely on discretion of the AOs. The sword of a possible changes in the return would continue to hang over the head of the taxpayers for six years after filing of the returns,” he said.

The new scheme is said to be different from the previous self- assessment scheme in some ways. For instance, the new scheme has a provision that does not bind the taxpayers to show an “increase in their income” as was essential in the previous scheme. The new scheme rather allows the taxpayers to show the “decrease in their income (if any)”. However, the LTBA says, “no AO would accept any return indicating a lower income than the previous years” because of the discretionary powers he or she enjoys in the new USAS just to show higher collection to the authorities.”

Second, he said, the new “scheme had done away with the checks and balances given in the previous scheme. Now an AO can change or amend a return as many times as he deems it necessary. The AOs can also change their own (erroneous) assessments that is opposed to the all legal principles.” He said the IT authorities would have to ensure that the AOs used “discretion to the minimal level” and only where a strong reason or cause existed for it.