ISLAMABAD: A local real estate builder has allegedly concealed Rs8.44 billion from the Federal Board of Revenue (FBR) in income tax returns. However, he filed a petition before the Islamabad High Court (IHC) to avoid legal proceedings.

The FBR on Feb 6, 2019 raided the office of the petitioner and confiscated official records including his bank details.

As per the record, the real estate builder had declared six bank accounts with the FBR and concealed transactions in 17 other bank accounts.

According to the documents, since 2013, the builder has declared Rs2.09 billion in sales whereas “sales as per data impounded” shows Rs10.54 billion.

FBR estimated that the outstanding tax against the said builder was Rs2.11 billion which is more than the amount he declared in the tax returns.

FBR’s commissioner Inland Revenue (IR) on Feb 6 authorised the officials to conduct proceeding under section 175 of the Income Tax Ordinance (ITO) 2001, which gives access to the commissioner or officers authorised by the commissioner to any premises, accounts, documents or computer.

On Feb 12, the petitioner’s counsel, advocate Qamar Afzal, adopted before the court that such power cannot be exercised unless the pre-conditions explicitly mentioned in sub section 1 have been fulfilled.

The counsel stressed that no proceeding under any other provision of the Ordinance of 2001 has been initiated.Likewise, the powers are not being exercised for the purposes of making an audit.

Justice Minallah issued notice to FBR and sought reply in this matter by Feb 18. The court suspended the operation of the order of IR commissioner till the next date.

In its written reply submitted to the IHC on Friday, FBR said the petitioner had been called to explain the significance of these entries and omissions, but he did not do so despite several opportunities.

The facts and materials led FBR to believe the petitioner was involved in large tax evasions.

In an individual capacity and as director and principal officer of the company, the petitioner is operating 23 bank accounts.

From the examination of the documents and bank accounts it has transpired that the total turnover of the petitioner and the company for the last five tax years is Rs10.54 billion whereas he declared only Rs2.09 billion in tax returns.

This amount does not include evasion of capital value tax, sales tax on services, advance tax of sales and purchase of property which are directly related to the turnover.

It said that to obtain the details and transactions of undeclared accounts, FBR “had no other option except to invoke the provisions of section 175 of the Ordinance. Action under section 175 of the Income Tax Ordinance, 2001 was, therefore, necessary to assess and complete the proceedings qua the petitioner and the company. Upon these circumstances, the commissioner of Inland Revenue, gave her assent that this was a fit case for search under section 175 of the Ordinance”.

Published in Dawn, February 16th, 2019