Internal investigation and audit: frequent changes in units' jurisdiction caused delay

The frequent changes in the jurisdiction of units covered under Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) and repeated transfers/postings of tax officials during 2009-10 has caused delay in completion of internal investigation and audit by the Directorate General of Internal Audit Inland Revenue.
It has been learnt on Tuesday that the change in jurisdiction of companies and other categories of taxpayers also requires transfer all the relevant records from one LTU/RTO to another. Resultantly, the concerned taxation officers of the directorate could not conduct complete internal audit of the units due to change in jurisdictions.
According to the report of the directorate, the department has compiled a comparative position of units audited, number of cases audited and number of units where follow up action was completed during the last three years. The data revealed that a considerable increase in respect of units audited and number of cases audited for the year 2009-10 as compared to the previous years. However, completion of follow up action has decreased during the year 2009-10 with regard to the previous year. The main reason of the said decrease is due to frequent changes in jurisdiction of cases falling in LTUs/RTOs. Further, frequent transfers of officers/officials have also caused delay in compliance of audit paras/reports by the respective taxation officers, the directorate said.
The report further depicted the loss of revenue detected by the audit authorities on account of non-short-levy of additional taxes under various heads of additional taxes. The data reflected a healthy increase of 159 percent for the year 2009-10 over the detection of loss of revenue during the corresponding period of last fiscal year.
The directorate has also compiled region-wise performance on account of non-short-levy of additional tax under section 205(3) of the Income Tax Ordinance, 2001 for failure to deduct/collect withholding taxes at the rates specified in the First Schedule of the Income Tax Ordinance, 2001. The Central Region, Lahore has shown better performance by detecting loss of revenue at Rs 1044.512 million which is 86.48 percent of total loss detection. During the year 2009-10 overall loss of revenue was detected at Rs 1207.838 million on account of non-levy of additional tax under section 205(3) of the Income Tax Ordinance 2001 which shows an increase of 264% against loss detected at Rs 331.947 million for the year 2008-09.
The department has compiled data on the detection of loss of revenue on account of non-short-levy of additional tax under section 205(1) of the Income Tax Ordinance, 2001 for failure to pay or timely deposit any instalment of advance tax due under section147 of the Ordinance. Total loss of revenue under the said head was detected at Rs 478.746 million during 2009-2010.
The region-wise performance vis-à-vis loss detected as presented through above chart reveals that the Southern Region, Karachi has detected Rs 365.824 million loss of revenue under this head, which constitutes 76.41 percent of the total loss of revenue detected. The loss of revenue of Rs 478.746 million was detected on account of non-levy of additional tax under section 205(3) of the Ordinance 2001 which shows an increase of 155 percent against loss detected under the said head for the year 2008-09 at Rs 187.061 million.
The region-wise details of loss of revenue detected at Rs 58.364 million for the year 2009-10 for short/non levy of additional tax for failure to pay admitted liability under section 137 of the Income Tax Ordinance, 2001 revealed that 66.95 percent additional tax has been charged by the Central Region, followed by Southern Region and Northern Region with 23.88 percent and 9.17 percent respectively. The data further reflected that the bulk of audit work has been done in LTU, Lahore.
The figures of loss of revenue detected at Rs 265.204 million for the year 2009-10 by the audit authorities for non/short levy of additional tax under section 205/89 of the Income Tax Ordinance, 2001 for failure to pay a part or whole of tax determined by the department. The major contribution of detection of loss of revenue has been made by the Central Region, which constitutes 76.15 percent of the total detection of revenue loss where lot of audit work has been done in RTO, Multan.