The Directorate General of Intelligence and Investigation Inland Revenue (IR) has detected non-deposit of withholding tax to the tune of Rs 62,954,774 by Pakistan Railways on the award of contracts to different firms/companies under agreements.
Source told Business Recorder here on Friday that the said state-owned entity had entered into agreement with various firms/companies since the year 2006 whereby contracts for operating passenger trains were awarded through open auction; however, due withholding tax u/s 236A, of the Income Tax Ordinance, 2001 has not been collected/deposited by the Pakistan Railways from the contractors. An inquiry/ investigation has been conducted in this regard and default u/s 161 of the Income Tax Ordinance has been ascertained to the tune of Rs 62,954,774 along with default surcharge u/s 205 at Rs 1,505,294.
The investigation proceedings in the case were initiated on the basis of information about non-deposit of advance tax by the said state entity. The investigation revealed that the taxpayer outsourced Hazara Express and Fareed Express for Rs 1,050 million and Rs 932 million per annum respectively through two different contracts awarded to a company of Lahore.
The notice under section 176 of the Income Tax Ordinance, 2001 was issued requisitioning the detail of tax payment u/s 236A of the Income Tax Ordinance 2001. But the attitude of the Railways Authorities has all along been evasive in provision of evidence of tax collected from the contractor. One authority has been shifting responsibility of tax collection to the other and each one was not inclined to hand in the information sought for. Finally, the matter was taken up with the awardee of the contracts who intimated that he has been regularly depositing advance tax u/s 236A, to the assistant cashier, Pakistan Railways, Lahore, along with payments on account of services outsourced by the taxpayer.
During the period 10.08.2016 to 02.12.2016, the aforesaid contractor made payment of advance tax u/s 236A in respect of Hazara Express and Fareed Express. This fact stands established that the taxpayer collected advance tax from the contractor but did not deposit the same into the government exchequer deliberately. As such income tax amounting to Rs 62,954,774 (including default surcharge up to 20.12.2016) is recoverable from Pakistan Railways, Lahore, for recovery of which investigation report has been sent to the Chief Commissioner-IR, Lahore. Further inquiry/investigation on the same lines is under way against 04 other parties and the outcome will be communicated to LTU, Lahore, for further necessary action in due course of time, directorate of intelligence added.
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