Concealment of income declared cognizable offence

ISLAMABAD: The Federal Board of Revenue (FBR) has declared concealment of income as a cognizable offence and the accused can be arrested under the new law.

According to an income tax circular issued by the FBR here on Thursday, the prosecution for concealment of income law already provides for prosecution mechanism under sections 201 to 203A of the Income Tax Ordinance, whereby, prosecution can be carried out for offences enumerated in sections 191 to200.

Under the Finance Act, 2021, a new mechanism has been introduced whereby the concealment of income has been made a cognizable offence by introduction of sections 203Bto 2301.

In order to attract new mechanism, the amount of concealed tax should be Rs100million or above in case of filer, and Rs25 million or above in case of non-filers.

Moreover, this concealment should be established through an assessment or amended assessment under section 121 or 122 of the Ordinance consequent upon third-party audit under section 177 or214C of the Ordinance.

The accused can be arrested, only after the written approval of committee consisting of finance minister, chairman and senior most member of the board.

The post arrest procedure to be followed has been laid down in newly inserted sections 203Bto 2031.

This procedure is harmonized with the procedure laid down in Sales Tax Act, 1990.

In order to streamline actions referred above, the act of concealment has been defined under the newly inserted clause (13AA) in section 2 of the Ordinance.

In order for an act to constitute concealment, it must be willful.

Mere disallowance of an expense or rejection of an exemption claim cannot be construed as concealment if the taxpayer has taken a reasonably arguable position.

Furthermore, where notice for amendment of assessment has been issued confronting taxpayer regarding concealment of income, no separate notice will be required to be issued under Section 111(5) of the Ordinance, as statute does not provide for any such notice, the FBR added.

Copyright Business Recorder, 2021