ISLAMABAD: Directorate General of Intelligence and Investigation Inland Revenue (DG I&I-IR) has started separating cases of tax evasion and money laundering to stop prosecuting business community under Anti-Money Laundering Act, who were only involved in tax frauds.

A senior Federal Board of Revenue (FBR) official told Business Recorder on Saturday that the agency has realised the fact that every case of tax evasion is not a case of money laundering. There is a difference between the case of tax evasion and money laundering. The cases of tax evasion cannot be prosecuted under the Anti-Money Laundering Act.

We fully understand that tax evasion and money laundering are different cases. The Anti-Money Laundering Act is an evolving law and the benefit of the doubt would be given to the business community. The suspicious transaction reports generated by the financial monitoring unit (FMU) do not specify whether it is a case of tax evasion or money laundering; however, 50 percent of the AML cases framed by the DG I&I-IR are in courts, sources added.

A report of the Directorate General of Intelligence and Investigation Inland Revenue revealed that notices are being sent by the FBR to business persons under the Anti-Money Laundering Act.

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The report stated that the Directorate General of Intelligence and Investigation Inland Revenue (DG I&I-IR) is a designated investigation and prosecution agency under Anti-Money Laundering Act, 2010 (AMLA, 2010) DG-I&I-IR is mandated to investigate and prosecute under AMLA, 2010 for the predicate tax offences mentioned vide section VIIA (Sales Tax Act, 1990), XIIA (Income Tax Ordinance, 2001 and XIV (Federal Excise Duty Act, 2005) in Schedule-I to AMLA, 2010.

The mandate to investigate and prosecute the tax offences under Income Tax Ordinance 2001 was given to DG-I&I-IR and for Sales Tax Act, 1990 and Federal Excise Duty Act, 2005 was given vide SRO 104(1)/ 2016.

The M/s PEB Industries is a private limited company incorporated on April 14, 2010 under the Companies’ Ordinance 1984.

As per audited accounts of the company, it is engaged in various business activities, mainly relating to the construction sector and registered in CTO, Islamabad.

As per SECP, the company has two directors namely, Muhammad Aslam Malik and Ramla Malik.

Huge tax evasion was detected during the inquiry and in the light of information received from the Financial Monitoring Unit (FMU). The accused was provided ample opportunities during inquiry proceedings under the Income Tax Ordinance, 2001, to explain its contention, but it failed to attend office and provide any satisfactory explanation documentary evidences.

Resultantly, income tax investigation report was sent to Corporate Tax Office (CTO) Islamabad for assessment proceedings under the Income Tax Ordinance 2001 on apparent concealment of income during the assessment proceedings, CTO Islamabad further provided various opportunities to the accused; however, it again failed to provide any document in support of its contention, and despite repeated requests neither attended the office nor filed any adjournment CTO passed assessment orders for concealment of income/ assets and un-explained credit, etc., for tax years, 2015, 2016, and 2017 and created tax demands of Rs140,531,05; Rs353,685.392 and Rs84,195,826, respectively vide orders dated 30th March 2021. Amended assessments orders were challenged before the Commissioner Inland Revenue (appeal) by the accused. CIR (A) remanded back the same for re-assessment proceedings and the same currently were pending for adjudication.

Sufficient opportunities were provided during inquiry by I&I-IR and assessee proceedings before CTO; however, the accused failed to submit the relevant documents in his support.

Accordingly, the Directorate of Intelligence and Investigation-IR, Islamabad initiated proceedings under AML Act, 2010 on commission of predicate offence, i.e., (Prosecution for Concealment of Income) and (Prosecution for False Statement Verification) of the ITO, 2001 vide section XIIA of the Schedule-I of the Anti-Money Laundering Act, 2010. FIR No. 08/2021 dated 13-09-2021 was filed.

Proceedings on the criminal side (under AMLA 2010) are under investigation of the AMLA 2010.

It is the fundamental right of the accused to submit the evidence in support of its contention, accordingly sufficient opportunities will be provided to the accused. The accused has requested for submission of documents. This issue will be decided in the light of the submitted document, the report of the directorate added.

Copyright Business Recorder, 2023

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