Tax officers accused of imposing penalties against agri income

LAHORE: The Income Tax department has been found imposing penalties and default surcharges for late payment of agriculture income tax which, according to the tax experts, is illegal because the taxation of agriculture income is not a subject of Income Tax Ordinance, 2001.

According to sources, the tax authorities were issuing notices under the garb of absence of a proof for payment of provincial agriculture income tax and considering it as “income from other sources,” and not as agriculture income.

They said the tax officers were trespassing provincial domain by involving in such practices and in some cases penalty and default surcharge is being imposed even if a taxpayer produces a proof for payment of agriculture income tax.

The sources said the income tax authorities assume the role of a provincial authority to harass a taxpayer despite a clear distinction that the taxation of agriculture income is not a matte to be dealt with under the Income Tax Ordinance.

KATI chief calls for taxes on agriculture sector

Rather, it is a provincial matter and it’s collection and consequences of late payment or non-payment are governed by the provincial law.

They added that the income tax authorities use their discrimination soon they find that the taxpayer has delayed payment of agriculture tax. The department refuses to extend the credit of agriculture tax against the creation of assets or expenditures made by the taxpayer.

In some cases, they said, taxpayers even do not claim any such credit except seeking declaration of agricultural income tax.

However, the tax authorities prefer to impose penalty and default surcharge in case of late payment of provincial agriculture tax instead of leaving the matter to the discretion of the provincial authorities.

According to the sources, mostly the income tax authorities exercise such powers if a taxpayer had paid the agriculture income tax after the issuance of notice and initiation of proceedings before the appellate tribunals of the department.

The tax authorities deal all such matters under section 111 of the Ordinance which envisages an income as “unexplained” income or asset where any amount is credited in a person’s book of account, or he has made any investment or is the owner of any money or valuable article, having incurred any expenditure or concealed income or furnished inaccurate particulars of his income, supressed any production, sales or any amount chargeable to tax or suppressed any item if receipt liable to tax in whole or in part.

However, the assessment officers misuse their authority of satisfaction by ignoring the provision of law making it obligatory to accept any explanation related to agriculture income tax, the sources added.

Copyright Business Recorder, 2023