Tax authorities pass assessment orders on incorrect assumptions?

LAHORE: Departmental store owners have alleged that the income tax authorities pass the assessment orders without giving due consideration to their documents/evidence and prefer to pass tax orders hastily on mere assumptions.

They said the department has set a practice of objecting their returns on the pretext that the taxpayer has not made tax deductions at the time of making payments under various heads and submitted statements under the law in a prescribed manner.

According to sources in the departmental stores’ community, even though all the documentary evidence/data regarding the deduction of withholding tax on account of payments made to the commission agents for purchases is produced by them, the concerned tax officials fail to point out any shortfall to confront them under the relevant provisions of the law. They said the text officials also fail to bring on record that any party/person from tax was liable to be withheld but not deducted the same.

Further, the department does not call for discharging the liabilities by the respective person whose tax was to be deducted. Instead, the tax demand is merely based on conjectures and surmises, as no specific transactional entries are confronted or highlighted by the tax authorities.

It is also an irony that the high-ups at the tax department do not consider the submissions made by taxpayers and prefer to support wrong tax demands raised by their subordinates, they added.

It may be noted that the Income Tax law requires the tax collectors to establish first the fact that the taxpayer is a withholding agent or not before proceeding further. Mere estimation to raise a tax demand is not the spirit of the law just to complete the proceedings initiated against a taxpayer. So much so, no separate instance of default is highlighted by the department while completing its proceedings.

Sources in the tax practitioners have pointed out that the phenomenon of raising fake demands was rampant during the Pakistan Tehreek-e-Insaf (PTI) regime when then Chairman Dr Ashfaq had verbally desired to question every tax return and raise a tax demand to increase tax revenue.

The taxpayers and the tax officers were also highly disturbed over the state of affairs, as most of the cases failed to sustain at the highest appellate forums. No due consideration was assigned to the documentary evidence produced by taxpayers to prove tax demands genuine at that time, which led to excessive litigations.

Copyright Business Recorder, 2023