WHT return filing through agent not sufficient to prove tax payment: PRA

LAHORE: The Punjab Revenue Authority (PRA) has established its tax demand by proving that mere filing of tax return by the withholding agent is not sufficient to claim that the tax due was actually paid, said sources.

A withholding agent cannot be absolved from his statutory obligation to collect and deposit the amount, they added.

According to details, the taxpayer was an Association of Person deriving his income from sale of medicines and pharmaceutical products. Being a withholding agent, he was required to collect/ deduct tax in accordance with the applicable provisions of the law and was obliged to e-file monthly as we ass annual statements under the relevant provisions of the Income Tax Ordinance. However, it was found that payments were made to various persons but no proof of tax deduction was provided.

Taking cognizance of the default of withholding tax provisions, the PRA issued a notice, which was not responded by the taxpayer, followed by a show cause notice and multiple opportunities of hearing but to no avail.

It may be noted that the compliance of any such notice is mandatory upon the taxpayer, as the relevant rules of the law contemplate that a person required to furnish the statement by furnishing a reconciliation of the amount mentioned in the biannual statement with the amounts mentioned in the returns of the income, statements, related annexes and other documents submitted from time to time.

Accordingly, a tax demand inclusive of default surcharge was created by the assessing officer. The taxpayer’s appeal was dismissed by the adjudicating authority but allowed by the tribunal by holding that though default of tax deduction for the tax year stood established but the assessing officer was not justified to create tax demand when the taxpayer has filed tax return for the concerned tax year.

The relevant appellate forum maintained that the taxpayer had failed to comply with a statutory provision while taking an admitted position the payments were made by him to various suppliers in his tax return for the concerned tax year.

Copyright Business Recorder, 2024