The Federal Board of Revenue (FBR) has forthwith stopped the Inland Revenue officials from abusing income tax powers of entering and searching business premises of taxpayers and warned strict action against those involved in searching premises without approval of the Chief Commissioner. Sources told Business Recorder here on Tuesday that the FBR has taken serious notice of the invoking enforcement action under section 175 of the Income Tax Ordinance 2001.
There are reports that certain officials and staff of the Federal Board of Revenue are abusing the powers conferred under section 175(1) of the Income Tax Ordinance 2001. It is hereby directed that the powers under section 175(1) will only be used under exceptional circumstances with the specific approval of Chief Commissioner of the region. Any complaint of abuse of powers will be dealt with strictly, the FBR added.
To deal with the sales tax issues, the FBR chairman had barred IR officials from conducting raids on the business community without prior approval of FBR Member Inland Revenue Operations and FBR chairman. However, instructions were not specific to the powers under section 175(1) of the Income Tax Ordinance 2001. This resulted in misuse of powers of IR officials under the cover of section 175(1) of the Income Tax Ordinance 2001. Now, the FBR has cautioned the IR officials to use these powers under exceptional circumstances with the specific approval of concerned chief commissioner.
According to the section 175 (power to enter and search premises), in order to enforce any provision of Income Tax Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorized in writing by the commissioner for the purposes of this section shall, at all times and without prior notice, have full and free access to any premises, place, accounts, documents or computer; may stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained may impound any accounts or documents and retain them for so long as may be necessary for examination or for the purposes of prosecution; may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required and may make an inventory of any articles found in any premises or place to which access is obtained.
Reportedly, the FBR officials were abusing the said powers conferred under section 175(1) of the Income Tax Ordinance 2001.
In May 2019, FBR Chairman Syed Shabbar Zaidi had barred its field formations from conducting raids on any premises of any exiting taxpayer businesses without prior approval of the FBR member Inland Revenue Operations and FBR chairman. The FBR had also issued instructions to the field formations that there will be no raid on any premises of any exiting taxpayer without prior approval of the FBR member operations and FBR chairman. If there are evidences of economic transactions which are chargeable to tax and the organization/entity is not a tax registered person then the officer of that jurisdiction will report it to the FBR member Inland Revenue Operations and FBR chairman, who will provide necessary directions for future course of action.
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