There is a sudden increase in the number of under-assessment of income and tax evasion cases during 2009-10 as compared to the same period last fiscal year, reflecting massive misuse of the Universal Self Assessment Scheme (USAS). It is learnt here on Wednesday that the Directorate General of Internal Audit Inland Revenue is surprised over such a major increase in cases of under-assessment of income.
According to the directorate's report, it is important to mention that the number of cases of under-assessment of income and tax evasion has increased from 380 last year to 624 in the year 2009-10, which is unprecedented in the history of the organisation and shows 64.21 percent increase.
With the advent of tax reforms undertaken by the FBR, functional based re-structuring and promulgation of the Income Tax Ordinance, 2001, the concept of deemed assessment calls for inspections of quality to detect quantified evasion of tax. In this regard, the Directorate General, Internal Audit (IR) has made land-mark progress despite frequent jurisdictional changes and administrative reshuffle which embody unsettling effect and delay in access to records for conducting inspections.
Similarly despite all odds, 204 inspection reports have been finalised against 199 in the year 2008-09, which shows increase. As a result of this performance, lose of revenue of Rs 8552.549 million has been detected during the year 2009-10, which is 3.75 times the revenue retrieved out of inspections in same period last fiscal.
The number of inspections carried out has increased from 244 inspections conducted in 2008-09 to 421 inspections completed in the year 2009-10; hence the volume of work carried out under the head 'inspection' has increased by 72.54 percent during the financial year 2009-10. Similarly, the number of cases and assessments commented upon has also increased from 1135 and 1374 in the year 2008-09 to 2359 and 1690 in the year 2009-10, respectively.
Following procedure is being followed by the inspection team comprising Additional Director and his supporting staff for conducting inspections: The inspection authority intimates to the concerned field officer in LTUs/ RTOs regarding inspection schedule and visits the said RTOs/LTUs to discuss the inspection work plan. The requisition of MPR/performance data and record of cases is made by the inspection authority followed by access to all requisite information and relevant record including computerised record, diskettes, floppies, hard discs available in the office.
The inspecting authority after completion of initial scrutiny communicates draft observations on daily basis to the respective officer before finalisation of inspection report. The respective taxation officer is required to respond within seven days to settle the observations.
The replies of the officers in charge are considered by the inspecting authorities before the draft notes are incorporated in the inspection report. The final inspection notes are serialised and incorporated in the inspection report along with the prescribed format on completion of the inspection work according to the method prescribed. The inspection report under the signature of inspection authority is delivered to the respective taxation officer within 15 days of the receipt of reply from the said officer, with copies to Chief Commissioner, LTUs/RTOs and Commissioner of the respective Division.
The Director then forwards a copy of inspection report to the Director-General of Internal Audit (Inland Revenue) along with his comments and the inspection control format. Year-wise computerised inspection control record is maintained in the office of each Director.