The Inland Revenue officers of the Federal Board of Revenue (FBR) have been given unlimited powers to arrest any person against the charges of the concealment of income in the recent budget presented.
Under the Finance Bill, 2021, the FBR proposed Section 203A (Power to arrest and prosecute) in the Income Tax Ordinance 2001. It must be remembered that Section 184 (Penalty for concealment of income) of the Income Tax Ordinance, 2001 abolished through the Finance Act, 2010.
Tax experts says “FBR cannot arrest or prosecute the taxpayers who have availed the tax amnesty schemes in the past. If the provision applied prospectively, the new taxpayers can question why action taken place against them when amnesties granted in the past.
According to tax experts, there was no need to introduce another section in the Income Tax Ordinance, 2001. When Section 192A (prosecution for concealment of income) already exists.
Material evidence of concealment of Income
According to the Finance Bill, 2021, an officer of Inland Revenue not below the rank of an Assistant Commissioner of Inland Revenue or any other officer of equal rank authorized by the Board in this behalf, who have material evidence, to believe that any person has committed the offense of the concealment of income or any offense warranting prosecution under this Ordinance, may arrest such a person.
Arrestment on concealment of Income
The substituted Section 203A proposes to empower the Assistant Commissioner or any other equally ranked officer. Authorized by the Board to arrest a person who has committed an offense under the ordinance. The section further proposes that the Chief Commissioner may compound the offense. If such person pays the amount of tax due with default surcharge and penalty. In the case of a company, every director or officer responsible may arrest by FBR. Without absolving the company from the payment of due tax, the tax expert added.
Where any person committed the offense of the concealment of income or any offense warranting prosecution under this Ordinance. The Chief Commissioner may, with the prior approval of the Board. Either before or after the institution of any proceedings for recovery of tax. May Compound the offense if such a person pays the amount of tax with such default surcharge and penalty.
Responsibility of other officer of Company
The FBR stated that where the person suspected of the offense of the concealment of income. A company, every director or officer of that company contributing to the offense of the concealment of income or any offense warranting prosecution under this Ordinance shall liable to arrest. Provided that any arrest shall not relief the company from the liabilities of payment of tax, default surcharge, and penalty.