Saturday, 28 January 2023

2 Companies reportedly found Involved in Rs6 Billion Mega Tax Fraud

Public Accounts Committee (PAC) has referred two mega tax fraud cases involving over Rs. 6 billion to the National Accountability Bureau (NAB) for investigation of tax evasion and illegal exemptions and concessions availed by those two companies.

On Thursday, Rana Tanveer Hussain, Chairman of the PAC, concluded after declaring the Federal Board of Revenue’s (FBR) reply as unsatisfactory in the case of the Chahat Food Industries Limited. The investigation team of the Auditor General of Pakistan (AGP) visited the business premises in Lahore and Vehari for verification. Team found no manufacturing activity. The company availed illegal exemption under section 65D of the Income Tax Ordinance 2001, inadmissible input tax, and tax credits.

On the basis of physical verification and available evidences and record, this is confirmed that the said company does not carry out any manufacturing activity. AGP suggested that a detailed investigation needs to be carried out for exactly determining the cause of revenue loss to the government exchequer, AGP survey added.

Members of the committee asked the FBR Chairman, FBR Member Inland Revenue (Operations), and FBR Member Audit and Accounting to declarer the names of the directors of the Chahat Food Industries Limited. However, tax authorities did not open the names before the committee.

Chairman Federal Board of Revenue (FBR), Asim Ahmad, on Thursday informed the Public Accounts Committee (PAC) that the FBR has no objection to referring two tax fraud cases to the National Accountability Bureau (NAB) for further investigation. If the committee thinks that the NAB can investigate the cases better, then we are not against this.

While explaining to the committee, Chairman FBR said that the FBR has already initiated an investigation in the case of Chahat Food Industries Limited and selected the case for audit. The High Court granted stay against the audit proceedings in the case. The FBR had selected the case for audit but cannot continue audit proceedings due to a court order.

Chairman FBR requested the committee to grant 30 days for completion of the investigation of the case. Due to the court order, we cannot directly approach the taxpayer but conduct an investigation on the basis of third-party information, which needs time. Asim Ahmad added that the amount of tax evasion in the second case of Multan is Rs. 992 million and not Rs. 6 billion.

FBR Member Inland Revenue Operations admitted that the FBR has no such system to check each and every filed income tax return under the self-assessment scheme. The FBR has limited resources and cannot conduct an audit of each and every income tax return filed. But If the FBR receives a complaint or / and evidence, the risk-based audit approach is being used. “These units are on our radar and we will recover each and every penny from them”, FBR Member Operations further said. PAC Members, Noor Alam Khan, Raja Riaz Ahmad, and MNA Raja Pervaiz Ashraf, asked the Chairman PAC to refer both the cases to the NAB for further investigation.

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