VERIFICATION OF AUDIT REPORT 2009-10

IN RESPECT OF REGIONAL TAX OFFICE MULTAN

(HELD ON 02.12.2015 AT LAHORE)

DESK AUDIT/PDP-17/09 REGARDING LOSS OF REVENUE DUE TO SUPPRESSION OF SALES

IN RESPECT OF REGIONAL TAX OFFICE, MULTAN (2009-10)
S.
#
1

Name

T.Y

Total Sales
as per
Sales Tax

M/s. AAA
Doublers (Pvt)
Ltd
2124344

2008

868389951

Special Zone

Total Sales
as per
Income
Tax
22444218

Suppression
of sales

Suppression
of Income
Tax

845945733

296081007

Departmental Reply

Latest compliance 07.05.2012

Difference
in
sales
stand
reconciled. As the unit is zero rated
under the Sales Tax Act, 1990,
therefore, para may be considered
as settled.
Latest Compliance 03.09.2015
An assessment order u/s 122
(1/122(5) of the income tax
Ordinance 2001 was passed on
30.06.2014 and tax liability of Rs.
16,957,365 created.
Recovery
proceedings
are
underway.
Latest Compliance 03.12.2015
The taxpayer being aggrieved and
preferred appeal before CIR(A)
Multan who vide order No. 244
dated: 21.10.2014 annulled the
assessment. The whole amount
has been taken into minus account.

Audit Remarks
21.05.2012 TO
22.05.2012
04.02.2013
Sales Tax Returns
along-with
reconciliation
statements to be
produced to audit for
verification.
08.07.2013
Final outcome to
be intimated to
proceed further in
the matter.
04.09.2015
Assessment
amended u/s 122 (5)
and recovery of Rs.
16,957,365/established which is
awaited.
02.12.2015
REFER TO DAC
CIR(A) annulled the
order passed u/s
122(5)
by
the
taxation officer on
the
ground
that
there is a time

1DAC RTO MULTAN A.R. 1998-99;2002-03; 2003-04 09.10.2013 (E)

DAC Directives
21.08.2013

DAC directed the RTO

to
finalize
the
proceeding and report
compliance
to
audit/FBR
by
15.09.2013.
DAC 03.03.2014
The DAC directed the
RTO to complete the
proceedings and get
the compliance verified
from
audit
by
31.03.2014.

DAC Directive dated

07.09.2015
The RTO reported that
in pursuance of audit
observation
tax
demand
of
Rs.
16,957,365
was
created on 30.06.2014,
but nothing could be
recovered so far.

limitation of 5 years
for passing orders.
Department
now
take while demand
that minuts account.
Status of 2Nd appeal
to be inform the
audit.

M/s. Roomi
Cotton
Ginning Ind
(Pvt) Ltd
2536557

2008

388648137

Special Zone

2DAC RTO MULTAN A.R. 1998-99;2002-03; 2003-04 09.10.2013 (E)

63993456

324654681

113629138

Latest compliance 07.05.2012

The case is under process and will be finalized in
the instant month.
Latest Compliance 10.02.2014
Proceedings are underway.

Latest Compliance 03.09.2015

The taxpayer argued that due to

conversion of Roomi Cotton Factory
(Ind) into M/s Roomi Inds (Pvt) Ltd on
23.11.2007, sales tax registration No.
0407520125891 granted by the CBR
vide C. No. 26(11)/GST/CRO/2005
dated: 19.11.2007 to M/s Roomi inds
(Pvt) Ltd remained the same as of
Roomi Cotton Factory. Therefore, to
declare/show sales of both the
entities, one sales tax return for the
month of Nov, 2007 has been filed.
After conversion M/s Roomi Cotton
Factory had not filed any sales tax
return for the succeeding month.
However M/s Roomi Ind (PVT) ltd
continued to file sales tax returns for
the succeeding months. Total sales
as per sales tax return is Rs.
176,674,298/- instead of Rs.
160,479,194/- as pointed by the audit
authorities and sales as per income
tax return 156,288,120/-.

Sales
Tax
Returns alongwith
reconciliation
statements to be
produced
to
audit
for
verification.
08.07.2013
Final outcome to
be intimated to
proceed further
in the matter.

04.09.2015
RTO
informed
that sales of
Roomi Ind (Pvt)
Ltd
are
Rs.
176.674 M as
per sales tax
return instead of
Rs. 160.479. the
department
is
requested
to
complete
legal
action
for
recovery
of
revenue.

The DAC observed with

concern that despite
lapse of 15 months, no
recovery
could
be
made.
The DAC directed the
RTO to ensure recovery
and report compliance
not
later
than
30.09.2015.

DAC directed the RTO to

finalize the proceeding and
report
compliance
to
audit/FBR by 15.09.2013.
DAC 03.03.2014
The DAC directed the RTO
to
complete
the
proceedings and get the
compliance verified from
audit by 31.03.2014.

DAC Directive dated

07.09.2015
The DAC discussed latest
report by the RTO, and
observed that statutory
action under the law
appears to be hit by
limitation of time already.
The DAC directed RTO to
get their stance verified by
Audit
and
report
compliance by 30.09.2015.

M/s. Gold
Flower (Pvt)
Ltd
0133393

2008

118601479

Special Zone

4862532

113738947

39808631

Latest compliance 07.05.2012

Case has been selected for audit
of Tax Year 2008 and proceedings
are under way. No record has been
produced by the taxpayer yet,
therefore, penalty u/s 182(1) for
non production of record u/s 177
of the Income Tax Ordinance, 2001
has been imposed.
03.09.2015
As per Boards direction proceedings
u/s 177 closed.

Assessment
proceedings
may
be
finalized at the
earliest.
08.07.2013
Final outcome
to be intimated
to
proceed
further in the
matter,
04.09.2015
DAC
in
its
meeting of Feb,
2014 directed to
complete
proceeding but
compliance
is
still awaited.

DAC directed the RTO to

finalize the proceeding and
report
compliance
to
audit/FBR by 15.09.2013.
DAC 03.03.2014
The DAC directed the RTO
to
complete
the
proceedings and get the
compliance verified from
audit by 31.03.2014.

DAC Directive dated

07.09.2015
The DAC noticed with
serious concern that
despite
very
clear
instructions contained in
Board
C.No.
(78)ITP/2009/7321
dated 14.01.2010, the
proceedings of the case
were filed, and the same
was not intimated to the
Board, despite huge
discrepancies
pointed
out by Audit.
The DAC directed that
the Chief Commissioner
may like to personally
see
the
case,
fix
responsibility
and
intimate the same to
DAC by 30.09.2015.

3DAC RTO MULTAN A.R. 1998-99;2002-03; 2003-04 09.10.2013 (E)

M/s. ABCO
Technical
(Pvt) Ltd
1560533

2008

173967058

Special Zone

139634768

34332290

12016302

03.09.2015
Assessment for the tax year 2008has
been amended u/s 122 (4) on
30.06.2014 and tax demand of Rs.
698,181 has been created.
Recovery proceedings are underway.
Latest compliance 03.12.2015
The
taxpayer
being
aggrieved
preferred appeal before CIR(A) who
vide No. 194 dated 28.07.2014
annulled the order on the ground that
taxation officer did not give credit of
the Income tax deducted at the import
stage amounting to Rs. 6,466,328/-.
No minimum tax is chargeable and
taken into minus account. Appeal
effect order is enclosed.

Sales Tax Returns

along-with
reconciliation
statements to be
produced to audit for
verification.
08.07.2013
Final outcome to
be intimated to
proceed further in
the matter.
04.09.2015
Assessment
amended
u/s
122(4)
of
the
Income
Tax
Ordinance,
2001
and recovery of
Rs.
698181/established which
is awaited.
02.12.2015
Reply
of
the
department is not
tenable as audit
observation
was
on suppression of
sales.

DAC directed the RTO

to
finalize
the
proceeding and report
compliance
to
audit/FBR
by
15.09.2013.
DAC 03.03.2014
The DAC directed the
RTO to complete the
proceedings and get
the compliance verified
from
audit
by
31.03.2014.

DAC Directive dated

07.09.2015
The RTO reported that
in pursuance of audit
observation
tax
demand of Rs. 698,181
was
created
on
30.06.2014, but nothing
could be recovered so
far.
The DAC observed with
concern that despite
lapse of 15 months, no
recovery
could
be
made.
The DAC directed the
RTO to ensure recovery
and report compliance
not
later
than
30.09.2015.

4DAC RTO MULTAN A.R. 1998-99;2002-03; 2003-04 09.10.2013 (E)

M/s. Roomi
Industries
(Pvt) Ltd
2963239

2008

160479194

156288120

4191047

1466876

Special Zone

Latest compliance 07.05.2012

Difference in sale stand reconciled,
therefore, audit observation may
kindly be considered as settled.
Latest Compliance 03.09.2015
The taxpayer argued that due to
conversion of Roomi Cotton Factory
(Ind) into M/s Roomi Inds (Pvt) Ltd on
23.11.2007, sales tax registration No.
0407520125891 granted by the CBR
vide C. No. 26(11)/GST/CRO/2005
dated: 19.11.2007 to M/s Roomi inds
(Pvt) Ltd remained the same as of
Roomi Cotton Factory. Therefore, to
declare/show sales of both the entities,
one sales tax return for the month of
Nov, 2007 has been filed. After
conversion M/s Roomi Cotton Factory
had not filed any sales tax return for
the succeeding month. However M/s
Roomi Ind (PVT) ltd continued to file
sales tax returns for the succeeding
months. Total sales as per sales tax
return is Rs. 176,674,298/- instead of
Rs. 160,479,194/- as pointed by the
audit authorities and sales as per
income tax return 156,288,120/-.

Sales Tax Returns

along-with
reconciliation
statements to be
produced to audit for
verification.
08.07.2013
Final outcome to
be intimated to
proceed further in
the matter.
04.09.2015
RTO informed that
sales of Roomi Ind
(Pvt) Ltd are Rs.
176.674 M as per
sales tax return
instead
of
Rs.
160.479.
the
department
is
requested
to
complete
legal
action for recovery
of revenue.

DAC directed the RTO

to
finalize
the
proceeding and report
compliance
to
audit/FBR
by
15.09.2013.
DAC 03.03.2014
The DAC directed the
RTO to complete the
proceedings and get
the compliance verified
from
audit
by
31.03.2014.

DAC Directive dated

07.09.2015
The DAC discussed
latest report by the
RTO, and observed that
statutory action under
the law appears to be
hit by limitation of time
already.
The DAC directed RTO
to get their stance
verified by Audit and
report compliance by
30.09.2015.

M/s. Bilz (Pvt)

Ltd
2172891

2008

152514604

Special Zone

151180277

1334327

467014

Latest compliance 07.05.2012

Amendment u/s 122(1) has already
been finalized by the DCIR Audit .
03.07.2013
Demand of Rs.2007766/- is already
adjusted against refund. Copy of
order enclosed. Ann-D
Latest compliance 10.02.2014

5DAC RTO MULTAN A.R. 1998-99;2002-03; 2003-04 09.10.2013 (E)

Reportedly
charged
and
recovered.
Payment challans/
evidence regarding
payments awaited.

DAC directed the RTO

revisit the case and
report compliance by
audit/FBR by
15.09.2013.
DAC 03.03.2014

08.07.2013
Revisit the case
and made proper

The DAC directed the

RTO to complete the

Charged and recovered. Copy of the

order is enclosed. Para may kindly
be settled.
Latest compliance 03.09.2015
Notice u/s 221(2) of the income tax
ordinance, 2001 for the tax year 2008
has been issued to the taxpayer
company. Vide above referred, notice
the taxpayer has been requested to
furnish section wise proof of tax
deduction of payment claimed in his
return amounting to Rs. 8,514,192/-. In
case of non compliance, effect of
payment of tax at Rs. 2,007,766/- will
be disallowed and demand shall be
created accordingly.
Latest compliance 03.12.2015
The taxpayer did not provide the
documentary evidence regarding
deduction of payment claim in his
return therefore, after giving the effect
of tax deducted u/s 235 and 236 and
u/s 153 amounting to Rs. 285602/balance tax amounting to Rs
1,722,164/- is payable.

6DAC RTO MULTAN A.R. 1998-99;2002-03; 2003-04 09.10.2013 (E)

assessment
and
credit verification
under report audit.
04.09.2015
Recovery awaited.
02.12.2015
Department has
charged the
suppression of sale
of Rs 1334327 and
tax charged at Rs
2007766. After
giving tax credit of
Rs 285602/=.
Balance tax payable
comes to Rs
1722164/=.
Recovery is awaited.

proceedings and get

the compliance verified
from audit by
31.03.2014.

DAC Directive dated

07.09.2015
The RTO informed
that proceedings
under section 221
regarding adjustment
of refund are in hand.
The DAC directed to
finalize the
proceedings at
earliest and get all the
recovery verified from
Audit by 15.09.2015.