21-Sep-20

RETURN OF INCOME, ASSESSMENTS AND APPEALS Return of Income – section 114 to 119
The following persons are required to file return of income:
a. Every company including an approved non-profit organization and an approved welfare
institution;
b. A person other than a company whose taxable income exceeds basic exemption. Every
individual whose business income exceeds Rs. 300,000 but does not exceed Rs. 400,000 in a
tax year is also required to furnish return of income;
c. A person whose income for the year is subject to FTR;
d. Who has been charged to tax for any of the two immediately preceding tax years;
e. Who claims a loss carried forward;
f. A person who owns immovable property of 500 square yards or more or a flat in urban areas;
g. A person who owns immovable property of 500 square yards or more in a rating area;
h. A person who owns a flat of 2,000 square feet or more in a rating area;
i. A person who owns a vehicle of above 1,000 cc;
However, the provisions of clauses (e) to (h) are not applicable for a non-resident person, widow,
orphan below 25 years of age and disabled person.

J) A person who has obtained National Tax Number;

K) A person who holds commercial or industrial connection of electricity where the annual bills
exceed Rs. 500,000;
L) A resident person who is registered with any Chamber of Commerce and Industry or any trade
association or market committee or any professional body including Pakistan Engineering
Council, Pakistan Medical and Dental Council, Bar Council, Institute of Chartered Accountants
of Pakistan or Institute of Cost and Management Accountants of Pakistan; or
M) Every resident person required to file foreign income and assets statement as required under
section 116A.

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 21-Sep-20

Due date of filing of return and extension therein – section 118:

Due date of filing:
1. 30th September
a) Return of income by an individual of AOP
b) Return of income by a company having year end between 1st July to 31st December.
2. 31st December
Return of income by a company having year end between 1st January to 30th June.
For the purpose of extension of time, the taxpayer is required to file an application to the
Commissioner and the Commissioner may grant an extension of time up to 15 days if he is satisfied
that the applicant is unable to furnish the return by the due date because of –
(a) Absence from Pakistan;
(b) Sickness or other misadventure; or
(c) Any other reasonable cause.
Under exceptional circumstances a longer time extension may also be granted by the
Commissioner.

If a Commissioner refuse to extend the time then the taxpayer may file an application to the Chief
Commissioner who may allow such extension of time for 15 days and a longer time under
exceptional circumstances.
1.8 Revised return of income-section 114(6) and 114(6A)
If a person discovers any omission or wrong statement in the return of income he may furnish a
revised return subject to the following condition:

a) It is a accompanied by the revised accounts or revised audited accounts;

b) The reason of revision of return duly signed is filed therewith;
c) It is accompanied by the Commissioner’s approval in writing for revision of return. This
condition is not applicable in the following cases:
 If the revised return is filled within 60 days of filling of return; or
 Where the revised taxable income is more than the taxable income previously declared or
the revised loss is less than the loss previously declared; or
 Where the Commissioner does not give his approval / rejection within 60 days of filling of
application for revision of return; and

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 21-Sep-20

Assessments
Assessment :Section 120 and 122(3)
A return of income (other than a revised return) filed by a taxpayer shall be considered as an
assessment of taxable income. However, if a return of income is not complete, the
commissioner can issue a notice to taxpayer for complete of tax return.

A return of income shall be treated at complete return if the following conditions are fulfilled.
 in the prescribed form
 duly signed
 state the prescribed information together with a declaration of records kept
 In the context of business, cop of accounts and other prescribed documents are furnished.
 accompanied with evidence of payment of due tax as per return of income
 accompanied with a wealth statement and wealth reconciliation statement; and
 Accompanies with foreign income and assets statement as required undersection 116A.

In case of any deficiency, the Commissioner shall issue a notice within 180 days from the end of the
financial year in which the return was furnished to complete the return by the date mentioned in
the notice. In the case of non-compliance of the notice, return filed shall be treated as invalid and
the tax payer shall be tread not having furnished a return of income by the due date.

Return filed electronically

Following tax payers shall require to file tax return electronically:-

 In case of company, electronic filling of income tax return and withholding statement shall be
mandatory.
 in case of non-resident ship owner and aircraft owner or charterer thereof, the electronic filing
of the income tax return and application for port clearance shall be mandatory.
 in case of sales tax registered person.
 in case of individual declaring taxable income of Rs. 1 million.

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 21-Sep-20

Audited by the Commissioner (section177) and selection for audit by the FBR (section214C)

The commissioner may call for any documents including books of account of any of the previous
06 years for conducting audit of any person. The commissioner or any other authorized office is
allowed access to electronic data and use of machine and software on which such data is kept.
Such machines and dully attested hard copies of data may be taken into possession for the
purpose of investigation.

The Commissioner shall conduct any audit (including examination of accounts and records,
enquiry into revenues, expenditures, assets and liabilities) and may call for other appropriate
information.

After obtaining taxpayers' explanation on all the issues raised in the audit report, the
commissioner may amend the assessment.

The commissioner my conduct audit electronically through video link.

Where a taxpayer has not furnished the required documents or sufficient explanation, the
Commissioner shall determine taxable income on the basis of sectoral benchmark ratios
prescribed by the FBR

The FBR may appoint a firm of Chartered Accountants or a firm of Cost and Management Accountant
to conduct an audit of any person selected for audit and the scope of such audit shall be determined
by the FBR on case to case basis.

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Special audit panel – Section 177 (1)

The FBR may appoint special audit panels, to conduct audit including forensic audit of the income tax
affairs, comparing two or more member from the following: -

 Any officer of Inland Revenue;

 A firm of chartered accountants;
 A firm of cost and management accountants;
 Any other person including a foreign expert or specialist as directed by the FBR.

Chairman of the panel shall be the office of Inland Revenue. If any one member of the panel, other
than the chairman, is absent from he conducted audit, the proceedings of the audit may continue and
the audit shall not be invalid or be called in question merely on the ground of such absence.

The scope of such audit shall be determined by the commissioner or FBR on case to case basis.

In case of a member other than office of Inland Revenue, an agreement of confidentiality shall be
made between FBR and the person or international tax authority.

Selection for audit by the FBR: section 214C

The FBR may select any person for audit of income tax affairs through compute ballot which
may be random or parametric as the FBR my deem fit. Parameters set by the FBR shall be
confidential.

Powers of the Commission under section 177 are independent of the powers of the FBR and
therefore selectin of audit by FBR shall not restrict the powers of the commissioner to call for
the documents including books of accounts for audit and to conduct audit under section 177.