Return,

Audit,
Appeals
BY: WAQAS SHABBIR, FCA
 Who is not required to file return?
Who is required to file Tax Return?
a) every company including non-profit organization Following persons shall not be required to file a return of
b) every person whose taxable income exceeds the exemption income solely for owning immoveable property or car:
limit or business income exceeds Rs. 300,000
c) any every person whose income for the year is subject to FTR a) widow;
d) any person who: b) an orphan below the age of twenty-five years;
c) a disabled person; or
 was charged to tax in any of the two preceding tax years; d) in the case of ownership of immovable property, a
 claims a loss carried forward; non-resident person.
 owns immovable property with a land area of 500 Sq yards; Return of income shall:
 owns any flat located in areas falling within the municipal
limits, Cantonment or Islamabad Capital Territory;  be in the prescribed form;
 owns flat having covered area of 2000 Sq ft in rating area;
 owns a car having engine capacity above 1000 CC;  be accompanied by required annexures, statements
 has obtained National Tax Number, or documents;
 Holds commercial or industrial electricity connection and
 fully state all the relevant particulars or information;
annual bill amount exceeds Rs. 500,000;
 is a resident person registered with any chamber of  be signed by the person or representative;
commerce and industry, trade or business association,
market committee or any professional body;  be accompanied with evidence of payment of due tax;
 is a resident individual required to file foreign income and
 be accompanied with a wealth statement if required;
assets statement.
e) persons notified by the Board with the approval of the Minister  be accompanied with a foreign income and assets
in-charge statement if required.
Who is required to file Wealth Statement
 Every resident individual;
 Every member of an AOP;
 Any individual who is required by the commissioner to
file wealth statement.
Particulars of Wealth Statement
 Total assets and liabilities as on the date
 Total assets and liabilities of the person’s spouse, minor
children, and other dependents as on the date
 assets transferred by the person to any other person
during the period and the consideration for the transfer;
 total expenditures incurred by the person, and the
person’s spouse, minor children, and other dependents
during the period; and
 the reconciliation statement of wealth.
Who is required to file Foreign Assets
Statement?
Every resident individual having foreign income of
not less than USD 10,000 or having foreign assets
with a value of not less than USD 100,000.
Particulars of Foreign Assets Statement
a) Total foreign assets and liabilities as on the last
day of the tax year;
b) any foreign assets transferred by the person to
any other person during the tax year and the
consideration for the said transfer; and
c) complete particulars of foreign income, the
expenditure derived during the tax year and the
expenditure wholly and necessarily for the
purposes of deriving the said income.
DUE DATE OF FILING
Extension in Date of filing
September 30 – coming after the end of Tax Year  Where a person cannot file tax return by the due date
 Individuals and AOPs
because of:
 Companies whose Tax Year end between 1st July and
a) absence from Pakistan;
31st December (both inclusive)
b) sickness or other misadventure; or
December 31– coming after the end of Tax Year
Companies whose Tax Year end between 1st Jan and 30th
c) any other reasonable cause,
June (both inclusive)
He may apply to commissioner within due date of filing
PENALTY FOR LATE FILING
return, to grant extension in time to file return.
 Normal calculation: Higher of 0.1% of tax chargeable per
 The Commissioner may grant extension of 15 days or
day of default or Rs. 1,000 per day of default
of longer period if there are exceptional circumstances.
 Minimum penalty: Rs. 10,000 in case of salaried person
and Rs. 50,000 in other cases  Where commissioner refuse to give extension or longer
extension, the person may apply to Chief
 Maximum penalty: 200% of the tax chargeable Commissioner for extension or longer extension.

 Penalty reduction: Penalty will be reduced by 75%, 50%  Chief Commissioner may grant the extension of 15
and 25%, if return is filed with 1, 2 and 3 months of the due days or for a longer period if there are exceptional
date.
circumstances.
REVISION OF RETURN
 Any person who, discovers any omission or wrong
statement may file revised return subject to the following
conditions:
 it is accompanied by the revised accounts or revised
audited accounts, however commissioner may waive
this condition if considers appropriate.
 reasons for revision of return, in writing, duly signed, by
the taxpayers are filed with the return.
 taxable income declared is not less than and loss
declared is not more than income or loss determined
by Commissioner. (Sec 121,122,122A,129,132,133,
221)
PENALTY ON SHORT PAID TAX
 When return is revised voluntarily, before receipt of any
notice, the person shall pay the short-paid tax, the default
surcharge and no penalty.
 When taxpayer deposits the tax, on identification by
commissioner during audit, before receipt of any notice,
the person shall pay the short-paid tax, the default
surcharge and 25% of penalty.
 When taxpayer deposits the tax on receipt of show cause
notice, the person shall pay the short-paid tax, the default
surcharge and 50% of penalty.

 approval of the Commissioner in writing for revision of

return is obtained, which is not required in situations,
where;
 return is revised within 60 days of filing;
 Commissioner has not made order on the
application within 60 days for filing the application;
 Taxable income is more or loss is less in revised
return.
 ASSESSMENT/ AUDIT
Self Assessment u/s 120: A tax return filed by the taxpayer
shall be considered as assessment.
Audit by Commissioner u/s 177: Commissioner may call for
any documents or records for audit of any tax year within 6
years from the end of that tax year.
Where taxpayer do not submit required information, the
commissioner may assess the income based on sectoral
benchmark ratios.
Special Audit Panel u/s 177(11): FBR may appoint special
audit panel to conduct audit including forensic audit of income
tax affairs.
Best Judgement Assessment u/s 121: Where taxpayer fails
to file tax return or provide required documents, the
commissioner may make assessment on the basis of
available information to the best of his judgement within 6
years from the end of tax year to which it relates.
However, if a person has not filed any return during last 5
years, then commissioner may issue him the notice to file tax
returns of last 10 years and on non-filing of return may make
best judgement assessment within 2 years of the notice
issued to file return.
Amendment of Assessment u/s 122:
 The commissioner may amend the assessment/ return
by making such alterations as considered necessary,
within 5 years of the end of the financial year in which the
return was filed (Last 6 tax years)
 The assessment can be further amended as many times
as necessary, within original period of 5 years or 1 year
from the end of financial year in which previous
amendment was made.
 Before making any amendment an opportunity of hearing
shall be provided to the taxpayer by issuing show cause
notice.
 The assessment shall be amended within 180 days of
the issuance of show cause notice.
Agreed Assessment u/s 122D
 Where the taxpayer, in response to the show cause
notice, intend to settle the case, he may file settlement
offer before the committee.
 Committee shall then decide on the offer and if
consensus is reached, the assessment is amended
accordingly.
RECTIFICATION OF MISTAKE IN ORDER U/S 227 APPEAL TO APPELLATE TRIBUNAL U/S 131

If there is a mistake apparent from the record, in the Where the taxpayer or Commissioner objects to an order
order of commissioner, the commissioner either on its passed by the Commissioner (Appeals), the taxpayer or
motion or on identification by the taxpayer, may rectify Commissioner may appeal to the Appellate Tribunal
the order. against such order within 60 days of the order.

APPEAL TO COMMISSIONER (APPEALS) U/S 127 The Tribunal may:

Any person dissatisfied with any order passed by a  Affirm the order
Commissioner, or any officer of inland revenue may  Modify the order
 Annul the order; or
file an appeal to the Commissioner (Appeals) against
 Remand back the order for further inquiries.
the order within 30 days of the order.

Commissioner Appeals may: REFERENCE TO HIGH COURT U/S 133

 Confirm the order Where the taxpayer or Commissioner is aggrieved by the

 Modify the order order of Tribunal, they may file an application to the High
 Annul the order; or Court, stating any question of law arising out of such
 Remand back the order for further inquiries. order.

BURDON OF PROOFT U/S 136

In any appeal by a taxpayer the burden shall be on the taxpayer to prove that the order is erroneous.