ISLAMABAD (February 09 2010): The federal government has re-promulgated the Finance Amendment Ordinance 2009 empowering tax officials to continue with making provisional assessment of the non-filers of income tax returns for the Tax Year 2009. Sources told Business Recorder here on Monday that the Finance Amendment Ordinance 2009 has been recently re-promulgated on the harmonisation of sales tax, federal excise duty and income tax.

The Federal Board of Revenue has made it mandatory for the non-filers of income tax returns to submit wealth statement, wealth reconciliation statement and explanation of source of assets in response to notices of provisional assessment under section 122C of the Income Tax Ordinance 2001. The income tax return of the non-filer would be invalid in cases where the wealth statement, wealth reconciliation statement and source of assets have not been submitted along with the return within 60 days.

The board has obtained the powers of the provisional assessment through this Presidential Ordinance, which has now been re-promulgated. This would empower the FBR to make provisional assessment of rich non-filers of income tax returns. In other cases, the FBR would be in a position to issue notices to the rich class, who have neither obtained the National Tax Numbers (NTNs) nor are ready to file returns.

A key feature of the Finance Amendment Ordinance 2009 is to considerably enhance the discretionary powers of the income tax officials by allowing them to make provisional assessment of non-filers, who failed to respond to notices. The government had introduced section 122C in the Income Tax Ordinance 2001 through Finance (Amendment) Ordinance, 2009.

Sources said that the section 122C had empowered the tax officials to make best judgement assessment (ex-parte assessment) on the basis of any kind of data available with the department. This would be applicable in the cases where any person failed to respond to the notice under section 114 for filing of income tax returns.

In the presence of section 121 (best judgement assessment), there was no requirement for introducing another assessment provision in the Ordinance 2001. Finance (Amendment) Ordinance, 2009 is mainly related to the harmonisation of taxes, but discretionary powers of the tax officials have been enhanced through new assessment provisions in the Income Tax Ordinance 2001.

The income tax officials could make 'best judgement assessment' relying on the departmental data, but the section 122C has not specified that the information should be supported by necessary proof. The authenticity of information needs to be verified before passing 'best judgement assessment', sources added.

Copyright Business Recorder, 2010