Income Tax Ordinance, 2001: Commissioner IR can issue assessment order on day return filed

KARACHI: Federal Board of Revenue (FBR) has empowered Commissioner Inland Revenue (IR) to issue assessment order against a return even on the date the return is filed.

The FBR recently issued updated Income Tax Ordinance, 2001 and explained assessment under Section 120 of income tax affair of a taxpayer by tax authorities.

Section 120: Assessments

Sub-Section (1): Where a taxpayer has furnished a complete return of income (other than a revised return under sub-section (6) of section 114) for a tax year ending on or after the 1st day of July, 2002,—

(a) the Commissioner shall be taken to have made an assessment of taxable income for that tax year, and the tax due thereon, equal to those respective amounts specified in the return; and

(b) the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the return was furnished.

(1A) Notwithstanding the provisions of sub-section (1), the Commissioner may conduct audit of the income tax affairs of a person under section 177 and all the provisions of that section shall apply accordingly.

Sub-Section (2): A return of income shall be taken to be complete if it is in accordance with the provisions of sub-section (2) of section 114.

Sub-Section (3): Where the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide such information, particulars, statement or documents by such date specified in the notice.

Sub-Section (4): Where a taxpayer fails to fully comply, by the due date, with the requirements of the notice under sub-section (3), the return furnished shall be treated as an invalid return as if it had not been furnished.

Sub-Section (5): Where, in response to a notice under sub-section (3), the taxpayer has, by the due date, fully complied with the requirements of the notice, the return furnished shall be treated to be complete on the day it was furnished and the provisions of sub-section (1) shall apply accordingly.

Sub-Section (6): No notice under sub-section (3) shall be issued after the expiry of one hundred and eighty days from the end of the financial year in which return was furnished, and the provisions of sub-section (1) shall apply accordingly.

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