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Q. Concealment of Income and Statutory penalties.

1. Inaugural Words:
Concealment of income is willful and deliberate non-compliance of statutory
provision that usually attracts some kind of Penal Action.
2. Relevant Provision:
Sec: 184 Income Tax Ordinances 2001
3. Cross-Reference
4. Procedure Adopted for Penalty:
U/Sec 184
i. Authority to impose penalty
 Commissioner
 Commissioner (Appeal)
 Appellate Tribunal
ii. Grounds of Penalty
i. When Commissioner or Appellate Tribunal is satisfied
ii. Person involved in proceeding s related to assessment
iii. Furnishing in accurate particulars of income on assessment
iii. Maximum Penalty
Maximum penalty is equal to tax sought to be affixed.
iv. Minimum Penalty
i. In case of 1st Default 5% amount of tax
ii. In Case of 2nd Class Additional 25 % of tax
iii. In case of 3rd Default 25% of Tax.
iv. In case of 4th Default 50% amount of Tax

5. General Principle for Imposition of Penalty:

Sec: 190 Income Tax Ordinances 2001
i. No penalty can be imposed unless opportunity of being heard provided
ii. Imposition of penalty without prejudice to any other liability
iii. Commissioner shall make assessment as to penalty.
6. Limitation Period for Penalty Proceedings:
U/Sec: 190
Order of Penalty must be passed within 2 years from the end of financial year
7. Quantum of Penalty :

The quantum of penalty is to be determined in accordance with law as it stands on

date when the default is committed.

8. Where tax payer claims any income or amount exempted and Penalty:

Tax will be imposed where it is proved that tax payer made the claim
Knowingly wrong.
9. Conclusion
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Question: Assessment and Procedure.

1. Preliminary Note:
2. Relevant Provision:
Sec: 120-126 Income Tax Ordinance 2001
3. Cross- Reference:
4. Interpretation of Term Assessment:
5. Statutory Analysis of Assessment in Income Tax Ordinance:
U/Sec: 120
Where a taxpayer has furnished a complete return of income for tax year ending on
or after the 1st day of July the commissioner shall perform assessment.
6. Procedure of Assessment:
U/Sec: 120
i. Commissioner shall be taken to have made an assessment
ii. Return of income shall be taken to be complete if it is in accordance with law.
iii. Where return of income is incomplete commissioner shall issue notice to the
taxpayer informing the deficiencies and shall require him to submit correct
information.
iv. If taxpayer fails to provide the correct information the return shall be treated
as invalid.
v. Where in response of notice the taxpayer has fully compiled with requirements
of notice the return shall be treated as complete.
vi. Limitation period for issue of notice shall be one hundred and eighty days from
the end of financial year.
7. Amendment in Assessment:
The commissioner may amend an assessment order by making alterations or
additions as the commissioner considers necessary.
 Limitation Period for Amendment:
Limitation period shall be 5 years from the end of financial year.
 Contents of Order of Amendment in Assessment:
i. The amended taxable income
ii. Amended amount of tax due
amount of tax paid
iii. Time place and manner of appealing the amended assessment.
8. Kinds of Assessment:
i. Best Judgment Assessment:
U/Sec: 121
Where a person fails to furnish a statement as required by notice the
commissioner shall make an assessment of taxable income of the person
based on information available.
ii. Provisional Assessment:
U/Sec 122 – B
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Where a person fails to submit the required information the commissioner shall
make a provisional assessment of the taxable specifying the taxable income.
9. Assessment in Relation to disputed Property:
U/Sec: 125
Where the ownership of property is chargeable to tax an assessment order in respect
of such property shall be made within one year after the end of financial year.
10. Evidence of Assessment:
U/sec: 126
The production of assessment order or a certified copy shall be conclusive proof of
evidence.
11. Final Remarks:

Q. Return and Wealth Statement:

1. Inaugural Words:
2. Relevant Provision:
Sec: 114-119 Income Tax Ordinance 2001
3. Cross-Reference:
Chap viii Income Tax Rules 2002
4. When Return is Filed:
U/Sec: 114
Every company whether it has taxable income or not and every person whose
income for tax year is maximum amount which is chargeable to tax is to file tax
return.
5. Persons Required to Furnish Income Tax Return:
i. Every Company
ii. Every person whose income is equal to amount chargeable with tax
iii. Any non-profit organization
iv. Welfare institution
v. Taxpayer of two preceding tax years
vi. Immovable property with are of two hundred and fifty square yards
vii. Flat of two thousand square feet
viii. Motor vehicle with capacity of 1000 CC
ix. Holder of commercial of electrical connection
x. Individual having income more than three hundred thousand
6. How to File Return:
U/Sec: 114
Return must be accompanied with;
i. Annexures
ii. Statement or documents
iii. Information required by document
iv. Declaration of record
v. Income statement
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vi. Balance sheet.
7. When Commissioner can call for a return:
 By notice in writing
 Date should be specified on notice.
8. Limitation Period for Calling Return:
U/Sec: 114(5) (6)
Within 30 days of notice in writing.
9. Person Not Competent to File Return:
i. A widow
ii. An orphan below the age of 25 years
iii. A disable person
iv. In Case of non-resident of Immovable property
v. Salaried person
vi. Any person not obliged to furnish return
10. Filing of Wealth Statement in Return:
Every person filing return shall also furnish the wealth statement.
11. Contents of Wealth Statement.
i. Accompanied with documents
ii. Statements and Certificates as specified
iii. Personal and total assets
iv. Personal and total assets of spouses, minor, children,
v. Assets transferred
vi. Total expenditure incurred by person
12. Revision of Wealth Statement:
U/Sec: 116 (3)
Where a person furnishes wealth statement discovers omission or wrong he may
without prejudice to liability furnish a revised wealth statement for tax year.
13. Discontinuing of Business and Filing of return:
U/Sec: 117
A notice in writing shall be given to the commissioner within 15 days after
announcement of filing of return by the commissioner.
14. Method of Furnishing tax Return:
U/Sec: 118
i. In Case of Company
On or before 31st day of December
ii. In Any other case:
On or before 30th September
15. Legal Consequences of Failure to File return
i. Penalty equal to 1/10th of tax payable
ii. Minimum penalty of Rs.500
iii. Maximum penalty of 25% of tax payable
iv. In, Case of failure to file Wealth Statement penalty of 2000 Rs.
16. Final Remarks:
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Q. Heads of Income:

1. Inaugural Words:
2. Relevant Provision:
Sec: 11 Income Tax Ordinances 2001
3. Cross-Reference:
Income Tax Rules 2002
4. What is Meant by Taxable Income:
U/Sec: 9
The taxable income shall be the total income of the person for the year reduced by
total of any deductible amount.
5. Total Income Statutory Meaning:
U/Sec: 10
Total income shall be the sum of person’s income under all the heads of Income.
6. Heads of Income:
i. Salary
ii. Income from Property
iii. Income from Business
iv. Capital Gains
v. Income from other Sources.
(a) Salary as Head of Income
1. Definition:
U/Sec: 12
A salary received by an employee in a tax year other than That exempted from Tax
shall be chargeable for tax.
2. Scope of Term Salary:
i. Any Pay
ii. Wages
iii. Remunerations
iv. Payment in lieu of leave
v. Bonus
vi. Commission
vii. Fees
viii. Gratuity
ix. Any value that is convertible to money
x. Any amount of allowance
xi. Amount of any expenditure
xii. Amount of profit
xiii. Consideration for agreement
xiv. Provident or other funds
xv. Pension or annuity
3. Deduction of Amount from Salary:
No deduction shall be allowed in deriving the amount of salary chargeable to tax.
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4. Election of Amount to Be Taxed in Salary:
i. An employee shall by notice in writing elect for the amount to be taxed in
following cases;
ii. Person paying tax from preceding 3 years
iii. Where salary is paid in arrears

(b) Income From Property

1. Definition:
U/Sec: 15
A rent received or receivable by person for a tax year other than rent shall be
chargeable to tax.
2. Scope Of term Rent Under Income from Property:
Rent means amount received or receivable by owner of land or building as
consideration together with plants or machinery.
3. Exemptions in Income from Property:
U/Sec:15
i. Lease of building
ii. Amenities or utilities
iii. By a person where rent is less than fair market rent
4. Deductions in Computing Income From Property:
i. In respect of repairs to a building
ii. Premium paid
iii. Any local rates , tax, Charge or cess
iv. Any ground rent
v. Any profit paid or payable on any money borrowed
vi. Property acquired, renovated, extended or reconstructed.
vii. Property is subject to mortgage.
viii. Expenditure paid in legal procedure
ix. Unpaid rent in respect of property irrecoverable
( c) Income from Business
1. What is Income from Business:
U/Sec: 18
i. The profit and any gains
ii. Income derived from any trade, professional or similar association
iii. Income from heirs
iv. Lease of tangible movable property
v. Fair market value of any benefit or perquisite convertible into money
vi. Management fee derived by management company
vii. Profit on debt
2. Deductions in Income from Business:
U/Sec: 20
In computing income from business deductions shall be allowed in respect of
expenditures of a person in that year.
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3. Where Deductions in Income From Business not Allowed:
U/Sec 21
i. any cess, rate or tax paid in Pakistan or in foreign country
ii. rent ,profit on debt
iii. Any entertainment expenditures
iv. Any fine or penalty paid
v. Reserve funds
vi. Profit on debt

(d) Income from Capital Gains

1. Definition:
U/Sec: 37
A gain arising on the disposal of a capital asset by a person other tan a gin that is
exempted from tax is chargeable with tax.
2. Scope of Term Capital Gains
 Consideration received by a person on disposal of security
 Security in Acquisition of property
 Cost of Assets
3. Deductions Under the Head of Capital Gains:
U/Sec: 38
i. Any loss on disposal
ii. Where a gain on the disposal would not be chargeable
iii. Disposal of painting
iv. Diposal of Sculpture
v. Drawing or other art work
vi. Jewellery
vii. Disposal of postage stamp
viii. Disposal of a coin or medallion

(e) Income from Other Sources U/Sec: 39

Income of every kind received by a person in a tax year if it not included in any other
head other than income exempted from heads of Income

2. Scope of Term Income from other Business:

U/Sec 39

i. Dividend
ii. Royalty
iii. Profit on debt
iv. Additional payment on delayed refund
v. Ground rent
vi. Rent from sub lease
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vii. Income from lease of any business
viii. Any annuity or pension
ix. Any prize bond
x. Amount received as consideration
xi. Fair market value of any benefit
4. Deductions in computing Income from Other Business:
U/Sec:40
Deduction shall be allowed for any expenditure paid by a person in the year to the
extent to which the expenditure is paid in deriving income chargeable to tax.
5. Conclusion.

Q. Procedure for Refund.

1. Preliminary Note:
2. Relevant Provision:
Sec: 170-171 Income Tax Ordinance 2001
3. Cross-Reference:’
 Art: 184(3) Constitution of Pakistan 1973
 Art: 199 Constitution of Pakistan 1973
 Income Tax Rules 2002
4. Interpretation of Term “Refund”
5. Who May Apply for Refund:
Sec: 170
The Taxpayer who has paid income tax in excess to the amount chargeable can
apply for refund.
6. Conditions for Application of Refund:
i. Payment in excess to amount chargeable
ii. Any advance or loan repaid by taxpayer he shall be entitled to refund
7. Procedure of Filing Application for Refund:
U/Sec: 170
i. Application shall be made in prescribed form
ii. It must be verified
iii. It must be made within 2 years of the date on which commissioner have issued
order of assessment.
8. Procedure Adopted By Commissioner for Refund:
U/Sec: 170 (4)
i. Inquiry shall be made by the commissioner
ii. Commissioner shall apply the excess in reduction of any other tax due
iii. Commissioner shall apply the balance of excess if any in reduction of any
outstanding liability of taxpayer to pay other taxes
iv. The commissioner shall refund the remainder if any to the taxpayer
v. The commissioner shall complete its procedure within 45 days
9. Remedies Against Refund:
U/Sec: 170(5)
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Person aggrieved by the order passed for refund may prefer an appeal to the
commissioner or appellate tribunals.
10. Additional Payment of Delayed Refund:
U/Sec: 171
Where refund due to a taxpayer is not paid within 3 months the commissioner shall
pay additional.
11. Nature of Additional Payment:
U/Sec: 171
It must be in the nature of compensation.
12. Final Remarks:

Q. Ratification of Mistakes.

1. Preliminary Note:
2. Relevant Provision:
Sec: 221 Income Tax Ordinance 2001
3. Cross-Reference:
Income Tax Rules 2002
4. Ratification of Mistakes:
Commissioner, commissioner (Appeal) or appellate tribunal can by order in
writing
Amend any order passed by them to ratify any mistake apparent on record on its
own motion or through notice by tax payer.
5. Authority to Ratify Mistakes:
U/Sec: 221

Commissioner Commissioner (Appeal) Appellate Tribunal

6. How Mistake is ratified:

i. Suo motu action by competent authority
ii. Notice by taxpayer
7. Scope of Term Mistake For Ratification:
i. Error of law or fact
ii. Clerical or arithmetical mistake
iii. Error in determining the written down value
iv. Overlooking obligatory Provision of Law
v. Ad- hoc figure pending assessment
vi. Any retrospective amendment of Law.
8. Time Limitation where Application for ratification is file by Taxpayer:
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U/Sec: 221(3)
After expiry of the financial year following the next date in which it was
Brought to it’s notice to the mistake as pointed out by the tax-payer shall deemed
to have been ratified.
9. Time Limitation for order of Ratification:
It can be made after the expiration of 5- Years from the date of the order sought
to be amended.
10. Conclusion:

Q. Income Tax Authorities.

1. Inaugural Words:
2. Relevant Provision:
Sec: 207-214 Income Tax Ordinance 2001
3. Cross-Reference:
 Finance Act 2012
 Income Tax Rules 2002
 Central Board of Revenue Act 1924
4. Classification of Income Tax Authorities:
 Federal Board of Revenue
 Chief Commissioner inland Revenue
 Commissioner Inland Revenue (Appeal)
 Additional Commissioner Inland Revenue
 Deputy Commissioner Inland Revenue
 Assistant Commissioner Inland Revenue
 Inland Revenue officer
 Inland Revenue Audit Officer
 Inspector Inland Revenue
 Auditor Inland Revenue
5. Federal Board Of Revenue:
U/Sec: 207
The Federal Board shall examine supervise and oversee the general administration.
6. Principle of Subordination:
U/Sec: 207(3)
a. The income tax Authorities shall be subordinate to the Federal Board of
Revenue.
b. Commissioner Inland Revenue, additional commissioner inland revenue,
c. Deputy commissioner inland revenue, assistant commissioner inland revenue
,Inland revenue officer, inland revenue audit officer, superintendent inland
revenue, inspector inland revenue shall be subordinate to the chief
commissioner Inland Revenue.
d. Additional Commissioners Inland Revenue, Deputy Commissioner Inland
Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers,
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Inland Revenue Audit Officers, Superintendents Inland Revenue, Auditors
Inland Revenue and Inspectors Inland Revenue shall be subordinate to the
Commissioners Inland Revenue
e. Deputy Commissioners Inland Revenue, Assistant Commissioners Inland
Revenue, Inland Revenue Officers, Inland Revenue Audit Officers,
Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors
Inland Revenue shall be subordinate to the Additional Commissioners Inland
Revenue.
f. An officer vested with the powers and functions of Commissioner shall be
subordinate to the Chief Commissioner Inland Revenue.
7. Appointment of Sub-Ordinate Authority:
U/Sec: 207
i. The board of revenue may appoint as many income tax authorities as may be
necessary.
ii. The Board of revenue may make an order to any income Tax authority to
appoint any income tax authority subordinate to it
8. Jurisdiction of Income Tax Authorities:
U/Sec: 209
The Chief official, the commissioner and Commissioner ( Appeal) shall perform all the
functions assigned to them under Income Tax Ordinance within the area they are
assigned by Board of Revenue.
9. Delegation of Powers and Functions by Commissioner:
U/Sec: 210
The commissioner may by order in writing confer all or any of the powers to
subordinate officers.
 Exception to the General Rule:
The commissioner shall not delegate the powers of assessment or amendment to any
officer below the rank of additional commissioner inland revenue.
10. Guidance to income tax Authorities:
U/Sec: 213
The commissioner may be assisted guided or instructed by any income tax authority
to whom he is subordinate.
11. Income Tax Authorities to follow the Orders of Federal Board Of Revenue”
U/Sec: 214 Income Tax Ordinances 2001
All the income tax authorities and other persons shall observe the instructions and
directions of Federal Board of Revenue.

12. Conclusion:

Q. Procedure of Appeal by Commissioner (Appeal) in income Tax Ordinance.

1. Introduction:
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According to Mosley and Whitley’s Law Dictionary;

Appeal is a procedure of complaint to superior court for an injustice done by inferior court.

2. Relevant Provision:

Sec: 127-130 Income Tax Ordinance 2001

3. Cross-Reference:

Chap XII Income Tax Rules 2002

4. Interpretation of term Appeal:

According to Black’s Law Dictionary

The submission of Lower court’s decision to higher court for possible reversal.

5. Hierarchy of Procedure of Appeal:

Against order of Commissioner____________ Appeal lies to commissioner (Appeal)

Order of Commissioner (Appeal)___________Appeal to appellate tribunal

Against order of appellate tribunal__________High Court

Against Order of Hugh court______________ To Supreme Court

6. Who Can File Appeal: U/Sec: 127

 Any Person dissatisfied against the order of commissioner

 Officer of Inland Revenue

7. Grounds for Filing Appeal:

8. Memorandum of Appeal:

i. It must be in prescribed form

ii. It must be verified
iii. It must state the precise grounds upon which appeal is made
iv. Accompanied with proper fee
v. Lodged within specified time

9. Limitation Period for Filing Appeal to Commissioner (Appeal)

An appeal shall be preferred within 30 days

10. Procedure of Appeal:

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U/Sec: 128

i. Notice shall be served to the appellate and commissioner against who’s order
appeal is preferred
ii. Commissioner (Appeal) may adjourn the hearing from time to time as it thinks fit
iii. Commissioner may dispose off the appeal if there is no sufficient ground and record
the reasons.
iv. Commissioner shall not accept any documentary evidence if it is produced after
filing appeal.

11. Decision of Appeal by the Commissioner (Appeal):

U/Sec: 129

i. Commissioner may make an order to confirm, modify, or annul the assessment order
ii. Commissioner may make any other order as it thinks fit
iii. As soon as practicable the commissioner (Appeal) shall serve the order to the
commissioner and the appellate.

12. Conclusion:

Q. Procedure of Appeal by Appellate Tribunal.

1. Inaugural Word:

2. Relevant Provision:

Sec: 130-132 Income Tax Ordinance 2001

3. Cross-Reference:

Chap XII Income Tax Rules 2002

4. Appointment of Appellate Tribunal:

U/Sec: 130

i. Appellate tribunal shall consist of;

ii. A chairperson,
iii. Judicial and accountant members as are appointed by Federal Government.

5. Qualifications of Members of Appellate Tribunal:

U/Sec: 130
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i. If the person has exercised the powers of district judge
ii. Qualified to be the judge of High Court
iii. Advocate of High Court
iv. Officer of Inland Revenue in BS-20 or above.

6. Qualifications of Accountant of Appellate Tribunal:

U/Sec: 130

i. Officer of Inland Revenue

ii. Commissioner Inland Revenue or commissioner Inland Revenue (Appeal) having at
least three years of experience.
iii. Person acted as chartered Accountant for not less than ten years.

6. Bench of Appellate Tribunal:

Powers and functions of the tribunal shall be exercised and discharged by benches

Constituted by the chairperson.

7. Powers and Function of Appellate Tribunal:

U/Sec: 130

i. Power to regulate it’s own procedure

ii. Power to regulate the procedure of Benches of Tribunal
iii. Power to hear
iv. Power to dispose off Appeals
v. Power to affirm , Modify, or annul the assessment order
vi. Power to remand case
vii. Power to make Inquiry

8. Procedure of Appeal of Appellate Tribunal:

U/Sec: 131 - 132

i. Appeal shall be fled within 60 f=days after the decision of Commissioner (Appeal)
ii.Fee shall be Two Thousand Rupees
iii.
Tribunal may accept the appeal upon satisfaction.
iv.Tribunal shall afford an opportunity of being heard to the commissioner and the
appellate.
v. Appellate tribunal shall dispose off the case within 6 months of it’s filing
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9. Finality of Award of Appellate Tribunal:

The decision of Appellate tribunal on an appeal shall be final.

10. Conclusion:

Q. Reference to The High Court.

1. Introduction

2. Relevant Provision

Sec: 133 of Income Tax Ordinance 2001

3. Cross Reference:

Income Tax Rules 2002

4. Limitation Period for Filing Reference to High Court:

Within 90 Days of the communication of the order of appellate Tribunal.

5. Who May File Reference To High Court:

The aggrieved person or the commissioner may prefer an application for the reference of
High Court.

6. Procedure Adopted By High Court on Reference:

U/Sec 133

i. The High court upon satisfaction may proceed with the case
ii. The reference shall be heard by a bench of not less than 2 judges of High Court.
iii. The High court bench shall decide the reference on question of Law
iv. High court shall specify the grounds upon which case has been decided.
v. The application of Reference by any person other than the commissioner shall be
accompanied with fee of one Hundred Rupees.

7. Final Remarks: