FBR requested to recover billions of rupees from Najam Sethi, Arsalan Iftikhar, other VIPs

KARACHI: Transparency International Pakistan (TIP) has requested the chairman of Federal Board of Revenue (FBR) to take immediate action for recovery of billions of rupees evaded taxes from persons involved including Najam Sethi and Arsalan Iftikhar.
In a complain of corruption in FBR resulting in non-recovery of evaded tax from VIPs viz Najam Sethi, Arsalan Iftikhar etc., the TIP referred to its previous letter sent on June 30, 2014 and recovery of Rs10.625 million tax on concealed income/property of Najam Sethi, as reported in an Urdu daily quoting FBR chairman.
The TIP said that the chairman was reportedly ordered to take action on following more recoveries on tax evasion as stated in the commissioner appeal, on which FBR is reported to be delaying actions, which needs to be completed urgently:
1. Similar document for an apartment 5M, 240 West, 98th Street, Manhattan was also found on the web, but the apartment is in the name of his son Ali Aziz Sethi and Najam Aziz Sethi is only his agent, as declared in the document. Proceedings to be initiated in his case too.
2. Taxpayer stated that property is owned jointly by the family. As per documents property at Manhattan, NY.25E is jointly owned by Mr & Mrs. Sethi Notices under section 122(5) to Mrs. Maimanat Mohsin is also to be issued.
3. Detailed scrutiny of other family members which also includes M/S Mira Sethi should be taken up to examine the increase in wealth vis-à-vis their declared income.
The TIP said that recommendations/findings from the Federal Tax Ombudsman (FTO) office received pm April 2014, on the above three issues, which orders that FBR should proceed with requirement of law, in connection with three different show cause notices:
The TIP quoted paragraph from the proceedings, on one complaint No. 630/LHR/IT(410)/1131/2013, July 16, 2013, which are similar for other two cases also, with FTO orders that any intervention from FTO at this stage is not warranted as no maladministration is involved in seeking information.
“The Department Representative (DR) reiterated the stance of the department made in the written comments. He contested the jurisdiction of FTO to investigate the complaint on the plea that it is a matter of assessment which appellate fora would be competent to decide. On merits, he submitted that the complaint was co-owner in an apartment in Manhattan, USA, which was not declared in the original wealth statement for tax year 2009. The actual price of this apartment was found at Rs98,943,332. The complainant had changed her stance thrice regarding ownership/share in ownership. Wealth statement was revised in February 2013 after issuance of notice by the department admitting the price of the apartment at Rs73,800,000. Value of assets declared as on June 30, 2008 was Rs16,522,245 resulting in accretion of Rs70,355,049 for tax year 2009. Unexplained income including exempt income as well as transfer of huge amounts of gifts between the family members for various years were also found without proper evidence, explanation and source to explain accretion in assets. The DR referred to the written arguments as well as facts mentioned in the show cause notices and submitted that another apartment worth Rs. 96,973,207 was declared in USA for tax year 2011 and yet another property worth Rs 115,500,000 was declared during the tax year 2012. The source of accretion in assets have not been properly explained and no documents were submitted nor any evidence has been produced. It was contended that substantial amount of accretion in assets, huge amount of income including exempt income and substantial amount of gifts were declared by the complainant in all the three years without explaining the sources and documentary evidence, which by itself required explanation regarding the definite amounts of accretions declared by the complainant herself. The DR contended that facts admitted by the complainant as available on record, were sufficient evidence in the meaning of ‘definite information’. He cited case law 2011 PTD (Trib) 321 wherein it has been held that “accretion in wealth was not supported by the record of the taxpayer, income declared from year to year by itself was a definite information warranting action under Section 122(1) of the Income Tax Ordinance 2001.
“Examination of record shows that the complainant had not declared the apartment in Manhattan, New York in the original wealth statement but it was declared in the revised wealth statement after issuance of notice by the department for tax year 2009. In the reconciliation statement, no details regarding huge amount of over Rs60 million received as ‘gift from family’ have been submitted with documentary evidence nor was there any detail of declared income which included exempt income also. Likewise, accretion in wealth requires proper explanation with documentary evidence for tax year 2010, 2011 and 2012. During the tax year 2011 another apartment has been shown in New York with some agricultural assets also. For tax year 2012, a residential flat in London has been declared to value Rs115.5 million. Accretion in all the four years has been shown without any documentary evidence or source of income. Substantial amounts have been declared to be ‘gifts from family’. These gifts are not through banking channels nor documented.
“It is established that while making assessment order in the case of complainant’s spouse (Mr. Sethi), the DCIR had ordered issuance of notices to the complainants should provide proof/documentary evidence of accretion in her income / assets in these years to the department, which should make a speaking order. Any intervention from FTO at this stage is not warranted as no maladministration is involved in seeking information.
The FBR said that the instance complaint is dispose of in the above terms and the case filed consigned to record.
The TIP said that the chairman FBR, since 2013 had also not taken any concrete action to make recovery of billions of rupees tax evaded by VIPs included Dr. Arsalan Iftikhar, F&A, Enterprises and FAE Pvt. Limited, Salman Ahmed Khan, Ahmed Khalil, Bahria Town and Zaid Rehman, though FTO directed chairman FBR in the letter dated December 12, 2012 actionable points on the third interim report of one-man inquiry commission, No. Suo Moto No. 02/2012 on April 24, 2013 and dated July 01, 2013 in the Suo Moto No. 02/2012 dated June 17, 2013.
The TIP pointed out to the chairman that act of any officer if he does not use his authority to prevent any undue benefit, favour (as has been give to all above mentioned VIPs) is corruption and corrupt practices, Subsection (vi) of Section 9 of NAO 1999.

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