UN-EXPLAINED INCOME OR ASSSET

By Advocate G.M Choudhry

 Tax and Corporate consultant

Co-founder and associated partner of G & Z LEGAL NEXUS

Questions arise about the un-explained and concealed income and assets of the residents of Pakistan. Some time resident has a value able property or he made extra ordinary expenses or he has made heavy amount of investment in any project but he did not disclosed these amounts  in his Income Tax return and wealth statement submitted on IRIS portal of FBR.

 Conditioned when income and assets shall be considered un-explained and concealed:

  • Where —
  • any amount is credited in a person’s books of account
  • person has made any investment or is the owner of any money or valuable article
  • a person has incurred any expenditure
  • any person has concealed income or furnished inaccurate particulars of income including —
  • the suppression of any production, sales or any amount chargeable to tax; or the suppression of any item of receipt liable to tax in whole or in part, and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made
  • suppression of any production, sales, any amount chargeable to tax and of any item of receipt liable to tax or the explanation offered by the person is not in the Commissioner’s opinion, satisfactory-

              1)  the amount credited, value of the investment, money, value of the article, or amount of expenditure shall be included in the person’s income chargeable to tax under the head “Income from Other Sources” to the extent it is not adequately explained;

              2) the suppressed amount of production, sales or any amount chargeable to tax or of any item of receipt liable to tax shall be included in the person’s income chargeable to tax under the head “Income from Business” to the extent it is not adequately explained.

Exemptions of un-explained income and assets

  • That where a taxpayer explains the nature and source of the amount credited or the investment made, money or valuable article owned or funds from which the expenditure was made, by way of agricultural income, such explanation shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.
  • Does not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels not exceeding five million Rupees in a tax year that is en-cashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.