Immovable property declaration and Section 111 related to concealed income
ISLAMABAD: The business community after conclusion of talks on valuation of immovable properties have claimed the government agreed to provide amnesty from declaring source of investment in immovable property purchased before July 01, 2016.
This means the tax authorities may not invoke Section 111 of Income Tax Ordinance, 2001 to ask taxpayer declare investment source. However, it is still unclear whether property investors have amnesty on those amount which were not declared beyond agreed valuation between the FBR and business community.
To aware the readers about law of unexplained income or assets, which was defined under Section 111 of Income Tax Ordinance, 2001.
Unexplained income or assets.
(1) Where —
(a) any amount is credited in a person’s books of account;
(b) a person has made any investment or is the owner of any money or valuable article;
(c) a person has incurred any expenditure; or
(d) any person has concealed income or furnished inaccurate particulars of income including —
(i) the suppression of any production, sales or any amount chargeable to tax; or
(ii) 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, the amount credited, value of the investment, money, value of the article, or amount of expenditure 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 head “Income from Other Sources” to the extent it is not adequately explained:
Provided 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.
(2) The amount referred to in sub-section (1) shall be included in the person’s income chargeable to tax in the tax year to which such amount relates.
(3) Where the declared cost of any investment or valuable article or the declared amount of expenditure of a person is less than reasonable cost of the investment or the valuable article, or the reasonable amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person’s income chargeable to tax under the head “Income from Other Sources” in the tax year to which the investment, valuable article or the expenditure relates.
(4) Sub-section (1) does not apply,
(a) to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.
(5) The Board may make rules under section 237 for the purposes of this section.