SHOW CAUSE FOR IMPOSITION OF PENALTY U/S 182 FOR FAILURE TO FILE RETURN U/S 114
If you have received a notice from the Federal Board of Revenue (FBR) asking you to show cause for imposition of penalty under section 182 for failure to file return under section 114, you might be wondering what to do next. In this blog post, we will explain the legal implications of this notice and how you can respond to it in a professional manner.
What is section 182 and why is it applicable to you?
Section 182 of the Income Tax Ordinance, 2001 deals with the penalties for various offences related to income tax. One of these offences is the failure to furnish a return of income as required under section 114 within the due date. Section 114 requires every person whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance, or who owns any assets or has any income from sources outside Pakistan, to file a return of income for that year.
If you fail to file your return of income within the due date, you are liable to pay a penalty under section 182(1) which is equal to higher of:
– 0.1% of the tax payable in respect of that tax year for each day of default; or
– Rs. 1,000 for each day of default.
However, the minimum penalty is Rs. 10,000 in case of individual having 75% or more income from salary, or Rs. 50,000 in all other cases. The maximum penalty cannot exceed 200% of the tax payable by you in that tax year.
The FBR has the power to impose this penalty on you after giving you an opportunity of being heard. This is why they have issued you a notice asking you to show cause as to why this penalty should not be imposed on you.
How can you respond to the notice?
The notice will specify a date by which you have to submit your explanation along with documentary evidence, if any, to the FBR office. You should not ignore this notice or delay your response, as this may result in further action by the FBR, such as attachment of your bank accounts or properties.
The best way to respond to the notice is to file your return of income for the relevant tax year as soon as possible and pay the tax due along with any surcharge or default surcharge applicable. You should also attach a copy of your return and proof of payment with your explanation. You should explain the reasons for your failure to file your return within the due date and request the FBR to waive or reduce the penalty in view of your compliance.
You should also mention any mitigating factors that may justify your failure to file your return on time, such as illness, accident, natural calamity, technical glitch, etc. You should support your explanation with relevant documents such as medical certificates, FIRs, bank statements, etc.
You should also state that you have no intention to evade tax or conceal your income and that you are willing to cooperate with the FBR in resolving this matter amicably. You should express your regret for any inconvenience caused to the FBR and assure them that you will file your returns on time in future.
You should write your explanation in a clear and concise manner and avoid any abusive or disrespectful language. You should also sign and date your explanation and mention your name, address, CNIC number and NTN number.
You should submit your explanation along with documentary evidence to the FBR office before the due date mentioned in the notice. You should also keep a copy of your explanation and evidence for your own record.
What will happen next?
After receiving your explanation and evidence, the FBR will examine them and decide whether to impose the penalty or not. They may also ask you for further clarification or information if required. They will communicate their decision to you in writing within a reasonable time.
If they decide to impose the penalty, they will issue you a demand notice asking you to pay the penalty amount within a specified time. If they decide not to impose the penalty or reduce it, they will issue you a relief order stating so.
You have the right to appeal against the decision of the FBR before the Commissioner (Appeals) within 30 days from the date of receipt of the demand notice or relief order. You have to pay 25% of the penalty amount as pre-deposit before filing an appeal.
You can also seek alternative dispute resolution (ADR) under section 134A of the Ordinance if you are not satisfied with the decision of the Commissioner (Appeals). You have to apply for ADR within 90 days from the date of receipt of order passed by Commissioner (Appeals).
Filing your return of income on time is not only your legal obligation but also your civic duty. It helps you avoid penalties and legal hassles and also contributes to the national exchequer. If you have received a notice from the FBR asking you to show cause for imposition of penalty under section 182 for failure to file return under section 114, do not panic or ignore it. Respond to it promptly and professionally and try to resolve your issue amicably with the FBR.