Renowned eatery brand accused of tax evasion

FBR officials say company is maintaining 19 undeclared bank accounts

ISLAMABAD: Tax authorities have sought bank information of a famous eatery brand after its seized record showed that directors of the company were operating over one and a half dozen undeclared bank accounts.

The Directorate of Intelligence & Investigation of Inland Revenue of Federal Board of Revenue on Wednesday raided the head office of Pehlwan Private Limited, according to senior officials. The officers confiscated the company’s computers and record, which revealed distortions in sales information and officially declared revenue, said the FBR officials.

The Directorate of Intelligence and Investigation has recently beefed up its operations against tax evaders, notably in the construction sector where it has managed to unearth billions of rupees tax evasions. A weak audit department of the FBR has allowed taxpayers to massively understate their incomes without having fear of accountability.

Malik Amir, a representative of Pehlwan Private Limited, confirmed to The Express Tribune that FBR has ceased the company’s record but insisted it was not a raid. He went on to say that the media should not interfere in this matter, as it was an issue between the FBR and the company.

Amir refused to comment on disparities that the FBR has unearthed in its accounts including 19 bank accounts that the company was operating under the radar.

The initial scrutiny of the record showed that the directors of the company are maintaining 19 bank accounts on their names, according to the findings of the investigation officers. The senior FBR officials said that the authorities have sought bank information and the owners and the directors would be soon called for an explanation.

The company is famous for producing Rewari, a crunchy sesame sweet usually eaten in colder weathers. The company’s confiscated record showed that it was also dealing in other food items but was “suppressing the sales to the tunes of millions of rupees”, according to the officials. The company also exports its goods.

Assertions

If allegations are proven, the company may be subject to penalties and surcharges and prosecution against the directors can also be initiated, according to directorate’s officials.

According to the FBR’s record, the company was not filing its income tax returns regularly while there were glaring mismatch in sales declared for tax purposes and actual sales. In tax year 2013, the company did not file income tax returns, violating the Income Tax Ordinance of 2001. In tax year 2014, it filed returns but claimed Rs10.853 million losses. However, its sales tax returns for tax year 2014 showed that the company made Rs8.697 million worth of sales.

The initial scrutiny of the record showed that there was difference of Rs612,606 in sales declared in the income tax returns and the sales tax return, said the FBR officials.

In tax year 2015, the company again did not file the income tax return. However, its sales tax return showed it made Rs13.544 million sales, registering an impressive 56% annual increase in sales.

The company’s sales further grew by 32.8% in tax year 2016, as its total officially declared sales for the year 2016 stood at Rs17.94 million.

The FBR has not yet revised the income tax return forms for tax year 2016 and the due date for filing the returns is September and December of this year, for individuals and companies, respectively.

The FBR has cited a statement of the company’s manager, Saeed Aftab, which appeared in an English daily in November last year. According to this statement, the company sells 1,000 kilogram of rewari every day during its peak season.

Published in The Express Tribune, August 5^th, 2016.

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