The Federal Board of Revenue (FBR) has slapped a tax penalty of Rs35million on Sarina Isa, the wife of Justice Qazi Faez Isa.
Commissioner Inland Revenue and International Taxes Zone Zulfiqar Ahmed on September 14 issued a 164-page order, stating that Sarina Isa has a tax liability of Rs35 million on account of her foreign assets.
The judge’s wife has condemned the move, accused the FBR official and the PTI led federal government of mala fide and announced to challenge the FBR decision at a higher forum. However, the FBR decision has sparked a debate as whether there will be an impact of this tax liability on the Justice Isa case.
A 10-judge SC bench on June 19 quashed a presidential reference which claimed that Justice Isa had committed misconduct by not disclosing his family member’s UK properties in his wealth statement.
In the split order, the bench had, however, asked the FBR to launch an inquiry into the foreign properties of the judge’s family members and to submit its report to the Supreme Judicial Council (SJC) – the constitutional forum that can hold a superior court judge accountable.
In a written statement issued to the media on Friday, she raised doubts over the 164-page order and accused FBR official Zulfiqar Ahmed of creating “artificial tax liability of over Rs35 million” against her.
“I don’t even know if he wrote the order himself,” she said, vowing to challenge the FBR verdict. Under the Supreme Court June 19 order, Sarina may avail all legal options against the FBR order.
Sarina Isa also rejected the FBR official’s claim that she on June 25 refused delivery of the FBR notice and said on that day her father had passed away.
She reiterated her claim that the PTI government is victimizing her husband and his family and the FBR official, Zulfiqar Ahmed, is part of ‘a team’ – headed by Prime Minister Imran Khan – that desperately wants to remove Justice Isa from the scene.
She said the FBR official while rejecting her comprehensive replies submitted in response to each of his eight notices held her liable to Rs35 million.
“Mr Zulfiqar in his notices referred to documents and information which I repeatedly requested [but] was not provided. This did not prevent him [to use these documents] against me. The voluminous order too does not attach these documents,” she noted.
Isa’s wife said in her reply dated August 28 she had asked the official for a personal hearing.
“However, Mr Zulfiqar Ahmed has passed an order against me without once hearing me. He has condemned me unheard.
“[He] does not say whether he decided all cases with hearing the taxpayer or his special treatment is for a taxpayer who happens to be married to a judge Mr Imran Khan’s government is desperate to remove,” she added.
She declared the FBR order “a piece of fiction” which disregarded her agricultural land income, most of her salary as a teacher of the Karachi American School as well as the sale proceeds and profits earned from the sale of her two properties at Karachi’s Clifton area.
Last month, she had disputed the FBR’s assessment about her income as well as the value of her foreign properties.
"You finally accept that I was a working woman but then qualify it by saying that I only had taxed source only to the tune of Rs9,375,931. You have also determined the purchase of three properties at Rs104,680,020.
“I do not know where you have taken the figure of Rs93,75931 from as you do not provide the details nor [tell] how you have determined the amount of Rs104,680,020. Please do so now," Sarina had said in her written reply to the FRB’s fourth notice issued on August 21.
She had requested the official to provide the documents which were relied upon in assessment. Likewise, she had also sought a copy of all her returns. Sarina said she had started to work at the Karachi American School 38 years ago – before her marriage – and worked there for decades.
“I do not know from which date you started [reckoning] my earning. Is it the date from which I started working at the school or when I started to submit my own returns?
“I also do not know whether you added the non-taxable part of my earnings in my earnings. Please answer my questions and provide copies of tax filing of the school and copies of all my returns."
Sarina said she along with a friend bought an office in the Clifton area of Karachi which was later rented. However, income tax is not payable on a certain percentage of amount from the rent.
She asked the FBR as to whether it examined this aspect. Sarina said she later sold that office at a profit. "Have you taken the sale consideration into account and treated it as part of my savings?" she asked.
She said she also purchased a house at Clifton which was also rented out. The rent income was disclosed and tax also paid after permissible deductions.
She asked as to whether certain percentages of deductions were considered as her earnings.
She stated that she also sold out that house later at profit and there was no requirement of paying on capital gains. Have you taken sale into account, she asked.
Sarina also revealed that she owned 278 acres of land – which is equal to 2,243 kanals. This land was managed by her father who died on June 25 this year.
However due to shortage of time, she could not give the exact amount which she earned from agricultural land. She said the amount of agricultural income would easily cover the price of the three properties prior to dates that they were bought.
Once I visit Jacobabad and Nasirabad then I will be able to provide you information about earning from these lands, she added.
Sarina stated that she invested income from the agricultural land in saving certificates issued by the government of Pakistan. Some of the agricultural income was deposited in a rupees account in UBL.
She said her agricultural income is sufficient to justify purchase of three properties in the UK.
"The price of the UK pounds and the USA dollars was less than they were bought. I do not accept as alleged by you that the price of properties was Rs104,680,020. Where have you taken the figure from," she had questioned.
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To keep this fair, Mr bajwa should also be held accountable to same standards