Judge’s wife writes another reply to FBR order

Sarina Isa, the wife of Supreme Court judge Qazi Faez Isa, has questioned the Federal Board of Revenue’s (FBR) decision to award her a tax penalty of Rs35 million and requested the taxman to withdraw its September 14 notice.

Commissioner Inland Revenue and International Taxes Zone Zulfiqar Ahmed on September 14 issued a 164-page order, stating that Sarina Isa had a tax liability of Rs35 million on account of her foreign assets.

The FBR order had sparked a debate as to what could be its implications for Justice Isa’s career.

A 10-judge bench of the Supreme Court 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 under income tax ordinance and to submit its report to the Supreme Judicial Council (SJC) – the constitutional forum that can hold a superior judge accountable.

Responding to the order through a written reply on September 18, the judge’s wife had condemned the move, accused the FBR official and the PTI led federal government of mala fide and announced to challenge the FBR order at a higher forum.

However, now she submitted a fresh reply, stating that the 'purported order' was passed because the commissioner was apparently not satisfied with her explanation. This does not call for imposition of a penalty, she said.

"In any event, my salary paid by the Karachi American School since the year 1982 was disregarded; the sale proceeds and profits earned from the sale of two properties in Clifton, Karachi were also disregarded; and so too were my earnings from my agricultural lands.

“[This was done] without disputing that I had worked in the Karachi American School since 1982, had bought and sold two properties in Clifton, Karachi and owned the stated agricultural lands.

“You disregarded my entire life of work and earnings by a stroke of the pen and assumed that I could not buy properties equivalent in value to a house built on a 500 square yards plot.

“Is this because I am a woman? Or is this because I had sought the income tax records of [Prime Minister] Imran Khan and [Adviser to PM] Shahzad Akbar, who having no known source of income [but] have managed to buy far more expensive properties.

“Is it wrong of me to demand a semblance in equality of treatment from the FBR? Is it not wrong to deny me justice by misinterpreting, twisting and consciously ignoring facts," said the seven-page reply.

She requested the FBR official to withdraw the notice, adding that if he was still not satisfied with her reply, he should tell her its reasons so that she could properly respond. “And, if you are still not satisfied I trust you will provide me the opportunity of a hearing this time,” she added.

The reply said the properties in London were acquired from Pakistan source income and money transfers through banking channels, “which was also directly confirmed by the FBR office illegally from the concerned bank”.

Sarina said the Commissioner Inland Revenue noted that some of the remittances were directly transferred to the solicitors handling the purchase of the properties.

"Without prejudice to the above, even if the purpose of some remittances was shown for some other reason, there is no provision in the [tax] ordinance to support your contention that the taxpayer could only utilize the amount for the stated purpose.

“Despite repeated requests, you have not disclosed the proof of the stated purpose. You have also taken a different stance by stating that Section 111(2)(ii) is applicable by wrongly assuming that I had undisclosed foreign source income, and despite the fact that I have lived in Pakistan throughout"

Sarina said she did not conceal, nor attempted to conceal her London properties, which stood in plain sight in her and her children’s names.

"If we wanted to conceal them we would have created a trust or company and hidden these assets under one or more different names and behind a corporate name and veil, like Mr Imran Khan and other famous personalities did.

“Even otherwise, the purported notice does not allege that I acted deliberately in defiance of any law or in conscious disregard of any obligation under the ordinance."

The reply said the purported notice also did not allege that she caused any loss of revenue to the exchequer. It is well settled that the law ought not to be used to penalize a taxpayer unless it can be shown that the default on the part of the taxpayer had resulted in any loss of revenue.

She said the Supreme Court’s June 19 order had explicitly instructed the FBR to conduct proceedings in accordance with the provisions of the ordinance, which includes the limitation period prescribed therein, and excluded all matters before tax year 2014, which stand finalized.

“But this direction of the Supreme Court and the said provisions of the ordinance you disregard. Any probe in the source of income of the finalized tax years is not permitted under the ordinance as it was barred by time,” said the reply.