The Federal Board of Revenue (FBR) has served a notice on ARY Communications Limited (ARY) and raised a tax demand of Rs992 million – alleging that the entity had evaded tens of millions in taxes through misrepresentation, concealment and misuse of exemptions, thereby causing a substantial loss to the national exchequer.
The order, dated June 30, 2019, followed a detailed, weeks-long exchange with ARY Communications as well as interactions with its representatives, in which the media house was unable to clear its position of misrepresenting facts in its Income Tax Returns to avoid millions in taxes, according to the FBR’s allegations in its detailed findings.
Furthermore, the FBR also claims that, during the course of these exchanges, it was found that, in a bid to escape the fresh tax demand, the media house allegedly tampered with previously-submitted official agreement documents – which were discovered by FBR.
Hence, the FBR notice states that “other consequential proceedings of penalty and prosecution will be initiated separately.”
In its replies to the FBR, in letters dated May 13, 2019, and June 25, 2019, ARY Communications repeatedly accused the tax collecting body of conducting a fishing expedition and also added that the proceedings are based on whims, assumptions, and guess work. It also said FBR had not allowed it ample time for replies.
However, there is no clear reply by ARY Communications on the charge of tampering the previously submitted agreement documents.
The FBR tax demand pertains to the year 2012-13; however, the FBR uncovered this matter when it started assessing prior tax statements, and, upon discovering evidence of misrepresentation, it has now given the media house an amended assessment, which it has the right to do under tax laws, of Rs.992 million.
ARY has challenged these finding in its replies to the FBR. This amended amount is just for the one year the FBR has assessed under Section 122 (5A) – 2012-13. Sources in FBR estimated that, if the FBR accusations also hold true for subsequent years, total tax demands can come close to Rs.5 billion.
The charges of the FBR investigation are multi-pronged.