Got 177(1) (Notice to call for record / documents / books of account) IDR from FBR

177(1) (Notice to call for record / documents / books of account) IDR

SHOW CAUSE 177(1) (Notice to call for record / documents / books of account) IDR

Please refer to the above subject.

This is to inform you that in exercise of the powers conferred under section 214D of the Income Tax
Ordinance 2001, your case has automatically been selected for audit on account of late filing of Income
Tax Return within stipulated time. Intimation letter to conduct an audit under section 177 of the Income
Tax Ordinance, 2001 has already been served upon you by the worthy Commissioner Inland Revenue,
Zone-II, Regional Tax Office, Gujranwala with the request to produce books of account maintained under
section 174(2) of the Income Tax Ordinance, 2001 read with Rules 28 & 33 of Income Tax Rules, 2002.
You are requested to provide the following record for examination and verification of your declared
results by due date positively:
1. Copies of Withholding tax statements u/s 165 of the Income Tax Ordinance, 2001.
2. Copy of financial statements including income & expenditure statement, trading Account, P&L
Account and Balance sheet
3. Journal, ledger, Cash book & Bank Book.
4 Salary Register.
5 Party wise details of purchases
6 Details of all the bank accounts alongwith bank statements .
7 Details of assets alongwith addition / deletion during the year, if any.
8 Details of loans and interest paid, if any.
9 Copy of Wealth Statement along with reconciliation statements.
10 Personal Expenditure statements.
11 Details of taxes paid along with tax payment challans and copies of utility bills.
Please note that in case of failure to provide the record with in the given time, penalty
proceedings for penalty of Rs.25,000/- under Para 8(a) of section 182(1) of the Income Tax Ordinance,
2001 shall be initiated.

What You Should Do Upon Receiving a 177(1) Notice:

1. Review the Notice Carefully

Check for Specific Details: The notice will mention the particular tax year or period that is being audited. Make sure you verify the details mentioned in the notice.
Understand the Timeline: Take note of any deadlines given to submit required documents or information to FBR.

2. Gather and Organize Relevant Documents

Tax Returns: Ensure you have a copy of the tax returns you filed for the relevant year(s).
Supporting Documents: Gather supporting documents such as financial statements, invoices, bank statements, receipts, contracts, and any other records related to your income, expenses, and deductions for the period under review.
Business Records: If you are a business taxpayer, collect detailed records such as profit and loss statements, balance sheets, sales and purchase records, payroll details, and other relevant financial documentation.
Transaction Records: If the audit involves specific transactions (e.g., large deposits, unusual expenses), provide explanations and documentation to substantiate those transactions.

3. Consult a Tax Professional or Accountant

Get Expert Advice: It is crucial to consult a chartered accountant, tax consultant, or tax lawyer to help you understand the specific requirements of the notice and to guide you through the audit process.
Audit Preparation: A professional can assist you in preparing your records for inspection and ensuring compliance with FBR’s requirements.

4. Respond to FBR’s Notice

Submit Documents Promptly: Ensure you submit all requested documents and information on time. Failing to do so may result in penalties or further legal action.
Be Transparent: Provide honest and clear explanations for any discrepancies or issues that may arise during the audit. If there are errors or mistakes in your filings, address them and be prepared to make any necessary amendments.

5. Cooperate with the Audit Process

FBR’s Audit Team: Be prepared for an audit, which may involve FBR officials reviewing your records in person or requesting additional documentation.
Clarify Queries: If the audit team has questions or requires further clarification, cooperate with them and provide additional documentation or explanations as needed.

6. Possible Outcomes of the Audit

Clearance: If everything is in order, the audit may conclude without any issues, and no further action will be required.
Additional Taxes or Penalties: If FBR identifies discrepancies in your filings (e.g., underreported income or incorrect deductions), you may be required to pay additional taxes, penalties, and interest.
Legal Action: In extreme cases, if tax evasion or fraud is found, FBR may initiate legal action, which could involve significant fines, penalties, or even prosecution.

7. Appeals Process (if applicable)

If you disagree with the findings of the audit, you may have the right to file an appeal with the FBR or the Appellate Tribunal. It’s advisable to seek legal counsel or professional advice before taking this step.

Conclusion:

Receiving a 177(1) Notice from FBR is a serious matter as it signals an audit of your financial and tax records. It’s essential to act promptly, gather all necessary documentation, and seek professional advice to ensure that the audit process goes smoothly. Proper compliance can help resolve the matter without penalties or legal complications.

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