A notice under Section 182 imposing penalty for the contravention of any provision of the Income Tax Ordinance 2001 means FBR is considering that you have not complied with a certain requirement, e.g. you missed a filing or submitted an incorrect statement or did not follow instructions in a previous notice from FBR and is proposing to levy a fine for such default. Knowing what provision of the Ordinance you have allegedly contravened is your first step towards taking appropriate action.
What does Section 182 actually refer to?
Section 182 is a general penalty provision which does not itself specify any one offense but provides a schedule of penalties applicable to various defaults under the Ordinance including delinquency in filing returns, failure to maintain records, failure to comply with a notice from FBR, incorrect particulars in a statement furnished to FBR etc. The notice should indicate what you have been alleged to have defaulted on.
Knowing What You are Being Penalized For
The notice should state which section of the Ordinance you have allegedly contravened, the relevant tax year or period and the amount of penalty proposed. Simply seeing the heading ‘182’ is not sufficient as each one of the sub-clauses of 182 deals with a different default.
How to Respond
If it turns out to be a true default on your part (e.g. you really did miss a filing deadline) you may normally just want to accept that the default occurred and pay the fine as most 182 defaults are calculated on a fixed or per diem basis and are not subject to negotiation. If you believe that there is no default (the return was filed on time or the documents were submitted, etc.) you should respond in writing with supporting documentation prior to the penalty being finalized as a 182 notice is normally issued as a show-cause notice and no final penalty order will be passed by FBR until you have responded.
Common Reasons for such a Notice
The most common defaults that lead to a 182 notice being issued include delinquency in filing income tax or sales tax return, failure to reply to a previous notice issued by FBR within the time specified, furnishing incorrect or incomplete particulars in a wealth statement and failure to maintain books of account as may be required by FBR while verifying the tax returns.
Consequences of Ignoring the Notice
Failure to respond to a show-cause notice normally leads to FBR taking the position that the default is established and that the penalty as proposed in the notice is appropriate with no opportunity to challenge the default or penalty at a later date except by appealing the order (which is a much more time-consuming and expensive process).
See this link for information regarding a similar notice relating to advance tax: Section 147 notice for advance tax.
For more information regarding sections of the Ordinance that provide for penalties consult the FBR website directly.
