I got, 182(2) (Notice to impose penalty u/s 182 for failure to comply with notice u/s 177) ,What to do?

182(2) (Notice to impose penalty u/s 182 for failure to comply with notice u/s 177.

As you are well aware of the fact that your case for the Tax Year 2019 was selected for audit u/s 177 of the Income Tax Ordinance, 2001 and intimation to this effect has already been sent to you by the Commissioner Inland Revenue, Zone I, Regional Tax Office, Gujranwala vide notice issued u/s 177(1) dated 12.02.2021. You were required to produce books of accounts and record maintained u/s 174 of the Income Tax Ordinance, 2001 by 27.02.2021, but remained attended.
In order to conclude the audit proceedings, a notice u/s 177(1) of the Income Tax Ordinance, 2001 was issued on 03.03.2021 requiring you to provide complete books of accounts as well as other allied documents/details by 10.03.2021. But despite proper service, neither books of accounts were provided nor any application for adjournment has been received. A reminder to this effect was also issued on 12.03.2021 for compliance on 19.03.2021. But this also met the same fate of non-compliance.
Since, you have failed to make compliance to notices u/s 177(1), you are, therefore, required to show cause that as to why penalty amounting to Rs.25,000/- of offence mentioned at S.No.8 of sub-section (1)(a) of section 182 of the Income Tax Ordinance, 2001 for non-production of record for default of second notice u/s 177(1) may not be imposed.
Compliance is required to be made on 13.04.2021

Please refer to the subject above cited
You were issued penalty notice for compliance by 13.04.2021 in non compliance of notice u/s 177 of the Income Tax Ordinance, 2001. But on the due date nobody attended the office nor any adjournment/plausible explanation was received in this office. Therefore, you are given another but final opportunity to present your cause before this office on the due date.
Please also note that this is final opportunity and penalty shall be levied u/s 182 for non compliance.

What to Do If You Receive a 182(2) Notice for Penalty Under Section 182 Due to Non-Compliance with Section 177 in Pakistan

Receiving a notice from the Federal Board of Revenue (FBR) can be daunting, especially when it relates to penalties for non-compliance. If you have received a 182(2) notice (Notice to impose penalty under section 182 for failure to comply with notice under section 177), it is crucial to understand its implications, your obligations, and the steps you must take to resolve the matter effectively. This comprehensive guide will walk you through everything you need to know and do.

Understanding the Legal Context

Section 177 of the Income Tax Ordinance, 2001 empowers the FBR to audit a taxpayer’s records to verify the accuracy of their tax returns and detect any discrepancies or tax evasion. When you receive a notice under section 177, you are required to produce your books of accounts and related documents for inspection.

Section 182(2) deals with the imposition of penalties when a taxpayer fails to comply with notices issued under various sections, including section 177456. If you do not respond to or comply with the audit notice, the FBR may issue a 182(2) notice, asking you to show cause why a penalty should not be imposed for your non-compliance.

Why Did You Receive a 182(2) Notice?

You received a 182(2) notice because you failed to comply with a previous notice under section 177, which required you to present your books of accounts and other relevant documents for audit. The FBR issues this notice after you miss the compliance deadline, and it serves as a final opportunity to explain your non-compliance before a penalty is imposed.

Common reasons for receiving a 182(2) notice:

• Ignoring or forgetting the audit notice under section 177

• Not providing the required documents within the stipulated time

• Failing to request an adjournment or provide a valid reason for delay

• Misunderstanding your tax obligations or audit requirements

• Technical or personal issues causing delay

What Are the Penalties for Non-Compliance?

The penalties for failing to comply with section 177 notices are outlined in section 182 of the Income Tax Ordinance, 2001. The penalty structure is as follows:

Note: The penalty may be higher if the FBR determines that the non-compliance is willful or if there are aggravating circumstances.

Step-by-Step Guide: What to Do After Receiving a 182(2) Notice

1. Review the Notice Carefully

• Check the specific tax year and the nature of non-compliance mentioned.

• Note the deadline for your response-missing this can result in an automatic penalty.

• Understand the amount of penalty being considered and the legal basis for its imposition.

2. Gather All Relevant Documents

• Collect your books of accounts, income statements, bank statements, and any other documents that were requested in the original section 177 notice.

• If you have already complied but the FBR did not receive or acknowledge your submission, gather evidence of your compliance (e.g., courier receipts, email correspondence).

3. Prepare Your Written Explanation

• Clearly explain the reasons for your non-compliance or delay.

• If you had a valid reason (technical issues, medical emergency, etc.), provide supporting evidence.

• If all tax liability was already deducted at source, mention this and explain that your delay did not cause any financial loss to the FBR.

4. File Any Outstanding Returns or Documents

• If you have not yet submitted your tax return or the required documents, do so immediately.

• Attach proof of submission with your response.

5. Consult a Tax Professional

• If you are unsure about how to respond or if the situation is complex, seek advice from a qualified tax consultant.

• A professional can help you draft a comprehensive response, represent you before the FBR, and minimize potential penalties.

6. Submit Your Response Before the Deadline

• Send your written explanation and supporting documents to the FBR office that issued the notice.

• Use a reliable method (registered post, courier, or the FBR’s online portal) and retain proof of delivery.

7. Follow Up

• After submission, follow up with the FBR to confirm receipt and to check the status of your case.

• Keep records of all correspondence for future reference.

Sample Response Structure for a 182(2) Notice

Subject: Response to Notice Under Section 182(2) for Non-Compliance with Section 177

To: [FBR Office/Officer Name]

Reference: Notice No. [xxxx], Dated [dd-mm-yyyy]

Dear Sir/Madam,

I am writing in response to the above-referenced notice. Due to [state your reason: e.g., unforeseen personal circumstances/technical issues], I was unable to comply with the notice under section 177 by the stipulated deadline. I have now attached the required documents and records for your review.

Please note that all my tax liabilities have been duly discharged, and there has been no loss to the exchequer due to the delay. I respectfully request that the penalty be waived in light of the circumstances explained.

Thank you for your understanding.

Sincerely,

[Your Name]
[CNIC/NTN]
[Contact Details]

Frequently Asked Questions (FAQs)

Q1: What happens if I ignore the 182(2) notice?
If you ignore the notice and do not respond by the deadline, the FBR will impose the penalty as outlined in the notice. Continued non-compliance can lead to higher penalties and further legal action.

Q2: Can the penalty be reduced or waived?
Yes, if you provide a valid and reasonable explanation for your non-compliance, and especially if there was no loss to the FBR, the penalty may be reduced or waived at the discretion of the tax authorities.

Q3: How can I avoid such notices in the future?

• Always respond to FBR notices promptly.

• Maintain organized financial records.

• Mark tax and compliance deadlines on your calendar.

• Consult a tax professional for ongoing compliance.

Table: Summary of Actions and Consequences

Best Practices for Future Compliance

• Set Reminders: Use digital calendars or tax software to remind you of important deadlines.

• Keep Records: Maintain a file (physical or digital) of all tax-related correspondence, notices, and submissions.

• Engage a Professional: Regularly consult with a tax advisor to ensure you stay compliant with all FBR requirements.

• Regularly Check FBR Portal: Log in to your FBR IRIS account periodically to check for any new notices or pending actions.

Conclusion

A 182(2) notice from the FBR is a serious matter but can be managed effectively by acting promptly and responsibly. Review the notice, gather your documents, provide a clear explanation, and submit your response before the deadline. If needed, consult a tax professional to guide you through the process. Proactive compliance and good record-keeping are the best ways to avoid such issues in the future.