Notice under Rule 44(4) of the Income Tax Rules 2002

SHOW CAUSE NOTICE UNDER RULE 44(4) OF THE INCOME TAX RULES, 2002 FOR RECONCILIATION
OF ANNUAL STATEMENT OF COLLECTION/ DEDUCTION OF WITHHOLDING TAX U/S
165 WITH RETURN OF INCOME FOR THE TAX YEAR-2016

Please refer to the above.

2. Being a Withholding agent under various provision of Income Tax ordinance, 2001. Further
the taxpayer is under legal
obligation to file withholding statements u/s 149 and 165 of the Income Tax Ordinance,
2001.
3. As per ITMS record the taxpayer (withholding agent) deducted and deposited the following
taxes.
Tax deducted u/s 149/165 NIL
Tax deducted u/s 153(1) (a) NIL
Tax deducted/s 153(1)(b) NIL
Total NIL
4 However, perusal of the income Tax /Sale Tax Return filed by the taxpayer for the year 2016
transpired that the taxpayer had payments under different head and was liable to withhold tax.
5. It is observed that you being a prescribed person failed to discharge your statutory obligation
regarding collection / deduction of withholding tax into the federal treasury. You are therefore, requested
to RECONCILE the amounts/figures declared in your Return of income, withholding and sale tax year
under consideration.
6 you are required to file following documents;
SR# DISCRIPTION
1. Party wise ledger accounts of sales/purchase of items.
2. Supporting documents in case of claim of sale/purchase not liable withholding tax
3. Complete supporting vouchers of expenses
4. Complete detail of salaries/wages, repair maintenance allowance other direct expenses salaries
P&L account, travelling/ conveyance advertisement/publicity, and other indirect expenses
5. All other allied documents are support for non-deduction of tax
6. In case of non-deduction. Prove competes, detail exemption certificate(s) reason for exemption/
Quote relevant provision of low in case the transaction was made from importers, please provide under
talking from along with NTN copy of sales/purchase.
7. Please provide financial account.
The required reconciliation should reach this office on or before the above mentioned due the income.

A 44(4) Notice from the Federal Board of Revenue (FBR) refers to Section 44(4) of the Income Tax Ordinance, 2001. This section is generally related to the assessment of income tax and the rejection of a tax return if FBR finds discrepancies, incomplete information, or failure to comply with tax laws. Section 44(4) specifically deals with situations where FBR is not satisfied with the tax return submitted by the taxpayer and requires additional information or rectifications.

What You Should Do Upon Receiving a 44(4) Notice:

1. Understand the Purpose of the Notice

• Rejection of Tax Return: The notice is typically issued when FBR has rejected your filed tax return or finds discrepancies in the return. This can occur if there is insufficient or inaccurate information provided, or if FBR believes there are underreported incomes or incorrect claims.
• Request for Clarification or Rectification: FBR may ask for additional information or clarifications regarding the filed return, or to rectify mistakes in the submitted information.

  Click here to read about Got 138(1) (Notice to pay overdue tax payable) from FBR – What should you do?

2. Review the Notice Carefully

• Reason for Rejection: The notice should specify the reasons why your return was rejected or why FBR requires more information. This could include:
  • Incorrect or incomplete details in the return.
  • Missing documents or supporting evidence.
  • Discrepancies between reported income and available records.
• Required Action: The notice will also outline what steps you need to take next. This could include submitting additional documentation, rectifying errors, or providing explanations for discrepancies.

3. Address the Issues Raised

• Correct Any Mistakes: If FBR has pointed out specific mistakes, such as errors in income reporting, incorrect deductions, or other discrepancies, correct the errors in your tax return.
  • Amend Your Return: If necessary, file a revised or amended return with accurate information. This can be done through the FBR e-filing portal.
• Provide Additional Documentation: If FBR requests additional documents to support your claims, such as bank statements, invoices, or contracts, make sure to gather and submit the requested documents in a timely manner.
• Clarify Discrepancies: If there is any confusion regarding the information you provided (such as inconsistent income figures), ensure you provide clear and accurate explanations for the discrepancies.

4. File a Revised Return if Necessary

• Amend the Return: If the notice requires you to amend your filed return, you can do so by submitting an updated return with the correct information. Make sure all the errors are corrected, and the new return reflects accurate income, expenses, and deductions.
• Use the E-filing Portal: The easiest way to file an amended return is through the FBR e-filing portal, where you can update the relevant sections and submit it for review.

5. Respond to the Notice Within the Given Time

• Adhere to the Deadline: The notice will specify a deadline for submission of the required documents, clarifications, or the amended return. Ensure you respond by this deadline to avoid penalties, interest, or further legal action.
• Failure to Respond: If you do not comply with the notice within the stipulated time frame, FBR may take further action, such as imposing penalties, charging interest on overdue taxes, or even conducting a tax audit.

6. Seek Professional Help (if necessary)

• Consult a Tax Professional: If you are unsure about how to rectify the errors, provide additional documentation, or amend the return, it is advisable to consult a tax professional, such as a chartered accountant or tax lawyer. They can help you understand the issues raised in the notice and guide you through the process of correction.
• Audit Risk: If the notice is part of an audit process or serious investigation, a tax consultant can help you prepare your documents and present them to FBR in a professional manner.

7. Check for Additional Penalties or Liabilities

• Penalties for Non-Compliance: If your return was rejected due to errors or failure to submit correct information on time, you may be subject to penalties or interest charges.
• Interest on Unpaid Taxes: In addition to penalties, if the return is rejected due to underreported income or unreported tax liabilities, you may also face interest charges on the outstanding amount.
• Settle Any Tax Liabilities: If, after correcting the return or submitting the requested documents, you find that you owe taxes, make the payment promptly to avoid further penalties.

8. Monitor the Outcome

• Confirm Submission: After submitting the required documents or revised return, monitor the status through the FBR e-filing system or keep in touch with FBR to ensure they have received and processed your response.
• Follow Up if Necessary: If you do not receive any feedback after submitting your response, follow up with FBR to confirm that they have processed your documents and closed the matter.

Possible Outcomes:

• Successful Resolution: If you correct the issues raised in the notice and provide the necessary information or documentation, FBR will process the corrected return and update your tax records.
• Additional Tax Demand: If the errors in your original return resulted in underreported tax liabilities, FBR may issue an additional tax demand for the outstanding amount, including any penalties and interest.
• Audit: In some cases, if there are serious discrepancies or if FBR is not satisfied with your response, the matter may be escalated to an audit.
• Further Penalties: If you fail to respond appropriately or within the required time frame, you may face penalties for non-compliance.

Conclusion:

A 44(4) Notice from FBR typically indicates that your tax return has been rejected or that FBR requires additional information or clarification. To address this:

1. Correct any errors in your return.
2. Provide any additional documents requested by FBR.
3. File a revised return if necessary.
4. Ensure you respond within the given time frame to avoid penalties or further legal action. If you need assistance, consider consulting a tax professional to ensure your compliance and proper handling of the notice.