Section 136 of the Income Tax Ordinance, 2001 in Pakistan indeed deals with the burden of proof in tax matters. This section outlines the allocation of the burden of proof between the taxpayer and the tax department (Federal Board of Revenue or FBR). Here’s a brief explanation of how it works:
- Initial Burden on the Taxpayer: According to Section 136, the initial burden of proving the correctness of income, profits, and gains declared in a tax return or the claim of any exemption, deduction, or set-off is on the taxpayer. In other words, when a taxpayer submits their tax return or makes a claim, they are required to provide supporting documentation and evidence to substantiate their claims.
- Shifting the Burden: However, if the taxpayer successfully provides a reasonable explanation and provides sufficient evidence to support their claims, the burden may shift to the tax department. This means that the tax department may then be required to justify its position if it disagrees with the taxpayer’s claims.
- Department’s Authority to Pass Orders: The tax department has the authority to pass orders based on the information provided by the taxpayer, as well as any other information available to them. If the taxpayer’s explanation and evidence are not deemed sufficient or credible by the department, they may make adjustments to the taxpayer’s declared income, profits, or deductions.
It’s important to note that tax laws and their interpretation can vary by jurisdiction, and specific provisions can change over time. Therefore, it’s essential for taxpayers in Pakistan to consult the most recent version of the Income Tax Ordinance, 2001 and seek guidance from tax professionals or legal experts to understand their rights and responsibilities when it comes to the burden of proof in tax matters.
Taxpayers are encouraged to maintain accurate and complete records of their financial transactions to support their tax declarations, as this can help in case of any disputes or audits by the tax authorities.
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