120(3) (Notice to complete deficiencies in Return of Income)
Refer to tax return e-filed by you for the tax year Whereas during desk audit of your tax returns for the tax year, it has been observed that the tax return filed is deficient on account of below and liable to be rendered in-valid in accordance with the provisions of section 114(2)(a) of the income tax ordinance, 2001 read with rule 29 of the income tax rules 2002:
– the financial statement attached with the tax return are not signed
However, before declaring your return so filed in-valid under section 114(2)(a) and charging penalty under section 182(1) of the Income Tax Ordinance, 2001, you are given an opportunity to furnish copy of signed audited accounts, by the above mentioned due date.
In case of non compliance by the due date your tax return filed for the tax year shall be rendered invalid u/s 114(2)(a) of the Income Tax Ordinance, 2001 read with rule 29 of the income tax rules 2002 and you shall be liable to be charged with penalty under section 182(1) of the Income Tax Ordinance, 2001.
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How to Respond to an FBR Section 120(3) Notice: A Comprehensive Guide
Introduction Receiving a Section 120(3) notice from the Federal Board of Revenue (FBR) in Pakistan signifies that the FBR has identified deficiencies in your previously filed income tax return. This guide will help you understand the notice, why you received it, and the steps to take to address it effectively.
When Do You Receive a Section 120(3) Notice from FBR?
You receive a Section 120(3) notice when the FBR detects issues in your income tax return, such as missing documentation, incomplete forms, or discrepancies that need to be corrected.
Why Did You Get a Section 120(3) Notice from FBR?
The primary reasons for receiving this notice include:
- Incomplete Documentation: Missing required documents with your tax return.
- Missing Forms: Lack of specific forms like the Section 7E form for deemed income from immovable property.
- Unsigned Financial Statements: Financial statements submitted without proper signatures.
- Discrepancies in Information: Inconsistencies or errors in your tax return.
- Non-compliance with Section 7E: Failure to report deemed rental income from immovable property.
What Should You Do After Receiving a Section 120(3) Notice from FBR?
1. Review the Notice Carefully
- Check the Details: Identify the specific deficiencies and deadlines.
- Understand Requirements: Note any additional documentation or forms needed.
2. Gather Required Documentation
- Collect Documents: Gather all relevant financial records, signed financial statements, and any missing forms.
- Ensure Accuracy: Make sure all documents are complete and properly signed.
3. Correct the Deficiencies
- Complete Forms: Address any missing forms, especially the Section 7E form if required.
- Sign Documents: Ensure all financial statements are signed.
- Provide Additional Information: Submit any extra information requested by the FBR.
4. Submit the Corrected Return
- Use FBR’s Online Portal (IRIS): Upload the corrected return and additional documents.
- Inform FBR: Notify the issuing FBR office about your compliance.
5. Seek Professional Help if Needed
- Consult a Tax Advisor: Get expert guidance on addressing deficiencies and completing forms.
- Professional Representation: A tax professional can represent you during the process.
6. Maintain a Positive Approach
- Avoid Negative Reactions: Stay calm and focused on addressing the issues.
- Examine Legal Points: Separate factual points from legal points in your response.
- Present a Clear Response: Ensure your response is well-supported and clear.
7. Keep Detailed Records
- Maintain Copies: Keep records of the original notice, corrected return, and all correspondence with the FBR.
8. Be Aware of Potential Consequences
- Penalties for Non-compliance: Understand that failure to address the notice can lead to penalties under Section 182 and potential legal action for providing false information.
Conclusion Receiving a Section 120(3) notice from the FBR is a serious matter that requires immediate attention and careful handling. By understanding the notice, gathering the required documents, correcting the deficiencies, and submitting a revised return, you can effectively address the issues raised by the FBR and ensure compliance with Pakistani tax regulations.
At ABH Consultants Islamabad, we specialize in assisting individuals and businesses with complex tax matters, including responding to FBR notices. Our team of experienced tax professionals can guide you through every step of addressing a Section 120(3) notice, ensuring that you comply fully with FBR requirements and protect your financial interests.
Contact ABH Consultants Islamabad today for expert assistance in managing your tax compliance and securing your financial peace of mind.
Reach out to help if you are unable to file your Tax Returns Properly