1. Nadeem Butt (FCA) NADEEM & CO. (Principal) CHARTERED ACCOUNTANTS
Prepared By
Nadeem Butt (FCA)
Chartered Accountant
Vice Chairman LTBA Tax Academy
NADEEM & CO.
(Principal)
CHARTERED ACCOUNTANTS
Taj Arcade, 3rd Floor, Office # 06, Opposite Services Hospital, 73-Main Jail Road, Lahore – Pakistan
Ph: , Fax: Mob: 0333 /
yahoo / gmail / hotmail.com website: nbandco.com

2. Wealth Statement Under Income Tax Ordinance, 2001 For Tax Year 2017
Total relevant Sections (9) + Rule (3)
111, 114, 115, 116, 118, 119, 120, 182, 191
Sr.
Section
Rule
Heading 1.
116
Wealth statement various aspects 2.
114
Requirements to file a return 3. 36
Who should file wealth statement and Requirements to file a wealth statement 4.
 118
 73
Procedure to file the wealth statement 5.
230
Charges for Various Forms 6.
118
Due date for filing of return / wealth statement 7.
115
Persons not required to furnish return of income 8.
119
Extension of time for furnishing of returns and other documents 9.
120
Limitation on issuance of short documents notice
10.
111
Unexplained income or assets
11.
182
Offence & penalty
12.
191
Prosecutions for non-compliance with statutory obligation
13.
Practical Case

3. 1. Wealth statement various aspects [U/S 116]
SR.
Headings
Explanation 1.
Actual cost concept
Its comparison to be made with the statement of assets and liabilities filed with the ECP. 2.
Contents of a wealth statement
the person‘s total assets and liabilities as on specific date;
the total assets and liabilities of the person‘s spouse, minor children, and other dependents as on specific date;
any assets transferred by the person to any other person during the specified period and consideration for the transfer;
the total expenditures incurred by the person, and the person‘s spouse, minor children, and other dependents during specified period and the details of such expenditures; and
the reconciliation statement of wealth. 3.
Double entry concept
With reference to various transactions.

4. 2. Requirements to file a return [Section 114(2)(e)]
SR.
Headings
Explanation 1.
Income tax return
shall be accompanied with a wealth statement.

5. 3. Who should file wealth statement & Requirements to file a wealth statement [U/S 116 & RULE 36]
Heading
Explanation 1.
Who is require d to file WS
Resident individual liable to file ITR
Every resident individual taxpayer is liable to file a ROI for any tax year shall furnish a WS & wealth reconciliation statement along-with the return. [Section 116(2)].
Implications with reference to filers and non filers especially related to non residents.
The provisions of section 116(2) shall not apply for the tax year 2014 to an individual or a member of an AOP whose last declared or assessed income, or the declared income for the year is less than Rs.1,000,000 or the amount of final tax was less than Rs. 35,000. [Clause 82 & 83 of Part IV of 2nd Schedule]
Every person (other than a company or an AOP’s filing statement u/s 115(4), falling under FTR shall file a wealth statement along with reconciliation of wealth statement.
Person filing return in response to a provisional assessment u/s 122C
A person (including members of an AOP as stated above) on filing of return in response to a provisional assessment u/s 122C shall furnish a WS accompanied by WRS & an explanation of sources of acquisition of assets. [Section 116(2A)]

6. 2.
Revision of WS
Where a person after filing of WS discovers any omission or wrong statement therein may furnish a revised Wealth statement at any time before amendment in assessment for the tax year to which it relates is made under sub section (1) or (4) of section 122. [Section 116(3)] 3.
Furnishing of WS [Rule 36]
In the prescribed Form
Verified in the specified manner
Accompanied by such documents, statements & certificates required under the Ordinance / Rules
Along-with a WRS. 4.
Format of wealth statement is separately attached
Containing total 27 main headings (including assets inside + outside Pakistan).
First 17 headings are for assets.
18 & 19 number headings are for Liabilities.
Serial 20 to 26 for WRS; and
Serial 27 for assets transferred / sold / gifted / donated during the year.

7. 4. Procedure to file the wealth statement [U/S 118 & U/R 73]
A ROI, an employer's certificate, a statement for incomes covered under FTR or a WS shall be furnished by almost all the persons on E. portal except where allowed to file by post or courier service or delivery by hand. [Section 118(1)]
Persons required to file return / statements electronically [Rule 73]
Sr.
Persons
Documents to be filed electronically 1.
A person registered under the Sales tax Act
ROI 2.
An individual having salary income of Rs. 500,000 or more
ROI, proof of tax deduction / payment & WS along-with its reconciliation. 3.
A non-corporate entity claiming refund 4.
Non-resident ship owner or non- resident aircraft owner or charterer thereof
ROI & port clearance application

8. 5. Charges for Various Forms [U/R 230]
The following forms shall be provided after 20th June, 2002 on payment as mentioned against each
Sr.
FORM
CHARGE 1.
Form of return of total income
Rs. 5 each 2.
Form of Wealth Statement u/s 116 of Income Tax Ordinance, 2001

9. Last date of filing of ITR / with wealth statement
6. Due date for filing of return / wealth statement [Section 118]
The return of income shall be furnished according to the following dates:
Sr.
Type of person
Year end
Last date of filing of ITR / with wealth statement 1.
Individuals being as Salaried or FTR case 2.
Non salaried individuals
Any year end 3.
Person who has discontinued the business 118(5) or through notice if return so required -
Date specified in the notice from CIR 4.
Persons required by notice to file ITR by CIR

10. 7. Persons not required to furnish return of income [U/S 115]
Sr.
Particulars
Explanation 1.
Persons not required to file return solely by reason of ownership of land or flat
The following persons shall not be required to furnish a ROI for a tax year solely by reason of ownership of land or flat within municipal limits or Islamabad capital territory: [Section 115(3)]
A widow;
an orphan below the age of 25 years
a disabled person or
a non-resident person. 2.
All the person’s income is fully covered under FTR
Any person who is not required to furnish a return, where all person's income is fully covered under final taxation, shall file a statement showing particulars of income for the tax year in such form & duly verified as required. [Section 115(4)]

11. Particulars Explanation
8. Extension of time for furnishing of returns and other documents [u/s 119]
Particulars
Explanation
Extension of time for furnishing returns & other documents [U/s 119]
If a person is required to furnish a ROI, an employer's certificate, a statement of FTR or a WS then the person may apply in writing to the CIR for an extension of time by the due date to furnish the same. [Section 119(1) and (2)]
On receipt of application if CIR is satisfied that the applicant is unable to furnish the ROI & other allied documents by the due date because of absence from Pakistan, sickness or other misadventure or any other reasonable cause the CIR may allow in writing an extension of time for a period not exceed 15 days from the due date of furnishing unless there are exceptional circumstances justifying a longer extension of time. [Section 119(3) and (4)]
An extension of time granted to file the return & other documents shall not be deemed as allowed for tax payable with the return & DS shall be charged till the payment of the same. [Section 119(6)]

12. 9. Limitation on issuance of short documents notice [u/s 120]
Return not complete under the Ordinance [U/s 120(3), (4), (5) & (6)]
No notice of short documents shall be issued after the expiry of 180 days from the end of the financial year in which return was furnished.
(Explain through practical example)

13. 10. Unexplained income or assets [U/S 111]
Where
(a) any amount is credited in a person's books of account;
(b) a person has made any investment or is the owner of any money or valuable article;
(c) a person has incurred any expenditure, or
(d) any person has concealed income or furnished inaccurate particulars of income including
(i) the suppression of any production, sales or any amount chargeable to tax; or
(ii) the suppression of any item of receipt liable to tax in whole or in part,
and the person offers no explanation about such items or the explanation offered by the person is not, in the CIR's opinion, satisfactory, the said amount shall be included in the person's income chargeable to tax in the tax year to which such amount relates under the head "Income from Other Sources" to the extent it is not adequately explained:
Provided that where a taxpayer explains to agricultural income as nature and source, such explanation shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.;
Where
The declared cost of any investment or valuable article or the declared amount of expenditure of a person is less than reasonable amount of such items, the CIR may include the difference in the person's income chargeable to tax under the head "Income from Other Sources" in the tax year to which such amount relates.
Non application of provisions
The aforesaid provisions do not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is en-cashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.

14. Section for which offence made
11. Offence & penalty [u/s 182]
Offence
Penalty
Section for which offence made
Where any person fails to furnish wealth statement or wealth reconciliation statement.
Higher of 0.1% of the taxable income per week or Rs. 20,000.
116

15. 12. Prosecutions for non-compliance
12. Prosecutions for non-compliance with Statutory Obligation [u/s 191]
Non compliance
Prosecution
Section
Where a person, without reasonable excuse, fails to –
comply with a notice to file the income tax return or wealth statement,
Fine or imprisonment for a term not exceeding 1 year or both.
191
If a person continues the offence and not filed the income tax return or wealth statement, without reasonable excuse, within the period specified by the Court,
Shall further punishable with fine of Rs.50,000 or imprisonment for a term not exceeding 2 years, or both.

16. 13. PRACTICAL CASE During the year following information is provided:
Mr. Asif has filled following wealth statement as on
Plot at DHA, Lahore
3,500,000
Capital in ABC & Co
2,500,000
Jewelry
500,000
Shares in XYZ (Pvt.) Ltd
1,000,000
Cash
1,500,000
Bank
2,000,000
TOTAL
11,000,000
Personal Loan
10,000,000
During the year following information is provided:
He earned salary income of Rs. 1,200,000 and paid tax Rs. 100,000.
He sold share of Rs. 200,000 for a consideration of Rs. 350,000.
He settled his personal loan of Rs. 500,000.
His household expenses aggregates to Rs. 850,000.
He has given gift of Rs. 400,000 to his brother Kamran through crossed cheque.
He has earned profit on ABC & Co of Rs. 450,000. His drawings from the firm during the year was Rs. 275, He paid tax of Rs.40,000 on firm income.
He purchased a new plot at EME society for total consideration Rs. 2,000,000 payable in 20 installments. During the year. He paid Rs. 700,000 in installments.
On 30th June 2017, his bank balance was Rs. 475,000.
Required:
Prepare the wealth reconciliation statement and wealth statement for 2017.

17. MR. ASIF
Wealth statement
As on June 30, 2017
Note
Rupees
Plot at DHA
3,500,000
Capital in ABC 1
2,675,000
Advance for plot at EME
700,000
Jewellery
500,000
Shares in XYZ
800,000
Cash 2
2,260,000
Bank
475,000
Total
10,910,000
Less:
Loan
(500,000)
Closing wealth
10,410,000

18. MR. ASIF
Wealth reconciliation statement
For the tax year 2017
Rupees
Opening Wealth
10,000,000
Add: Sources
Salary Income
1,200,000
Gain on sale of shares
150,000
Profit on ABC & CO
450,000
Total
11,800,000
Less:
Gift to brother
400,000
Tax deducted from salary
100,000
Tax on profit of ABC & Co.
40,000
Household expenses
850,000
Total (11,800,000-1,390,000)
1,390,000
10,410,000

19. Note 1
Capital Reconciliation
Rupees
Opening
2,500,000
Profit
450,000
2,950,000
Drawings
275,000
Total
2,675,000

20. Note 2 Rupees Opening cash 1,500,000 Opening bank 2,000,000 3,500,000
Cash & Cash Equivalent Reconciliation
Rupees
Opening cash
1,500,000
Opening bank
2,000,000
3,500,000
Add:
Salary
1,200,000
Drawings
275,000
Sale of shares
350,000
1,825,000
Total
5,325,000
Less:
House hold expenses
850,000
Taxes
140,000
Gift
400,000
Plot instalments
700,000
Loan instalment
500,000
2,590,000
2,735,000
Cash balancing (Rs. 2,735,000 – 475,000)
2,260,000
Bank
475,000