Original Articles

Evidence of corruption of Najam Sethi, Punjab’s Caretaker Chief Minister – by Adnan Farooq

 Najam Sethi was part of the caretaker set up in 1996 which held elections that were massively rigged. He also  did that 'Princess and the Playboy' where MNAs projects were shown by BBC's Panorama as 'corruption of BB/Zardari'. Najam Sethi was Prime Minister's Adviser (federal minister) on Political Affairs and Accountability after President Leghari dismissed Benazir Bhutto in 1996.
Najam Sethi was part of the caretaker set up in 1996 which held elections that were massively rigged. He also did that ‘Princess and the Playboy’ where MNAs projects were shown by BBC’s Panorama as ‘corruption of BB/Zardari’. Najam Sethi was Prime Minister’s Adviser (federal minister) on Political Affairs and Accountability after President Leghari dismissed Benazir Bhutto in 1996.

Source: Adapted from View Point Online with some additional information.

Rs 15,820,315 and Rs 3,803,923 were either concealed or under-declared in 2010 and 2011 respectively

Investigations by tax authorities reveal that although noted TV anchorperson Najam Sethi filed his Income Tax returns for the tax years 2010 and 2011 yet he resorted to misdeclaration and concealment of his income.

For the year 2010 [period of receipts July 2009-June2010], Mr Sethi (CNIC 3520230172081, National Tax Number 453890) received payments from the following payers:

National Communication, Hum Network, Century Publications, Kalaam Communication (Pvt) Ltd, and Media Times (Ltd).

He declared receipts from all sources (including exempt income) worth Rs 48, 924, 558. Tax to the tune of Rs 3, 065, 197 was deducted. However, according to investigations he received an amount of Rs 64, 823, 743 and the due tax amount was Rs 4, 488, 754.

For the year 2011 [period of receipts July 2010-June 2011], he received payments from the following payers:

National Communication, Hum Network, Media Times (Ltd), Beyond Borders Ltd, IGI Investments Bank Ltd, and TFT GT (Pvt) Ltd.

He declared receipts of Rs 33, 078, 596 and paid tax to the tune of Rs 8,449, 221. However, tax authorities have identified an income of Rs. 68, 186, 219 liable for a tax deduction to the tune of Rs 7, 102, 683.

While it is evident that Mr Sethi has concealed his income, he it seems has paid the tax he was supposed to pay if we consider tax deductions over a period of two years. However, a few caveats are in order here to appreciate his genius at twisting figures.

For the first, according to investigations he is guilty of concealing his real income. Official investigations reveal that Mr Sethi has received payments not merely in his personal capacity but as director beyond Borders (Pvt) Ltd (BBL). It came out that media houses while disbursing payments mentioned either Mr Sethi’s CNIC or National Tax Number but payments were shown to Beyond Borders. To unveil the mystery, the tax authorities conducted a thorough probe. The probe led to the following position:

Tax year     Total payments       On behalf of BBL     Najam Sethi’s receipts     Declared Receipts

2010               64, 823,743             31,719,500                 33,104, 243                           48,924,558

2011                 68,186,219                 31,303,700               36,882,519                             33,078,596

In other words Rs 15,820,315 and Rs 3,803,923 were either concealed or under-declared in 2010 and 2011 respectively.

Even in the case of BBL, tax authorities have found certain discrepancy. A probe into BBL income revealed the following position:

Tax year : 2010

Payments to BBL: 37,867,571

Payments to Najam Sethi on BBL’s behalf: 31,719,500

BBL’s total receipts: 69,587,071

BBL’s declared receipts : 30,289,500

Difference: 39,297,571

A similar pattern is found for the tax year 2011:

Tax year : 2011

Payments to BBL: 9,686,981

Payments to Najam Sethi on BBL’s behalf: 31,303,700

BBL’s total receipts: 40,990,681

BBL’s declared receipts : 22,709,500

Difference: 18,281,181

For the second, Najam Sethi has not declared any receipts from Geo/Jang Group even if he had joined country’s biggest media house by January 2011.

Thirdly, Najam Sethi has been working on ventures abroad. However, his declarations do not mention any foreign source of income. As resident individual, his foreign sources of income are also taxable in Pakistan.

Tax authorities are also verifying reports regarding two properties in his name in the USA. Documents in the possession of tax authorities show that Mr Sethi own own the following properties in the USA:

Unit 25E, Block 1171, 100 Riverside Boulevard, Manhattan (Single residential condo Unit).

Unit 5M, Block 1869 Lot 1336, 240 West 98th Street, Manhattan (Single residential condo Unit).

 

Rs 20 million tax notice by FBR to Caretaker Chief Minister Punjab
Rs 20 million tax notice by FBR to Caretaker Chief Minister Punjab. Najam Sethi bought an apartment in New York in July 2008 for US$ 1.2 million & source was unexplained

Dawn TV anchor Talat Hussain recently alleged in this talk show that Najam Sethi’s ‘chiRya’ (inside information source) is actually Malik Riaz.

Later Najam Sethi in his talk show criticized Talat and that was replied by Talat in his talk show by declaring all his assets and challenging Sethi to do that. Now as per some documents, Sethi owns properties in US that are likely to be declared or exposed.

Some people, through social media , even has alleged that Sethi recieved all these properties as benfits from his ‘Chirya’ aka Malik Riaz.

najam-sethi-property-1
najam-sethi-property-2

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  • Sethi was a political prisoner from 1975-1977 during the regime of Zulfikar Ali Bhutto for protesting military action in Balochistan. In 1984, the regime of General Zia ul Haq put him in prison for one month for publishing “From Jinnah To Zia”, a book authored by the former chief justice of the Supreme Court of Pakistan, Justice Mohammad Munir. The book was a sort of mea culpa in which the author had admitted his grave error in legitimizing the first martial law in Pakistan in 1958, thereby paving the way for Gen Zia’s martial law in 1977. In 1999, he was again imprisoned by the government of Prime Minister Nawaz Sharif on trumped up charges of treason. The reason was relentless exposure of corruption in the Sharif family by The Friday Times. The Supreme Court of Pakistan later rejected the charges and freed him after one month. While in detention, he was tortured and suffered a heart attack, which necessitated heart surgery in 2000. The Sharif government harassed him later by slapping dozens of income tax cases, accused him of being a “non-Muslim” and tried to deprive him of his voting rights. But all the cases were dismissed by the courts and the his rights were restored by the Chief Election Commissioner.

  • You can, however, now let go of the guilt and still sport an inspired from Armani or, better yet, a replica. Replica Armani sunglasses are never worth more than $20, so they definitely come in cheap. There’s no need for you to make an effort coming up with such an amount. You don’t even have to break your bank account or empty your wallets for a pair.

  • Tax Ombudsman seeks details of Sethi’s NY property

    Wednesday, April 03, 2013
    From Print Edition

    New 0 0 0

    ISLAMABAD: Federal Tax Ombudsman (FTO) Dr. Shoaib Suddle has summoned a final report on the tax details of caretaker Punjab CM Najam Sethi and missing of description of his properties in Manhattan, New York, from the FBR documents, till April 5, 2013. The FTO has summoned the record from three different top FBR officials in the next three days.

    The FTO order (Diary No. 5229/2012, Dated: 01-04-2013) sent to secretary Revenue Division, Islamabad, chief commissioner Inland Revenue Regional Tax Office, Lahore and commissioner Inland Revenue, Zone-II, Regional Tax Office, Lahore reads as follows;

    “Sub: ASSETS DECLARATION AND TAX DEDUCTION INFORMATION OF MR. NAJAM SETHI Reference letter No. J.3235 dated 08-02-2013 from Commissioner Inland Revenue, Zone-II, RTO, Lahore, on the above noted subject received, vide Chief Commissioner’s No. CC/RTO/ADP/SO-IV/4414 dated 11-02-2013 and FBR’s No. 5229/TO-I/2012 dated 14-02-2013.

    2. It has come to our notice that Mst. Amra Sarwar, Assistant Commissioner, IR, Audit Unit-03, Zone-VII, Regional Tax Office-II, Lahore issued a show cause notice u/s 122(9) read with Section 122(1)/122(5) of the Income Tax Ordinance 2001 on 31-07-2012, mentioning full description of Mr. Najam Sethi’s property situated at Manhattan, New York. In the letter dated 08-02-2013 referred to above, this fact has not been mentioned at all. As sufficient information is already available with the Department, it is required that final report in the matter be submitted to this Secretariat by 05-04-2013 positively.”

    http://www.thenews.com.pk/Todays-News-13-22016-Tax-Ombudsman-seeks-details-of-Sethi%E2%80%99s-NY-property

  • Najam sethi made chairman PCB as reward he is known tax evaders .Read this and you ll know his worth
    DEPUTY COMMISSIONER INLAND REVENUE-AUDIT 01, ZONE II, REGIONAL TAX OFFICE, LAHORE. Tele No. 042-99214091

    Dated:- May 31, 2013

    Name of the tax payer Mr. Najam Aziz Sethi

    Amendment Order Under Section. 122(5) of the Income Tax Ordinance, 2001.
    NTN 0453890-7
    Tax Year 2009
    No. 07 Dated

    AMENDED ORDER UNDER SECTION 122(5)

    1. The Taxpayer Mr. Najam Aziz Sethi is an individual and derives salary as director and editor-in- chief of the Media Times Pvt Limited (The Friday Times). The Tax Payer is also drawing salary from Vanguard Books Pvt Limited, as Manging Director. The Tax Payer (TP) also holds shares in the companies, i.e., M/S Beyound Borders and M/s Media Times, falling in the jurisdiction of Unit 01, Zone II. The complaint was lodged by the Transparency International against the TP. The essence of the complaint is that Mr. Sethi has not disclosed its total assets, including an apartment worth US$1.2M with the tax authorities. Similar stories were also found on the Web and electronic media mainly focusing on the under-declaration of assets in tax year 2010 and 2011 by Mr. Sethi.
    2. This department started working on the complaint and found definite information in the form of authentic documents issued by the New York department of Finance. As facts of the case called for amendment of assessment so a notice under section 122(9)/122(5) of the Income Tax Ordinance, 2001 was issued vide this office No.03 dated July 31, 2012, which is reproduced as below:-
    “Please refer to the above subject.
    Whereas, I consider it necessary that the assessment order, deemed to have been finalized under section 120 of the Income Tax Ordinance, 2001 for the tax year 2009 needs alteration to make additions to the declared income by amendment under section 122(5) read with section 122(9) of the Income Tax Ordinance, 2001. The amendment is required for imposition of the correct amount of tax for the tax year 2009 as in my opinion income tax return declaring income at Rs. 3,654,000/-, relating to the income and tax, filed under the relevant provision of this Ordinance, have resulted in suppression of income to the following reasons:-
    This office is in possession of definite information that you had purchased an apartment having gross area 978 Sq. Ft @ $ 1,233.77 per Sq. Ft in Manhattan, USA for a consideration of Pak Rupees at Rs. 98,943,332/- ($ 1,206,626 x Rs. 82) during the period relevant to tax year 2009.
    Last market sale information was downloaded from the internet; this transaction was made on 25.7.2008 / 4.8.2008. Whereas, the perusal of wealth statement for the tax year 2009 revealed that you have not disclosed the investment of Rs. 98,943,332/-, which was made for acquisition of said apartment.
    The perusal of reconciliation statement appended with the wealth statement as on 30.06.2009 also depicts your total assets to the tune of Rs. 7,054,372/- as on 30.06.2008 (tax year 2008). It is beyond any shadow of doubt that you had insufficient funds at the material time to make the huge investment amounting to Rs. 98,943,332/-, which clearly indicates that you made this investment out of un-explained source of income which tantamount to concealment of asset within the ambit of section 111(1)(b) of the Income Tax Ordinance, 2001.
    Keeping in view of the above narrated facts, the undersigned intends to amend the deemed assessment for the tax year 2009 in term of section 122(5) of the Income Tax Ordinance, 2001 in the following manners:-
    Addition under section 111(1)(b) on account of
    un-explained investment as discussed above. Rs.98,943,332/-
    Add income declared under NTR Rs. 3,654,000/-
    Total income proposed to be amended Rs.102,597,332/-
    Tax @ 20% Rs. 20,519,466/-
    If you have any objection to the above treatment, you are required to attend the office of the undersigned on or before 5-8.2012 along with written reply duly substantiated with supporting documentary evidence.”
    3. In response to the reminders issued dated April 01, 2013 and April 11, 2013, the tax payer, through its Authorized Representative, Rizvi & Company filed adjournment request for fifteen days. On April 19, 2013 the reply was submitted with following submissions:
    a. The said property is owned by Mr. Najam Sethi, Mrs. Syeda Maimanat Mohsin and Mr. Ali Aziz Sethi.
    b. The purchase of the said property is duly mentioned in the Income Tax Return of Syeda Maimanat Mohsin for the Tax Year 2009.
    4. The reply was also accompanied by copy of an earlier reply. The TP maintained that the said reply was, in fact, submitted on February 22, 2013. There is no such letter in the record of this office. In that reply, it was claimed that the property was purchased by Mrs. Maimanat Mohsin, whereas, the title was in the name of three family members, namely, Mr. Najam Sethi, Mrs. Syeda Maimanat Mohsin and Mr. Ali Aziz Sethi. It was also contended in the same reply that the said purchase had been duly recorded in the wealth statement of Mrs. Maimanat Mohsin.
    5. There is clear contradiction in both replies. In the earlier reply dated February 22, 2013 it was claimed that the title is merely in the name of three family members and the sole owner is Mrs. Mohsin. It was also stated in the same reply that, “the fact of purchase of the said Flat has properly been declared in the return of Syeda Maimnat Mohsin (NTN:2377635-8) for the Tax year 2009.” However, it was maintained in the later reply, dated April 19, 2013 that apartment is owned by three family members. TP was asked to clarify the position vis-a-vis this anomaly in the letter issued on April 21, 2013. Request was also made to the TP in the letter for the submission of documents in support of his contention. TP filed his reply on April 24, 2013. No effort was made to clarify the matter in the said reply, however, in the latest reply dated May 20, 2013, it has been maintained in para 5 of the reply, that:
    “property is jointly owned by Najam Sethi, Syeda Maimanat Mohsin and Ali Sethi (son) who has given his power of Attorney to his parents. The same is reflected in the income tax returns of our client.”
    During the hearing on May 20, 2013, on the objection that no document has been provided by the TP in support of his contention that the property is jointly owned by the three members, AR promised to provide the documents within a day or two vide order sheet entry 9. He provided another reply on May 22, 2013 stating once again that property was purchased by three persons and names of only Mr. and Mrs. Sethi appeared on the registry. He also stated that Mr. Ali Sethi has been authorized by his parents as ‘Special Power of Attorney’ of the same property. Strangely, in the reply dated May 20 it was stated that the power of attorney is given by the son to his parents. It is pertinent to mention that the original notice was issued on account of undisclosed investment out of unexplained sources of income. In the reply dated May 22, 2013 it was once again reiterated by the AR that:
    “The investment in the above property was made by the above 3 persons as reflected in their income and wealth statements submitted to you.”
    AR also repeated his earlier stance, while submitting the reply, that the property has duly been reflected in the wealth statement Mrs. Sethi.
    6. In the letter of this office dated April 21, 2013 in response to the AR’s letter dated April 19, 2013 it was also stated with respect to TP’s claim of ownership of apartment by Mrs. Maimnat Mohsin:
    “Moreover, the notice was issued in July, 2012, whereas, the wealth statement for tax year 2009 of Mrs. Maimanat Mohsin was revised in February 2013. In the original wealth statements for Tax Year 2009 of Mrs. Maimanat Mohsin and Mr. Sethi no such apartment was mentioned. The wealth statement revision seems to be an afterthought and there is no room for revision on a specific issue which had already been confronted to you in a notice.
    It has also been observed that even as per revised wealth statement of Mrs. Maimanat Mohsin for tax year 2009, sufficient resources were not available for the purchase of the said apartment, which was worth Rs.98M as confronted to you in the earlier notice of this office. The total income of Mrs. Maimanat Mohsin was merely Rs.3.6M and Rs.1.5M in tax year 2009 and 2008 respectively. The department reserves its right to initiate proceedings separately in the case of Mrs. Maimanat Mohsin with reference to revised wealth statement.”
    7. AR in his reply dated April 24, 2013 agitated the reference made to Mrs. Sethi and maintained that:
    ‘law does not empower the department to take up the proceedings against any taxpayer without having definite information in possession against the assessee and lawful jurisdiction. Furthermore, the proceedings taken up against one taxpayer does not mean to debar the whole family of the taxpayer to proceed under the law.”
    8. TP failed to submit any documents in support of his contention despite repeated requests vide letter no 480 dated April 21, 2013 and letter 540 dated May 15, 2013. He only submitted a power of attorney on May 22, 2013 given by the parents to the son giving him the:
    “broad powers to handle your property during your lifetime, which may include powers to mortgage, sell or otherwise dispose of any real or personal property….”
    No concrete documents stating all three of the family members are the owners of the property was provided. AR was also confronted the ‘definite information’ available with the office, regarding ownership of the apartment by Mr. Najam Sethi. He did not object the authenticity of the documents
    9. Major points agitated by the Tax Payer in his replies are:
    a. Apartment is owned by the Mrs. Maimnat Mohsin and title is merely in the name of family members. The purchase has duly been disclosed in the annual return of the Mrs. Sethi. However in the latest reply conflicting stance was taken and it was maintained that apartment is jointly owned. This has been discussed at length in the foregoing paras.
    b. The observation in the reply of this office dated April 21, 2013 was uncalled for and law does not empower the department to take up proceedings without definite information and lawful jurisdiction.
    c. The AR also agitated in his replies dated April 24 and May 20, 2013 that the proceedings are malafide, being initiated because of external pressure.
    Findings
    10. It is pointed out that notice u/s 122(5) is issued on the basis of examination of taxpayer’s particulars of income as contained in the prescribed return submitted for Income tax as well as information contained in the wealth statement for the tax period 2009. The definite discrepancy in non declaration of property in the wealth statement called for the necessity of amendment of assessment. It has been held by the Hon’ble Supreme Court that Commissioner is empowered to amend an assessment order, treated as issued under section 120, under sub-section (5) of section 122 on the basis of definite information by making such alterations or additions as the commissioner considers necessary (2009 PTD 1392 C – para – 37). Further calling for record/documents with reference to disparities pointed out is permissible as per para 2 of the prescribed notice u/s 122 as per part-II of the First Schedule to the Income Tax Rules, 2002.
    a. The documents and definite information available with the office are in the form of property / ownership papers. As per these documents an apartment 25E, 100 Riverside Boulevard, Manhattan is in the name of Mr. Najam Aziz Sethi and Mrs. Syeda Maimanat Mohsin. The Recorded/Filed date of the document is August 04, 2008 and Preparation Date mentioned on the document is July 31, 2008. Therefore, the registration of the apartment appears to be in tax year 2009 according to this document. The document has been issued by the City Registrar, New York Department of Finance. Other documents include a ‘Notice of property Value” issued by NYC, Finance dated January 15, 2012 and ‘Property Tax Bill Quarterly Statement’ dated June 08, 2012.
    b. In the light of this document and submission made by the TP, the earlier stance of the tax payer that the property is owned by Mrs. Maimnat Mohsin is not supported by the documents. At the same time the latest submissions made by the tax payer are partially supported by the available documents and ‘definite information’ available with this office, and the same is accepted to the extent of supported material. That is, the apartment situated at 25E, 100 Riverside Boulevard, Manhattan is jointly owned by two family members, namely, Mr. Sethi and Mrs. Sethi.
    c. TP also maintained in his replies dated February 22, where he said that property is owned by Mrs. Sethi; and April 19, 2013, where he claimed that property is jointly owned, that purchase was duly shown in the wealth statement of Mrs. Maimnat Mohsin. I have accepted the latest stance of TP partially that it is jointly owned by Mr. and Mrs. Sethi. Perusal of the documents and record available with this office shows that the property under discussion has been disclosed by the Mrs. Sethi in her revised wealth statement (Revised on February 06, 2013), however, no such property has been declared in the wealth statement of Mr. Sethi, who is also an owner of the same property, which has also been accepted by the AR of the Tax Payer. The value of property at Rs.73M is also questionable. However this office is in possession of definite information from ‘US Titile Records’ property detail report that value of the said apartment was $1,206,625, the same was confronted to the TP in original notice at the Rs./$ rate of 82/1 as on the purchase date.
    d. The argument extended by the AR during hearing on May 23, 2013, that non-declaration of apartment in the wealth statement of Mr. Sethi is not prejudicial to the interest of revenue as the same had duly been declared in the wealth statement of Mrs. Sethi is rejected on the basis of following grounds:
    i. The value of apartment declared in the wealth statement of Mrs. Sethi is below the market price as discussed in the para 10(c )
    ii. The apartment was declared in the wealth statement of Mrs. Sethi in the revised wealth statement in February, 2013. It was not declared in the original wealth statement which was revised only after the issuance of notice u/s 122(5) to Mr. Sethi.
    iii. Moreover, even after the declaration of property by Mrs. Sethi, albeit after the issuance of notice u/s 122(5) to Mr. Sethi, the wealth statement of Mr. Sethi is still silent about the sources available to him for the investment in the purchase of the apartment. It has been conceded by the AR in his reply dated May 22, 2013 and quoted in para 5 above, that the investment in the property was also made by Mr. Sethi. But no reasonable explanation regarding availability of resources in the wealth statement of the TP for tax year 2009, commensurate with the investment made by Mr. Sethi in the purchase of the apartment has been provided. Furthermore, it was explicitly stated in the reply date May 22, 2013, that:
    “The investment in the above property was made by the above 3 persons as reflected in their income and wealth statements submitted to you.”
    However, the said investment is not reflected in the wealth statement of Mr. Sethi.
    e. The annual income and wealth of Mr. Sethi in 2008 and 2009 has been summarized in the following table:
    Year Taxable Income Net Assets Cash and Bank Balances
    2008 1,500,000 43,549,372 7,054,372
    2009 3,654,000 51,806,652 15,056,652
    It appears that from tax year 2008 to 2009 the increase in income is around 2M, against his increase, accretion in wealth is around 8M, if half of the share of the apartment, i.e., around 49M, which has not been declared, is also included, the total worth of assets will be around 60M, which is much higher than the available/declared sources of income. Furthermore, the property in question has not been declared in the wealth statement of 2009. The purchase and ownership (½ share) of apartment out of concealed sources and its non-declaration by Mr. Sethi is established in the light of above mentioned facts and according to the confession made by the AR, that the apartment is also owned by Mr. Sethi. Moreover, despite this admission of ownership, no proof of declaration or, for that matter, any plausible reason for non-declaration of the apartment in the wealth statement of Mr. Sethi has been provided.
    f. As far as the AR’s position regarding initiation of proceedings without ‘definite information’ is concerned, the detailed definite information has been discussed above and there is no need to dilate upon this subject. Moreover, it is sufficient to say regarding AR’s objection of ‘lawful jurisdiction’ that this office has lawful jurisdiction on Mr. Sethi, being director (and share holder) of the Media Times, which falls in the jurisdiction of this office.
    g. TP also agitated that the initiation of proceedings was due to some external pressure. It is suffice to say that proceedings were initiated when the ample evidence was already circulating in the media. This office was able to get hold of some of the authentic documents which constituted the ‘definite information’ and legally this office was empowered to initiate proceedings under section 122(5) of the Ordinance.
    11. On the basis of above facts, the investment out of concealed sources of income by Mr. Sethi in an apartment situated at Manhattan, New York in tax year 2009 is established and his income is amended as under:-
    a) Taxable Income declared: Rs. 3,654,000
    b) Total un-explained / concealed investment in the purchase
    of an apartment as discussed above. Rs.98,943,332

    c) Addition of 1/2 of the un-explained / concealed investment
    in the purchase of an apartment u/s 111(1)(b) as discussed in para 10 (b)
    10(d)(iii) and 10(e) above. Rs.49,471,666
    d) Total income (a+c) Rs.53,125,666

    Tax @ 20% Rs.10,625,133
    Tax Already paid as per return Rs.1,201,802
    Tax Verified Nil
    Tax Payable Rs.10,625,133

    Issue Demand Notice u/s 137 of the Income Tax Ordinance, 2001. Also issue notice u/s 182 for imposition of penalty for concealment of investment/ownership of valuable article through concealed sources of income.

    This order consists of seven pages and each page bears my signatures and seal.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    Notes not for tax payer
    1. Similar document for an apartment 5M, 240West, 98th, Street, Manhattan was also found on the web, but the apartment is in the name of his son Mr. Ali Aziz Sethi, and Mr. Najam Aziz Sethi is only his agent, as declared in the document. Proceedings to be initiated in his case too.
    2. Tax Payer stated that property is owned jointly by the family. As per documents property at Manhattan, NY, 25E is jointly owned by Mr. and Mrs. Sethi. Notice u/s 122(5) to Mrs. Maimanat Mohsin is also to be issued.
    3. Detailed scrutiny of other family members which also includes M/S. Mira Sethi should be taken up to examine the increase in wealth vis-à-vis their declared income.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    DEPUTY COMMISSIONER INLAND REVENUE-AUDIT 01, ZONE II, REGIONAL TAX OFFICE, LAHORE. Tele No. 042-99214091

    No. Dated:- May 22, 2013
    To

    Mr. Najam Aziz Sethi
    C/O M/S Media Times Limited,
    41-N GULBERG INDUSTR, LAHORE
    NTN. 0453890-7

    Subject:- NOTICE U/S 182(2) OF THE INCOME TAX ORDINANCE, 2001 (THE ORDINANCE) – TAX YEAR 2009 –
    Please refer to the above subject.

    Consequent upon the order issued vide DCR No.07 dated 31 -05-2013 an amount of of Rs. 49,471,666 was added in your income on account of investment in property through unexplained sources of income. You were not able to submit any document in support of your contention that the property does not belong to you. You are also liable to pay penalty equal to 100% of the t ax sough to be evaded on account of concealed investment in the purchase of an apartment, situated at Manhattan, New York, in terms of sr. no.12 of Section 182(1) of the Ordinance, as follows:

    Total un-explained / concealed investment
    in purchase of an apartment as discussed above. Rs. 98,943,332

    Addition of 1/2 of the un-explained / concealed investment
    in the purchase of an apartment Rs.49,471,666

    Tax sought to be evaded @ 20% Rs.9,894,333
    Penalty equal to 100% of the tax evaded Rs.9,894,333

    You are requested to show cause that why not 100% penalty equal to the amount of tax short fall be imposed on you under sr.12 of the section 182(1) of the Ordinance.

    The due date and time of filing of reply and hearing is fixed as 07-06-2013 at 11:00 hours.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    DEPUTY COMMISSIONER INLAND REVENUE-AUDIT 01, ZONE II, REGIONAL TAX OFFICE, LAHORE. Tele No. 042-99214091

    Dated:- May 31, 2013

    Name of the tax payer Mr. Najam Aziz Sethi

    Amendment Order Under Section. 122(5) of the Income Tax Ordinance, 2001.
    NTN 0453890-7
    Tax Year 2009
    No. 07 Dated

    AMENDED ORDER UNDER SECTION 122(5)

    1. The Taxpayer Mr. Najam Aziz Sethi is an individual and derives salary as director and editor-in- chief of the Media Times Pvt Limited (The Friday Times). The Tax Payer is also drawing salary from Vanguard Books Pvt Limited, as Manging Director. The Tax Payer (TP) also holds shares in the companies, i.e., M/S Beyound Borders and M/s Media Times, falling in the jurisdiction of Unit 01, Zone II. The complaint was lodged by the Transparency International against the TP. The essence of the complaint is that Mr. Sethi has not disclosed its total assets, including an apartment worth US$1.2M with the tax authorities. Similar stories were also found on the Web and electronic media mainly focusing on the under-declaration of assets in tax year 2010 and 2011 by Mr. Sethi.
    2. This department started working on the complaint and found definite information in the form of authentic documents issued by the New York department of Finance. As facts of the case called for amendment of assessment so a notice under section 122(9)/122(5) of the Income Tax Ordinance, 2001 was issued vide this office No.03 dated July 31, 2012, which is reproduced as below:-
    “Please refer to the above subject.
    Whereas, I consider it necessary that the assessment order, deemed to have been finalized under section 120 of the Income Tax Ordinance, 2001 for the tax year 2009 needs alteration to make additions to the declared income by amendment under section 122(5) read with section 122(9) of the Income Tax Ordinance, 2001. The amendment is required for imposition of the correct amount of tax for the tax year 2009 as in my opinion income tax return declaring income at Rs. 3,654,000/-, relating to the income and tax, filed under the relevant provision of this Ordinance, have resulted in suppression of income to the following reasons:-
    This office is in possession of definite information that you had purchased an apartment having gross area 978 Sq. Ft @ $ 1,233.77 per Sq. Ft in Manhattan, USA for a consideration of Pak Rupees at Rs. 98,943,332/- ($ 1,206,626 x Rs. 82) during the period relevant to tax year 2009.
    Last market sale information was downloaded from the internet; this transaction was made on 25.7.2008 / 4.8.2008. Whereas, the perusal of wealth statement for the tax year 2009 revealed that you have not disclosed the investment of Rs. 98,943,332/-, which was made for acquisition of said apartment.
    The perusal of reconciliation statement appended with the wealth statement as on 30.06.2009 also depicts your total assets to the tune of Rs. 7,054,372/- as on 30.06.2008 (tax year 2008). It is beyond any shadow of doubt that you had insufficient funds at the material time to make the huge investment amounting to Rs. 98,943,332/-, which clearly indicates that you made this investment out of un-explained source of income which tantamount to concealment of asset within the ambit of section 111(1)(b) of the Income Tax Ordinance, 2001.
    Keeping in view of the above narrated facts, the undersigned intends to amend the deemed assessment for the tax year 2009 in term of section 122(5) of the Income Tax Ordinance, 2001 in the following manners:-
    Addition under section 111(1)(b) on account of
    un-explained investment as discussed above. Rs.98,943,332/-
    Add income declared under NTR Rs. 3,654,000/-
    Total income proposed to be amended Rs.102,597,332/-
    Tax @ 20% Rs. 20,519,466/-
    If you have any objection to the above treatment, you are required to attend the office of the undersigned on or before 5-8.2012 along with written reply duly substantiated with supporting documentary evidence.”
    3. In response to the reminders issued dated April 01, 2013 and April 11, 2013, the tax payer, through its Authorized Representative, Rizvi & Company filed adjournment request for fifteen days. On April 19, 2013 the reply was submitted with following submissions:
    a. The said property is owned by Mr. Najam Sethi, Mrs. Syeda Maimanat Mohsin and Mr. Ali Aziz Sethi.
    b. The purchase of the said property is duly mentioned in the Income Tax Return of Syeda Maimanat Mohsin for the Tax Year 2009.
    4. The reply was also accompanied by copy of an earlier reply. The TP maintained that the said reply was, in fact, submitted on February 22, 2013. There is no such letter in the record of this office. In that reply, it was claimed that the property was purchased by Mrs. Maimanat Mohsin, whereas, the title was in the name of three family members, namely, Mr. Najam Sethi, Mrs. Syeda Maimanat Mohsin and Mr. Ali Aziz Sethi. It was also contended in the same reply that the said purchase had been duly recorded in the wealth statement of Mrs. Maimanat Mohsin.
    5. There is clear contradiction in both replies. In the earlier reply dated February 22, 2013 it was claimed that the title is merely in the name of three family members and the sole owner is Mrs. Mohsin. It was also stated in the same reply that, “the fact of purchase of the said Flat has properly been declared in the return of Syeda Maimnat Mohsin (NTN:2377635-8) for the Tax year 2009.” However, it was maintained in the later reply, dated April 19, 2013 that apartment is owned by three family members. TP was asked to clarify the position vis-a-vis this anomaly in the letter issued on April 21, 2013. Request was also made to the TP in the letter for the submission of documents in support of his contention. TP filed his reply on April 24, 2013. No effort was made to clarify the matter in the said reply, however, in the latest reply dated May 20, 2013, it has been maintained in para 5 of the reply, that:
    “property is jointly owned by Najam Sethi, Syeda Maimanat Mohsin and Ali Sethi (son) who has given his power of Attorney to his parents. The same is reflected in the income tax returns of our client.”
    During the hearing on May 20, 2013, on the objection that no document has been provided by the TP in support of his contention that the property is jointly owned by the three members, AR promised to provide the documents within a day or two vide order sheet entry 9. He provided another reply on May 22, 2013 stating once again that property was purchased by three persons and names of only Mr. and Mrs. Sethi appeared on the registry. He also stated that Mr. Ali Sethi has been authorized by his parents as ‘Special Power of Attorney’ of the same property. Strangely, in the reply dated May 20 it was stated that the power of attorney is given by the son to his parents. It is pertinent to mention that the original notice was issued on account of undisclosed investment out of unexplained sources of income. In the reply dated May 22, 2013 it was once again reiterated by the AR that:
    “The investment in the above property was made by the above 3 persons as reflected in their income and wealth statements submitted to you.”
    AR also repeated his earlier stance, while submitting the reply, that the property has duly been reflected in the wealth statement Mrs. Sethi.
    6. In the letter of this office dated April 21, 2013 in response to the AR’s letter dated April 19, 2013 it was also stated with respect to TP’s claim of ownership of apartment by Mrs. Maimnat Mohsin:
    “Moreover, the notice was issued in July, 2012, whereas, the wealth statement for tax year 2009 of Mrs. Maimanat Mohsin was revised in February 2013. In the original wealth statements for Tax Year 2009 of Mrs. Maimanat Mohsin and Mr. Sethi no such apartment was mentioned. The wealth statement revision seems to be an afterthought and there is no room for revision on a specific issue which had already been confronted to you in a notice.
    It has also been observed that even as per revised wealth statement of Mrs. Maimanat Mohsin for tax year 2009, sufficient resources were not available for the purchase of the said apartment, which was worth Rs.98M as confronted to you in the earlier notice of this office. The total income of Mrs. Maimanat Mohsin was merely Rs.3.6M and Rs.1.5M in tax year 2009 and 2008 respectively. The department reserves its right to initiate proceedings separately in the case of Mrs. Maimanat Mohsin with reference to revised wealth statement.”
    7. AR in his reply dated April 24, 2013 agitated the reference made to Mrs. Sethi and maintained that:
    ‘law does not empower the department to take up the proceedings against any taxpayer without having definite information in possession against the assessee and lawful jurisdiction. Furthermore, the proceedings taken up against one taxpayer does not mean to debar the whole family of the taxpayer to proceed under the law.”
    8. TP failed to submit any documents in support of his contention despite repeated requests vide letter no 480 dated April 21, 2013 and letter 540 dated May 15, 2013. He only submitted a power of attorney on May 22, 2013 given by the parents to the son giving him the:
    “broad powers to handle your property during your lifetime, which may include powers to mortgage, sell or otherwise dispose of any real or personal property….”
    No concrete documents stating all three of the family members are the owners of the property was provided. AR was also confronted the ‘definite information’ available with the office, regarding ownership of the apartment by Mr. Najam Sethi. He did not object the authenticity of the documents
    9. Major points agitated by the Tax Payer in his replies are:
    a. Apartment is owned by the Mrs. Maimnat Mohsin and title is merely in the name of family members. The purchase has duly been disclosed in the annual return of the Mrs. Sethi. However in the latest reply conflicting stance was taken and it was maintained that apartment is jointly owned. This has been discussed at length in the foregoing paras.
    b. The observation in the reply of this office dated April 21, 2013 was uncalled for and law does not empower the department to take up proceedings without definite information and lawful jurisdiction.
    c. The AR also agitated in his replies dated April 24 and May 20, 2013 that the proceedings are malafide, being initiated because of external pressure.
    Findings
    10. It is pointed out that notice u/s 122(5) is issued on the basis of examination of taxpayer’s particulars of income as contained in the prescribed return submitted for Income tax as well as information contained in the wealth statement for the tax period 2009. The definite discrepancy in non declaration of property in the wealth statement called for the necessity of amendment of assessment. It has been held by the Hon’ble Supreme Court that Commissioner is empowered to amend an assessment order, treated as issued under section 120, under sub-section (5) of section 122 on the basis of definite information by making such alterations or additions as the commissioner considers necessary (2009 PTD 1392 C – para – 37). Further calling for record/documents with reference to disparities pointed out is permissible as per para 2 of the prescribed notice u/s 122 as per part-II of the First Schedule to the Income Tax Rules, 2002.
    a. The documents and definite information available with the office are in the form of property / ownership papers. As per these documents an apartment 25E, 100 Riverside Boulevard, Manhattan is in the name of Mr. Najam Aziz Sethi and Mrs. Syeda Maimanat Mohsin. The Recorded/Filed date of the document is August 04, 2008 and Preparation Date mentioned on the document is July 31, 2008. Therefore, the registration of the apartment appears to be in tax year 2009 according to this document. The document has been issued by the City Registrar, New York Department of Finance. Other documents include a ‘Notice of property Value” issued by NYC, Finance dated January 15, 2012 and ‘Property Tax Bill Quarterly Statement’ dated June 08, 2012.
    b. In the light of this document and submission made by the TP, the earlier stance of the tax payer that the property is owned by Mrs. Maimnat Mohsin is not supported by the documents. At the same time the latest submissions made by the tax payer are partially supported by the available documents and ‘definite information’ available with this office, and the same is accepted to the extent of supported material. That is, the apartment situated at 25E, 100 Riverside Boulevard, Manhattan is jointly owned by two family members, namely, Mr. Sethi and Mrs. Sethi.
    c. TP also maintained in his replies dated February 22, where he said that property is owned by Mrs. Sethi; and April 19, 2013, where he claimed that property is jointly owned, that purchase was duly shown in the wealth statement of Mrs. Maimnat Mohsin. I have accepted the latest stance of TP partially that it is jointly owned by Mr. and Mrs. Sethi. Perusal of the documents and record available with this office shows that the property under discussion has been disclosed by the Mrs. Sethi in her revised wealth statement (Revised on February 06, 2013), however, no such property has been declared in the wealth statement of Mr. Sethi, who is also an owner of the same property, which has also been accepted by the AR of the Tax Payer. The value of property at Rs.73M is also questionable. However this office is in possession of definite information from ‘US Titile Records’ property detail report that value of the said apartment was $1,206,625, the same was confronted to the TP in original notice at the Rs./$ rate of 82/1 as on the purchase date.
    d. The argument extended by the AR during hearing on May 23, 2013, that non-declaration of apartment in the wealth statement of Mr. Sethi is not prejudicial to the interest of revenue as the same had duly been declared in the wealth statement of Mrs. Sethi is rejected on the basis of following grounds:
    i. The value of apartment declared in the wealth statement of Mrs. Sethi is below the market price as discussed in the para 10(c )
    ii. The apartment was declared in the wealth statement of Mrs. Sethi in the revised wealth statement in February, 2013. It was not declared in the original wealth statement which was revised only after the issuance of notice u/s 122(5) to Mr. Sethi.
    iii. Moreover, even after the declaration of property by Mrs. Sethi, albeit after the issuance of notice u/s 122(5) to Mr. Sethi, the wealth statement of Mr. Sethi is still silent about the sources available to him for the investment in the purchase of the apartment. It has been conceded by the AR in his reply dated May 22, 2013 and quoted in para 5 above, that the investment in the property was also made by Mr. Sethi. But no reasonable explanation regarding availability of resources in the wealth statement of the TP for tax year 2009, commensurate with the investment made by Mr. Sethi in the purchase of the apartment has been provided. Furthermore, it was explicitly stated in the reply date May 22, 2013, that:
    “The investment in the above property was made by the above 3 persons as reflected in their income and wealth statements submitted to you.”
    However, the said investment is not reflected in the wealth statement of Mr. Sethi.
    e. The annual income and wealth of Mr. Sethi in 2008 and 2009 has been summarized in the following table:
    Year Taxable Income Net Assets Cash and Bank Balances
    2008 1,500,000 43,549,372 7,054,372
    2009 3,654,000 51,806,652 15,056,652
    It appears that from tax year 2008 to 2009 the increase in income is around 2M, against his increase, accretion in wealth is around 8M, if half of the share of the apartment, i.e., around 49M, which has not been declared, is also included, the total worth of assets will be around 60M, which is much higher than the available/declared sources of income. Furthermore, the property in question has not been declared in the wealth statement of 2009. The purchase and ownership (½ share) of apartment out of concealed sources and its non-declaration by Mr. Sethi is established in the light of above mentioned facts and according to the confession made by the AR, that the apartment is also owned by Mr. Sethi. Moreover, despite this admission of ownership, no proof of declaration or, for that matter, any plausible reason for non-declaration of the apartment in the wealth statement of Mr. Sethi has been provided.
    f. As far as the AR’s position regarding initiation of proceedings without ‘definite information’ is concerned, the detailed definite information has been discussed above and there is no need to dilate upon this subject. Moreover, it is sufficient to say regarding AR’s objection of ‘lawful jurisdiction’ that this office has lawful jurisdiction on Mr. Sethi, being director (and share holder) of the Media Times, which falls in the jurisdiction of this office.
    g. TP also agitated that the initiation of proceedings was due to some external pressure. It is suffice to say that proceedings were initiated when the ample evidence was already circulating in the media. This office was able to get hold of some of the authentic documents which constituted the ‘definite information’ and legally this office was empowered to initiate proceedings under section 122(5) of the Ordinance.
    11. On the basis of above facts, the investment out of concealed sources of income by Mr. Sethi in an apartment situated at Manhattan, New York in tax year 2009 is established and his income is amended as under:-
    a) Taxable Income declared: Rs. 3,654,000
    b) Total un-explained / concealed investment in the purchase
    of an apartment as discussed above. Rs.98,943,332

    c) Addition of 1/2 of the un-explained / concealed investment
    in the purchase of an apartment u/s 111(1)(b) as discussed in para 10 (b)
    10(d)(iii) and 10(e) above. Rs.49,471,666
    d) Total income (a+c) Rs.53,125,666

    Tax @ 20% Rs.10,625,133
    Tax Already paid as per return Rs.1,201,802
    Tax Verified Nil
    Tax Payable Rs.10,625,133

    Issue Demand Notice u/s 137 of the Income Tax Ordinance, 2001. Also issue notice u/s 182 for imposition of penalty for concealment of investment/ownership of valuable article through concealed sources of income.

    This order consists of seven pages and each page bears my signatures and seal.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    Notes not for tax payer
    1. Similar document for an apartment 5M, 240West, 98th, Street, Manhattan was also found on the web, but the apartment is in the name of his son Mr. Ali Aziz Sethi, and Mr. Najam Aziz Sethi is only his agent, as declared in the document. Proceedings to be initiated in his case too.
    2. Tax Payer stated that property is owned jointly by the family. As per documents property at Manhattan, NY, 25E is jointly owned by Mr. and Mrs. Sethi. Notice u/s 122(5) to Mrs. Maimanat Mohsin is also to be issued.
    3. Detailed scrutiny of other family members which also includes M/S. Mira Sethi should be taken up to examine the increase in wealth vis-à-vis their declared income.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    DEPUTY COMMISSIONER INLAND REVENUE-AUDIT 01, ZONE II, REGIONAL TAX OFFICE, LAHORE. Tele No. 042-99214091

    No. Dated:- May 22, 2013
    To

    Mr. Najam Aziz Sethi
    C/O M/S Media Times Limited,
    41-N GULBERG INDUSTR, LAHORE
    NTN. 0453890-7

    Subject:- NOTICE U/S 182(2) OF THE INCOME TAX ORDINANCE, 2001 (THE ORDINANCE) – TAX YEAR 2009 –
    Please refer to the above subject.

    Consequent upon the order issued vide DCR No.07 dated 31 -05-2013 an amount of of Rs. 49,471,666 was added in your income on account of investment in property through unexplained sources of income. You were not able to submit any document in support of your contention that the property does not belong to you. You are also liable to pay penalty equal to 100% of the t ax sough to be evaded on account of concealed investment in the purchase of an apartment, situated at Manhattan, New York, in terms of sr. no.12 of Section 182(1) of the Ordinance, as follows:

    Total un-explained / concealed investment
    in purchase of an apartment as discussed above. Rs. 98,943,332

    Addition of 1/2 of the un-explained / concealed investment
    in the purchase of an apartment Rs.49,471,666

    Tax sought to be evaded @ 20% Rs.9,894,333
    Penalty equal to 100% of the tax evaded Rs.9,894,333

    You are requested to show cause that why not 100% penalty equal to the amount of tax short fall be imposed on you under sr.12 of the section 182(1) of the Ordinance.

    The due date and time of filing of reply and hearing is fixed as 07-06-2013 at 11:00 hours.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    DEPUTY COMMISSIONER INLAND REVENUE-AUDIT 01, ZONE II, REGIONAL TAX OFFICE, LAHORE. Tele No. 042-99214091

    Dated:- May 31, 2013

    Name of the tax payer Mr. Najam Aziz Sethi

    Amendment Order Under Section. 122(5) of the Income Tax Ordinance, 2001.
    NTN 0453890-7
    Tax Year 2009
    No. 07 Dated

    AMENDED ORDER UNDER SECTION 122(5)

    1. The Taxpayer Mr. Najam Aziz Sethi is an individual and derives salary as director and editor-in- chief of the Media Times Pvt Limited (The Friday Times). The Tax Payer is also drawing salary from Vanguard Books Pvt Limited, as Manging Director. The Tax Payer (TP) also holds shares in the companies, i.e., M/S Beyound Borders and M/s Media Times, falling in the jurisdiction of Unit 01, Zone II. The complaint was lodged by the Transparency International against the TP. The essence of the complaint is that Mr. Sethi has not disclosed its total assets, including an apartment worth US$1.2M with the tax authorities. Similar stories were also found on the Web and electronic media mainly focusing on the under-declaration of assets in tax year 2010 and 2011 by Mr. Sethi.
    2. This department started working on the complaint and found definite information in the form of authentic documents issued by the New York department of Finance. As facts of the case called for amendment of assessment so a notice under section 122(9)/122(5) of the Income Tax Ordinance, 2001 was issued vide this office No.03 dated July 31, 2012, which is reproduced as below:-
    “Please refer to the above subject.
    Whereas, I consider it necessary that the assessment order, deemed to have been finalized under section 120 of the Income Tax Ordinance, 2001 for the tax year 2009 needs alteration to make additions to the declared income by amendment under section 122(5) read with section 122(9) of the Income Tax Ordinance, 2001. The amendment is required for imposition of the correct amount of tax for the tax year 2009 as in my opinion income tax return declaring income at Rs. 3,654,000/-, relating to the income and tax, filed under the relevant provision of this Ordinance, have resulted in suppression of income to the following reasons:-
    This office is in possession of definite information that you had purchased an apartment having gross area 978 Sq. Ft @ $ 1,233.77 per Sq. Ft in Manhattan, USA for a consideration of Pak Rupees at Rs. 98,943,332/- ($ 1,206,626 x Rs. 82) during the period relevant to tax year 2009.
    Last market sale information was downloaded from the internet; this transaction was made on 25.7.2008 / 4.8.2008. Whereas, the perusal of wealth statement for the tax year 2009 revealed that you have not disclosed the investment of Rs. 98,943,332/-, which was made for acquisition of said apartment.
    The perusal of reconciliation statement appended with the wealth statement as on 30.06.2009 also depicts your total assets to the tune of Rs. 7,054,372/- as on 30.06.2008 (tax year 2008). It is beyond any shadow of doubt that you had insufficient funds at the material time to make the huge investment amounting to Rs. 98,943,332/-, which clearly indicates that you made this investment out of un-explained source of income which tantamount to concealment of asset within the ambit of section 111(1)(b) of the Income Tax Ordinance, 2001.
    Keeping in view of the above narrated facts, the undersigned intends to amend the deemed assessment for the tax year 2009 in term of section 122(5) of the Income Tax Ordinance, 2001 in the following manners:-
    Addition under section 111(1)(b) on account of
    un-explained investment as discussed above. Rs.98,943,332/-
    Add income declared under NTR Rs. 3,654,000/-
    Total income proposed to be amended Rs.102,597,332/-
    Tax @ 20% Rs. 20,519,466/-
    If you have any objection to the above treatment, you are required to attend the office of the undersigned on or before 5-8.2012 along with written reply duly substantiated with supporting documentary evidence.”
    3. In response to the reminders issued dated April 01, 2013 and April 11, 2013, the tax payer, through its Authorized Representative, Rizvi & Company filed adjournment request for fifteen days. On April 19, 2013 the reply was submitted with following submissions:
    a. The said property is owned by Mr. Najam Sethi, Mrs. Syeda Maimanat Mohsin and Mr. Ali Aziz Sethi.
    b. The purchase of the said property is duly mentioned in the Income Tax Return of Syeda Maimanat Mohsin for the Tax Year 2009.
    4. The reply was also accompanied by copy of an earlier reply. The TP maintained that the said reply was, in fact, submitted on February 22, 2013. There is no such letter in the record of this office. In that reply, it was claimed that the property was purchased by Mrs. Maimanat Mohsin, whereas, the title was in the name of three family members, namely, Mr. Najam Sethi, Mrs. Syeda Maimanat Mohsin and Mr. Ali Aziz Sethi. It was also contended in the same reply that the said purchase had been duly recorded in the wealth statement of Mrs. Maimanat Mohsin.
    5. There is clear contradiction in both replies. In the earlier reply dated February 22, 2013 it was claimed that the title is merely in the name of three family members and the sole owner is Mrs. Mohsin. It was also stated in the same reply that, “the fact of purchase of the said Flat has properly been declared in the return of Syeda Maimnat Mohsin (NTN:2377635-8) for the Tax year 2009.” However, it was maintained in the later reply, dated April 19, 2013 that apartment is owned by three family members. TP was asked to clarify the position vis-a-vis this anomaly in the letter issued on April 21, 2013. Request was also made to the TP in the letter for the submission of documents in support of his contention. TP filed his reply on April 24, 2013. No effort was made to clarify the matter in the said reply, however, in the latest reply dated May 20, 2013, it has been maintained in para 5 of the reply, that:
    “property is jointly owned by Najam Sethi, Syeda Maimanat Mohsin and Ali Sethi (son) who has given his power of Attorney to his parents. The same is reflected in the income tax returns of our client.”
    During the hearing on May 20, 2013, on the objection that no document has been provided by the TP in support of his contention that the property is jointly owned by the three members, AR promised to provide the documents within a day or two vide order sheet entry 9. He provided another reply on May 22, 2013 stating once again that property was purchased by three persons and names of only Mr. and Mrs. Sethi appeared on the registry. He also stated that Mr. Ali Sethi has been authorized by his parents as ‘Special Power of Attorney’ of the same property. Strangely, in the reply dated May 20 it was stated that the power of attorney is given by the son to his parents. It is pertinent to mention that the original notice was issued on account of undisclosed investment out of unexplained sources of income. In the reply dated May 22, 2013 it was once again reiterated by the AR that:
    “The investment in the above property was made by the above 3 persons as reflected in their income and wealth statements submitted to you.”
    AR also repeated his earlier stance, while submitting the reply, that the property has duly been reflected in the wealth statement Mrs. Sethi.
    6. In the letter of this office dated April 21, 2013 in response to the AR’s letter dated April 19, 2013 it was also stated with respect to TP’s claim of ownership of apartment by Mrs. Maimnat Mohsin:
    “Moreover, the notice was issued in July, 2012, whereas, the wealth statement for tax year 2009 of Mrs. Maimanat Mohsin was revised in February 2013. In the original wealth statements for Tax Year 2009 of Mrs. Maimanat Mohsin and Mr. Sethi no such apartment was mentioned. The wealth statement revision seems to be an afterthought and there is no room for revision on a specific issue which had already been confronted to you in a notice.
    It has also been observed that even as per revised wealth statement of Mrs. Maimanat Mohsin for tax year 2009, sufficient resources were not available for the purchase of the said apartment, which was worth Rs.98M as confronted to you in the earlier notice of this office. The total income of Mrs. Maimanat Mohsin was merely Rs.3.6M and Rs.1.5M in tax year 2009 and 2008 respectively. The department reserves its right to initiate proceedings separately in the case of Mrs. Maimanat Mohsin with reference to revised wealth statement.”
    7. AR in his reply dated April 24, 2013 agitated the reference made to Mrs. Sethi and maintained that:
    ‘law does not empower the department to take up the proceedings against any taxpayer without having definite information in possession against the assessee and lawful jurisdiction. Furthermore, the proceedings taken up against one taxpayer does not mean to debar the whole family of the taxpayer to proceed under the law.”
    8. TP failed to submit any documents in support of his contention despite repeated requests vide letter no 480 dated April 21, 2013 and letter 540 dated May 15, 2013. He only submitted a power of attorney on May 22, 2013 given by the parents to the son giving him the:
    “broad powers to handle your property during your lifetime, which may include powers to mortgage, sell or otherwise dispose of any real or personal property….”
    No concrete documents stating all three of the family members are the owners of the property was provided. AR was also confronted the ‘definite information’ available with the office, regarding ownership of the apartment by Mr. Najam Sethi. He did not object the authenticity of the documents
    9. Major points agitated by the Tax Payer in his replies are:
    a. Apartment is owned by the Mrs. Maimnat Mohsin and title is merely in the name of family members. The purchase has duly been disclosed in the annual return of the Mrs. Sethi. However in the latest reply conflicting stance was taken and it was maintained that apartment is jointly owned. This has been discussed at length in the foregoing paras.
    b. The observation in the reply of this office dated April 21, 2013 was uncalled for and law does not empower the department to take up proceedings without definite information and lawful jurisdiction.
    c. The AR also agitated in his replies dated April 24 and May 20, 2013 that the proceedings are malafide, being initiated because of external pressure.
    Findings
    10. It is pointed out that notice u/s 122(5) is issued on the basis of examination of taxpayer’s particulars of income as contained in the prescribed return submitted for Income tax as well as information contained in the wealth statement for the tax period 2009. The definite discrepancy in non declaration of property in the wealth statement called for the necessity of amendment of assessment. It has been held by the Hon’ble Supreme Court that Commissioner is empowered to amend an assessment order, treated as issued under section 120, under sub-section (5) of section 122 on the basis of definite information by making such alterations or additions as the commissioner considers necessary (2009 PTD 1392 C – para – 37). Further calling for record/documents with reference to disparities pointed out is permissible as per para 2 of the prescribed notice u/s 122 as per part-II of the First Schedule to the Income Tax Rules, 2002.
    a. The documents and definite information available with the office are in the form of property / ownership papers. As per these documents an apartment 25E, 100 Riverside Boulevard, Manhattan is in the name of Mr. Najam Aziz Sethi and Mrs. Syeda Maimanat Mohsin. The Recorded/Filed date of the document is August 04, 2008 and Preparation Date mentioned on the document is July 31, 2008. Therefore, the registration of the apartment appears to be in tax year 2009 according to this document. The document has been issued by the City Registrar, New York Department of Finance. Other documents include a ‘Notice of property Value” issued by NYC, Finance dated January 15, 2012 and ‘Property Tax Bill Quarterly Statement’ dated June 08, 2012.
    b. In the light of this document and submission made by the TP, the earlier stance of the tax payer that the property is owned by Mrs. Maimnat Mohsin is not supported by the documents. At the same time the latest submissions made by the tax payer are partially supported by the available documents and ‘definite information’ available with this office, and the same is accepted to the extent of supported material. That is, the apartment situated at 25E, 100 Riverside Boulevard, Manhattan is jointly owned by two family members, namely, Mr. Sethi and Mrs. Sethi.
    c. TP also maintained in his replies dated February 22, where he said that property is owned by Mrs. Sethi; and April 19, 2013, where he claimed that property is jointly owned, that purchase was duly shown in the wealth statement of Mrs. Maimnat Mohsin. I have accepted the latest stance of TP partially that it is jointly owned by Mr. and Mrs. Sethi. Perusal of the documents and record available with this office shows that the property under discussion has been disclosed by the Mrs. Sethi in her revised wealth statement (Revised on February 06, 2013), however, no such property has been declared in the wealth statement of Mr. Sethi, who is also an owner of the same property, which has also been accepted by the AR of the Tax Payer. The value of property at Rs.73M is also questionable. However this office is in possession of definite information from ‘US Titile Records’ property detail report that value of the said apartment was $1,206,625, the same was confronted to the TP in original notice at the Rs./$ rate of 82/1 as on the purchase date.
    d. The argument extended by the AR during hearing on May 23, 2013, that non-declaration of apartment in the wealth statement of Mr. Sethi is not prejudicial to the interest of revenue as the same had duly been declared in the wealth statement of Mrs. Sethi is rejected on the basis of following grounds:
    i. The value of apartment declared in the wealth statement of Mrs. Sethi is below the market price as discussed in the para 10(c )
    ii. The apartment was declared in the wealth statement of Mrs. Sethi in the revised wealth statement in February, 2013. It was not declared in the original wealth statement which was revised only after the issuance of notice u/s 122(5) to Mr. Sethi.
    iii. Moreover, even after the declaration of property by Mrs. Sethi, albeit after the issuance of notice u/s 122(5) to Mr. Sethi, the wealth statement of Mr. Sethi is still silent about the sources available to him for the investment in the purchase of the apartment. It has been conceded by the AR in his reply dated May 22, 2013 and quoted in para 5 above, that the investment in the property was also made by Mr. Sethi. But no reasonable explanation regarding availability of resources in the wealth statement of the TP for tax year 2009, commensurate with the investment made by Mr. Sethi in the purchase of the apartment has been provided. Furthermore, it was explicitly stated in the reply date May 22, 2013, that:
    “The investment in the above property was made by the above 3 persons as reflected in their income and wealth statements submitted to you.”
    However, the said investment is not reflected in the wealth statement of Mr. Sethi.
    e. The annual income and wealth of Mr. Sethi in 2008 and 2009 has been summarized in the following table:
    Year Taxable Income Net Assets Cash and Bank Balances
    2008 1,500,000 43,549,372 7,054,372
    2009 3,654,000 51,806,652 15,056,652
    It appears that from tax year 2008 to 2009 the increase in income is around 2M, against his increase, accretion in wealth is around 8M, if half of the share of the apartment, i.e., around 49M, which has not been declared, is also included, the total worth of assets will be around 60M, which is much higher than the available/declared sources of income. Furthermore, the property in question has not been declared in the wealth statement of 2009. The purchase and ownership (½ share) of apartment out of concealed sources and its non-declaration by Mr. Sethi is established in the light of above mentioned facts and according to the confession made by the AR, that the apartment is also owned by Mr. Sethi. Moreover, despite this admission of ownership, no proof of declaration or, for that matter, any plausible reason for non-declaration of the apartment in the wealth statement of Mr. Sethi has been provided.
    f. As far as the AR’s position regarding initiation of proceedings without ‘definite information’ is concerned, the detailed definite information has been discussed above and there is no need to dilate upon this subject. Moreover, it is sufficient to say regarding AR’s objection of ‘lawful jurisdiction’ that this office has lawful jurisdiction on Mr. Sethi, being director (and share holder) of the Media Times, which falls in the jurisdiction of this office.
    g. TP also agitated that the initiation of proceedings was due to some external pressure. It is suffice to say that proceedings were initiated when the ample evidence was already circulating in the media. This office was able to get hold of some of the authentic documents which constituted the ‘definite information’ and legally this office was empowered to initiate proceedings under section 122(5) of the Ordinance.
    11. On the basis of above facts, the investment out of concealed sources of income by Mr. Sethi in an apartment situated at Manhattan, New York in tax year 2009 is established and his income is amended as under:-
    a) Taxable Income declared: Rs. 3,654,000
    b) Total un-explained / concealed investment in the purchase
    of an apartment as discussed above. Rs.98,943,332

    c) Addition of 1/2 of the un-explained / concealed investment
    in the purchase of an apartment u/s 111(1)(b) as discussed in para 10 (b)
    10(d)(iii) and 10(e) above. Rs.49,471,666
    d) Total income (a+c) Rs.53,125,666

    Tax @ 20% Rs.10,625,133
    Tax Already paid as per return Rs.1,201,802
    Tax Verified Nil
    Tax Payable Rs.10,625,133

    Issue Demand Notice u/s 137 of the Income Tax Ordinance, 2001. Also issue notice u/s 182 for imposition of penalty for concealment of investment/ownership of valuable article through concealed sources of income.

    This order consists of seven pages and each page bears my signatures and seal.

    (USMAN ASGHAR)
    Deputy Commissioner Inland Revenue

    Notes not for tax payer
    1. Similar document for an apartment 5M, 240West, 98th, Street, Manhattan was also found on the web, but the apartment is in the name of his son Mr. Ali Aziz Sethi, and Mr. Najam Aziz Sethi is only his agent, as declared in the document. Proceedings to be initiated in his case too.
    2. Tax Payer stated that property is owned jointly by the family. As per documents property at Manhattan, NY, 25E is jointly owned by Mr. and Mrs. Sethi. Notice u/s 122(5) to Mrs. Maimanat Mohsin is also to be issued.
    3. Detailed scrutiny of other family members which also includes M/S. Mira Sethi should be taken up to examine the increase in wealth vis-à-vis their declared income.

    https://m.facebook.com/Saynotocorrupt/posts/212762815539291

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