DJM CEO says tax evasion charges a ‘conspiracy of rival business lobby’
The Federal Board of Revenue (FBR) has detected massive tax evasion of Rs 2,198,534,185 by DJM Securities owned by renowned stockbroker Dawood Jan Muhammad in the head of trade of DG Khan Cement company’s shares.
The company has been asked to pay tax amount to the government.
The rectified order passed by Deputy Commissioner Inland Revenue, RTO Karachi, on January 29 stated that: “Dear taxpayer, as a result of order passed u/s 221 (1) in your case, where by your total tax demand for the tax year 2007 has been determined to payable as Rs 2,198,534,185. You are requested to make the payment of the above amount within fifteen days from the date of issue of the order in treasury office/ sub treasury office.”
The taxpayer is a private limited company and member of Karachi Stock Exchange Limited. Return of income for the tax year 2007 was filed under section 114 (1) of the income tax ordinance 2001, declaring taxable income of Rs5, 005,805. The assessment was deemed to have been made under section 120 of the income tax ordinance 2001, order stated.
Later on, the order was amended u/s 122(5) of the income tax ordinance 2001 vide D.C.#1/11 dated 27-06-2013. The assessment was further amended u/s 122(5)/(9) read with section 122(4) of income tax ordinance 2001 vide D.C.No.04/11, dated 30-06-2013 at an income of Rs6,855,104,232.
Being an aggrieved, the taxpayer filed two appeals before the Commissioner Inland Revenue, (Appeals-II) Karachi against the said orders and the learned CIR (Appeals-II) vide his consolidated order bearing No-10 & 11, dated 11-11-2013 has deleted the addition made on account of difference of value of shares u/s 111 (1) (b) amounting to Rs 686,934,572. Resultantly, the appeal effect was given through passing order u/s 124 income ordinance 2001 dated 29-11-2013 at an income of Rs6, 168,169,660.
According to findings of order, the contention of the A.R of the taxpayer is totally wrong because of the fact that as per CDC statement of the taxpayer, total numbers of shares are the depicted as 126,595,757 of 122 companies. However, there is only typographical error in passing order u/s 122(5) dated 27-06-2013. Hence the contention of the AR of the taxpayer on this score is baseless and devoid of any merit, hence is hereby rejected, order mentioned.
Sources said that Benami or anonymous trading accounts are most often used by tax evaders or other nefarious individuals such as drug dealers to launder money.
The issue came into the limelight after a former employee of DJM Securities, Muhammad Irfan wrote a letter to chairman National Accountability Bureau (NAB) on July 26, 2013, claiming he was one of the victims of the company’s malpractices.
According to official documents available, the complainant alleged that the bank accounts of all the employees of the company were used for buying and selling of shares, while overdrafts in the name of the employees were sanctioned on the security of Mr Dawood, Mr Yakoob Jan Mohammad and DJM Securities (Pvt) Ltd.
The ‘benami’ trading issue came into light after Muhammad Irfan’s taxes were assessed at over Rs 111 million in 2005 and over Rs 171 million in 2006 respectively, due to these transactions in his name. Irfan then lodged an appeal with the tax authorities, saying that since he was only paid Rs 120,000 per annum by DJM Securities, and he did not logically have the ability to own hundreds of millions of shares and these transactions were done in his name and on his behalf by Dawood Jan Muhammad.
DJM DENIES CHARGE:
Dawood Jan Muhammad, CEO of DJM Securities, rejected the charge, saying a conspiracy was being hatched by “a strong lobby” of his business rivals.
“The lobby is strong and we are in a legal battle,” the broker told Pakistan Today.
Blasting the co-conspirators in the FBR, he said an Appellate Tribunal of the Board’s Inland Revenue had granted him a stay order barring the tax collectors from taking any action against him.
“At this stage we deem it appropriate to grant stay against recovery of demand,” reads the tribunal order issued on March 18.
Dubbing the Rs 2bn tax evasion case as a years old “drama”, Dawood said the FBR had constantly been changing the amount of tax from Rs 4 billion to Rs 1.5 billion and then over Rs 2 billion.
He claimed that FBR representatives never appeared in the tribunal’s hearings ever since he had moved an appeal in September last year.
Asked about the allegations levelled against him by Irfan, Dawood revealed that his former employee just visited him yesterday (Wednesday) to complain that his signatures were forged to be used in a letter sent in his name to the NAB.
“He has also submitted an affidavit to the NAB that the letter carries his fake signatures,” the DJM executive claimed.
To a query on trading shares in the names of company employees, Dawood said: “The story of Irfan dates back to 2006-2007 when there was an amnesty for Capital Gains Tax (CGT).”
“Is share trading a crime? Is taking an overdraft from a bank without defaulting on loan a crime?” he contended.
