Legal: In another rebuttal yesterday, Jatan Prasad Lalchand Prasad (JPLP) submitted that the Office of the Attorney General (OAG) has wrongly inflated the sales for the year 2014.

The defendant’s lawyer argued that the prosecution had entered the same bills twice. The lawyer submitted to Phuentsholing dungkhag court that the sales worth Nu 522.186 million (M) declared in the charge sheet was inflated from Nu 517.803M, causing a difference of Nu 4.382M.

“The sales report prepared by the learned prosecution will show that in many instances the same bills have entered twice,” it was mentioned in the submission. JPLP also submitted the other changes discovered from comparing its statutory audit report and OAG’s charge sheet for the income years of 2011, 2012, and 2013.

Its main argument was that OAG had included purchase costs in the sales amount to determine tax liability, which the JPLP lawyer pointed out, was wrong.

In a rebuttal, OAG representatives had said that the defendant had not deducted the purchase costs at the time when it was supposed to, explaining that the law did not allow deducting purchase costs now. Both the parties reiterated the same expressions yesterday.

The main contention, however, was the provision of section 35.2 of the Income Tax Act 2001 that states: “Expenses related to income under Section 35.1 shall be disallowed as deductions.” OAG pointed out that an entity is not allowed to deduct the expenses or purchase costs after it is missed at the supposed time. If the law allows, then, there won’t be tax evasion, OAG representatives said.

However, JPLP has said that this particular provision of section 35.2 should not be read as: “All allowable deductions related to income under section 35.1 shall not be disallowed as deductions.” Submitting that this provision related to the “concealed income” and not to the purchase (direct cost), defendant’s lawyer pointed only concealed income or undisclosed profit were subject to tax.

Section 35.1 of the income Act, meanwhile, states: “A fine equivalent to twice the tax amount sought to be evaded in addition to tax due shall be imposed on concealment of the particulars of income or furnishing inaccurate particulars of income.”

In its submission yesterday, JPLP lawyer also stressed section 12.1 of Chapter 5, Part II of the income Act that states:  “The rate of Business Income Tax under full liability shall be 30 percent on the profit.” The defendant then maintained that sales amount (turnover) of the business is not the income or profit of a business unit and that it cannot technically or legally be a matter of any agreement.

JPLP lawyer then submitted to the court that the defendant should be liable to fines and penalties worth Nu 8.69M that the statutory auditor had established as per the ITA 2001. It is against OAG’s imposition amount Nu 184.90M.

Meanwhile, OAG will submit its rebuttal on April 8 tentatively.

 Rajesh Rai, Phuentsholing