Bank statement alone not proof of income, rules Supreme Court

ISLAMABAD: In a landmark judgment, the Supreme Court of Pakistan ruled that a bank statement alone does not constitute proof of an individual’s income.

A two-member bench of the apex court, headed by Chief Justice Yahya Afridi, heard the case, with the judgment authored by Justice Shafi Siddiqui.

The court concluded that a bank statement, by itself, does not necessarily demonstrate a taxpayer’s income and cannot be considered “definite information” for the purpose of reassessment.

In its ruling, the Supreme Court stated that mere financial transactions recorded in a bank account cannot be treated as evidence of income. It further clarified that holding funds in a bank account cannot, without valid justification, be deemed as undisclosed income.

Declaring the Federal Board of Revenue’s (FBR) reassessment action illegal, the court rejected the tax authority’s position and ruled in favor of the petitioner. The court stressed that tax officials cannot issue notices to account holders without clear, credible, and verifiable evidence.

The judgment highlighted the need to prevent the misuse of tax laws, warning that assessments based solely on suspicion or assumption lack legal standing.

“Bank records alone are not sufficient grounds for legal proceedings under tax laws,” the verdict stated. The court emphasized that all tax-related actions must be based on transparent and substantiated information.

The case was brought by a petitioner challenging the FBR’s reassessment proceedings, which had been initiated on the basis of the petitioner’s bank statement being treated as income.