Ishaq Dar Response to Supreme Court in #PanamaPapers #Pakistan


Ishaq Dar Response to Supreme Court in #PanamaPapers #Pakistan

Application for Summary Rejection of Findings in JIT Final Report

On behalf of Senator M. Ishaq Dar – Filed with Supreme Court on 17-07-2017

Sr.

No. Description of Document Date Page

1 Summary of Objections against JIT Findings 17-07-2017 1-16

SUPPORTING DOCUMENTS AND EVIDENCE

2 Wealth Reconciliation Statement from 1983 to 2016

(Annex-A/1-3)

17-19

3 Letter from Senator Dar to NAB (Annex-B/1) 16-12-2006 20-24

4 Letter from Senator Dar to NAB (Annex-B/2) 22-10-2007 25-38

5 Letter from Senator Dar to NAB (Annex-B/3) 16-12-2007 39-43

6 Letter from Senator Dar to NAB (Annex-B/4) 22-09-2015 44-55

7 Letter from NAB to Senator Dar (Annex-C) 06-09-2016 56

8 News article by Mr. Ansar Abbasi (Annex-D) 16-07-2016 57

9 Letter from Senator Dar to JIT along with acknowledgement

receipt (Annex-E)

03-07-2017 58

10 Letter from FBR to JIT (Annex-F) 07-07-2017 59-60

11 Letter from FBR to JIT (Annex-G) 08-07-2017 61

12 Letter from FBR to JIT (Annex-H) 30-05-2017 62-66

13 Letter from FBR to JIT (Annex-I) 30-06-2017 67-75

14 ‘Iqama’ of Senator Dar on his passport (Annex-J) 76-78

15 Statement of Assets and Liabilities for year ended 30th June 2005

filed by Senator Dar with ECP (Annex-K)

21-09-2005 79-85

16 Statement of Assets and Liabilities for year ended 30th June 2008

filed by Senator Dar with ECP (Annex-L)

20-09-2008 86-91

17 Copies of banking transactions for repayments received by

Senator Dar from his son during the period 2009-2015

(Annex-M/1-13)

92-111

18 Financial Statements of Hajveri Trust (Annex-N) 112-178

19 Financial Statements of Hajveri Foundation (Annex-O) 179-229

IN THE SUPREME COURT OF PAKISTAN

(Original Jurisdiction)

CMA No 2017

in

Constitutional Petition No.29/2016

Imran Ahmed Khan Niazi Petitioner

Versus

Mian Muhammad Nawaz Sharif

Prime Minister of Pakistan and others Respondents

Application for Summary Rejection of Findings in JIT

Final Report in respect of Respondent No.10

A. PRELIMINARY SUBMISSIONS:

1. The Findings of the J.I.T in its Final Report (Vol-I, Section IX, p 248,

para 13) in respect of Respondent No.10 (“the Findings”) are

ex-facie malafide for the following reasons:

(a) The Findings are beyond the mandate given to the JIT by

this Hon’ble Court vide Order dated 20-04-2017. The

Findings relate to the wealth/income of Respondent No.10

which is neither mentioned in this Hon’ble Court’s aforesaid

Order nor in the original Constitution Petition No.29 of

2016, nor was it raised during the hearing of the Petition

before this Hon’ble Court. The JIT has not mentioned any,

much less cogent, reason for the apparent

transgression of its mandate. The Findings merit

rejection for this reason alone.

(b) The Report/Findings malafidely fail to mention that on

being informed by the JIT regarding non-availability of his

income-tax returns for certain years, Respondent No.10

provided copies of the same from his personal record to

the JIT that very day. He also explained that other relevant

record uptil 2001/02 was available with NAB from where it

could be requisitioned by the JIT. Even this record was

retrieved by FBR from NAB and delivered to the JIT on 8th

July, 2017 (before presentation of its Final Report on 10th

July, 2017). Ignoring these facts, the JIT has

recorded the totally incorrect, indeed perverse,

finding that the returns had not been filed and that

this amounts to “hiding of assets and tax evasion”!

(c) No question was put to Respondent No.10 regarding any of

the other adverse findings relating to his income / wealth.

Hence, Respondent No.10 was denied the opportunity to

explain any observation of the JIT. In particular, the socalled

“exorbitant” increase in assets was never pointed

out by the JIT to Respondent no.10. Had it done so,

Respondent No.10 would have explained each and every

accretion in his assets, with documentary proof. The

statement in the Report that repeated requests /

opportunities were given to provide details of

sources etc. is factually incorrect and clearly

malafide.

The Wealth Reconciliation Statement from 1983 to 2016,

including the years 2003-2008 when he was tax nonresident

in Pakistan, is attached herewith (Annex-A/1-3)

and establishes that each and every rupee of his

income and all his assets are duly explained and

supported by documentary evidence, which has

always been available with the concerned

authorities.

(d) Malafide of the JIT is also evident from the fact that

it has questioned even the substantial amounts

given by Respondent No.10 to registered charities,

without even attempting to verify their work or

ascertaining whether Respondent No.10 had claimed tax

exemption in respect thereto (which he had not). The

perverse finding of tax evasion cannot but be termed as

malicious.

(e) In view of the above and other instances of mala fide and

incorrect, baseless and fabricated findings on the part of

the JIT, the entire Final Report of the JIT stands vitiated.

(f) Respondent No. 10 categorically denies any and all

allegations, directly or indirectly, made against him in the

JIT Report. Respondent No. 10 reserves his right to further

respond to any other finding against him in the Final

Report, as may be required.

2. The Findings are ex-facie factually incorrect, as established in

the detailed Reponses below. The conclusions/Findings have

clearly been contrived/ fabricated and have no factual or legal

basis whatsoever.

B. DETAILED RESPONSES TO FINDINGS

Finding:

a. Mr. Muhammad Ishaq Dar did not file income tax returns

from 1981/82 to 2001/02. Being an expert in economics

and part of ruling elite is, prima facie, tantamount to tax

evasion

Response:

1. Respondent no.10 has filed all his returns, including income

tax and wealth tax returns, together with wealth statements,

from 1981-82 to 2001-02, in accordance with law. The said

record fully accounts for all income and wealth of Respondent

no.10 during the said period, as well as corresponding

payments of taxes due. Hence, the finding that income tax

returns have not been filed from 1981/82 to 2001/02, is

factually incorrect.

2. It is noteworthy that Respondent no.10 had already submitted

his complete record, including Income Tax Returns and

Wealth Statements, for both himself and his wife, for a period

spanning 22 years, from 1985 till 2007, to the National

Accountability Bureau (NAB) vide letters dated 16th December

2006, 22nd October 2007, and 16th December 2007, and again

vide letter dated 22nd September 2015 (Annex-B/1-4). NAB,

vide letter dated 6th September 2016 (Annex-C), confirmed

that it had investigated various allegations (which were

frivolous and politically motivated) against Respondent no.10,

including so-called “assets beyond known sources of income”,

and had found no evidence substantiating the said

allegations. The case was consequently closed on the

recommendation of the Regional Board NAB Lahore and the

Executive Board of NAB.

3. The NAB decision was also mentioned by Journalist, Mr. Ansar

Abbasi, in his news article dated 16th July 2016 (Annex-D), in

the following words: “a perfect case study of how the

politicised Bureau has been abusing its authority to blackmail

a high profile politician, who generally enjoys good reputation,

despite repeated recommendations from its own officials to

close the inquiry as nothing was ever found against the

accused” . The article further stated: “Official documents

reveal that more than seven times the allegations against

Ishaq Dar have been probed by different inquiry officers and

every time the recommendations remained the same- “Close

the case” . Mr. Abbasi concluded his article by stating that:

“The Lahore NAB report in Dar’s case was endorsed by both

the Operation Division and the Prosecution Division of the

Bureau, which led to its review by the EMB, which finally after

16 years decided to close the inquiry.”

4. On 3rd July, 2007 when Respondent no.10 appeared before

the Joint Investigation Team (JIT), he was informed by the

JIT that tax returns from FY 2003 to FY 2006-2007 and for

the period prior to FY 2001, have not been provided by FBR.

Respondent no.10 replied that he can provide his personal

copies of the tax returns for the years 2003 to 2007-2008 in

order to assist the investigation. That very day, i.e. 3rd July,

2017, Respondent no.10 traced the documents from his

personal record and sent the same to the JIT, which was

received by the JIT at 08:55 p.m. vide acknowledgement

receipt (Annex-E).

5. Respondent no.10 also informed JIT that he had already

directed FBR to ensure full cooperation with the JIT. He also

offered that, if the JIT were to formally complain to him in his

capacity as Minister of Finance and Revenue regarding nonprovision

of requisite data by FBR, he would take disciplinary

action against the concerned FBR officials.

6. Respondent no.10 further apprised JIT that according to his

information, his entire record uptil 2001-02 including income

tax / wealth statements, was taken into custody by NAB from

FBR in the period subsequent to the 1999 coup. This

statement is borne out by the fact that on Respondent no.10’s

direction, the very next day, i.e. 4th July 2017, FBR launched a

hectic search operation, as a result of which the old record

prior to 2002-03 was located with the NAB authorities. FBR

informed the JIT accordingly on 7th July (Annex-F), and the

record was retrieved from NAB and submitted to JIT on 8th

July, 2017, duly acknowledged by it (Annex-G). It may be

mentioned here that Respondent No. 10’s wealth tax returns

and wealth statements for the entire period were also

provided to JIT by FBR vide letters dated 30th May, 2017

(Annex-H), and 30th June, 2017 (Annex-I).

7. It is evident from the above that although the JIT could have

requisitioned the relevant record from NAB directly, (especially

since a representative of NAB is a member of the JIT), it was

retrieved from NAB by FBR and handed over to the JIT on 8th

July, 2017, before submission of its Final Report on 10th July,

2017. What is shocking is that the JIT has failed to mention in

its Report that the relevant record prior to 2002-03 had been

provided by FBR (and subsequent record for 2003 to 2007-08

had been provided by Respondent no.10 from his personal

record) during the course of investigation. On the contrary,

the JIT has recorded the adverse finding that the relevant

returns from 1981/82 to 2001/02 have not been filed. The

perverse conclusion that this is tax evasion is clear

evidence of mala fide, and an apparent attempt to

mislead this Hon’ble Court amounting to contempt.

Findings:

b. An exorbitant increase in his assets has been observed

since year 2008/09 for which source of funds / income

and details were not furnished despite repeated

requests / opportunities.

d. Respondent no.10 invested GBP 5.5 million in BARAQ

Holdings in UAE. Source of these funds was not

disclosed by him despite repeated requests. Out of

these funds, GBP 4.97 million were given by him to his

son. After year 2008, he started receiving funds and

payment of loans from his son which became a source

of his assets build up in Pakistan

Response:

8. The observation regarding “exorbitant” increase in assets was

never put to Respondent no.10 in writing or during his

appearance before the JIT and hence no question arises of

“repeated requests / opportunities” having been provided for

this purpose. Had he been asked, Respondent no.10 would

easily have explained the increase in assets since 2008/09, as

per details in para-9 below.

9. The facts are that at the end of tax year 2008, Respondent

no.10’s assets in Pakistan were worth Rs. 44,827,562.

Respondent no.10 was a non-resident for tax purposes in

Pakistan for tax years 2003 to 2008. During this period,

Respondent no.10 earned remuneration for professional

advisory services in the United Arab Emirates (UAE) as

Finance Advisor to H.H. Shaikh Nahayan Bin Mubarak Al

Nahayan. In this capacity, Respondent no.10 was the exofficio

President / CEO of BARAQ Holdings. Respondent

no.10’s resident status in UAE as Financial Adviser during this

period is mentioned in the ‘iqama’ on his passport (Annex-J).

During the period 2003-2005, a sum of GBP 8.2 million was

earned as remuneration for professional advisory services and

a sum of GBP 1.647 million was spent, which includes gift of

GBP 1.56 million to his son. Accordingly, Respondent no.10

had a closing foreign assets balance of GBP 6.553 million at

the end of 2005, of which GBP 5.5 million was accumulated

credit balance with BARAQ Holdings. It may be emphasized

that the said credit balance with BARAQ Holdings has been

misconstrued by the JIT as an investment, whereas the

correct position is that it was accumulated unpaid

remuneration for professional advisory services mentioned

above, and declared as such in his Statement of Assets and

Liabilities for year ended 30th June 2005 filed with the Election

Commission of Pakistan (Annex-K). Respondent no.10 was

not an investor in BARAQ Holdings, as intimated to the JIT

during the hearing on 3rd July 2017, but the ex-officio

President / CEO of the company. Hence, lawful income earned

abroad as a professional Financial Advisor was the source of

funds for this credit balance, which was duly declared in the

relevant Statement of Assets and Liabilities to the Election

Commission of Pakistan. Out of this credit balance,

Respondent No. 10 extended Qarz-e-Hasna/loan of

GBP 4.97 million to his son uptil the year ended 30th

June 2008, which was duly declared in the Statement

of Assets and Liabilities for year ended 30th June 2008

to the Election Commission of Pakistan (Annex-L).

10. As per section 11(6) of the Income Tax Ordinance, 2001,

Respondent No. 10 is not legally obligated to declare his

overseas income in his tax returns in Pakistan for the period

during which he was tax non-resident, i.e. FY 2003 to FY

2008. The said section of the Income tax Ordinance, 2001, is

reproduced below for convenience:

“The income of a non-resident person under a head of income

shall be computed by taking into account only amounts that

are Pakistan-source income.”

This legal position was explained by Respondent no.10

to the JIT on 3rd July, 2017 but was malafidely and

incorrectly recorded in his Statement as a refusal to

provide details of his remuneration as non-resident.

In fact, notwithstanding the legal position,

Respondent no.10 had already provided details /

documentary evidence of his overseas income and

wealth reconciliation for the non-resident period to

NAB vide letter dated 22nd October 2007 (Annex-B/2).

11. The earnings mentioned in para-9 resulted in increase of

foreign assets worth GBP 6.125 million by the end of tax year

2008. After the general elections in 2008, Respondent No.10

formally resigned as Financial Adviser / President-CEO of

BARAQ and took oath as Federal Minister on 31st March, 2008

in the PPP-PML(N) coalition government, which was formed

on the only condition that the judiciary, unconstitutionally

sacked by General Musharraf in November 2007, will be

restored within 30 days. (On the non-fulfilment of the

condition of restoration of judiciary, Respondent No. 10,

together with his other PML(N) colleagues, resigned as

Federal Minister on 13th May 2008). Consequently,

Respondent No. 10 became a tax-resident in Pakistan from FY

2008-2009 and onwards.

12. Section 11(5) of the Income tax Ordinance, 2001, reads as

follows:

“The income of a resident person under a head of income

shall be computed by taking into account amounts that are

Pakistan-source income and amounts that are foreign-source

income.”

In accordance with the above provision, overseas assets

worth Rs. 837.15 million (GBP 6.125 million) were merged

with local assets worth Rs. 44.83 million in the wealth

statement. After merging the overseas assets, and taking into

account both income and expenditure during the year,

including donations worth Rs. 50.3 million, net wealth at the

end of tax year 2009 was duly declared at Rs. 831.68 million.

In subsequent years, Respondent no.10 received annual

repayments of the Qarz-e-Hasna from his son, concluding with

repayment of the final installment in 2015. Copies of banking

transactions for repayments received by Respondent no.10

from his son during the period 2009-2015 are enclosed at

Annex-M/1-13. These repayments were invested by

Respondent no.10 in Pakistan Investment Bonds (PIBs),

National Investment Trust (NIT) units, and deposits with

banks. The lawful return on such investments / bank deposits

reconciles with the increase in income, which is duly taxed in

Pakistan, and the sources of increase in assets and income.

Details of income and wealth of Respondent no.10 for the

period 2009 – 2016 have been included in the Reconciliation

Statement at Annex-A(3). During the said period, and after

becoming tax resident, the net wealth of Respondent No. 10

of Rs. 881.98 million as on 30th June 2008 has reduced to Rs.

544.27 million as on 30th June 2016. In view of the above,

each and every income / asset of Respondent no.10

has been declared in accordance with law and is fully

supported by documentary evidence, which has always

been available with the concerned authorities.

Finding:

c. Analysis of financial details of his assets and record of

FBR reflects dichotomies on mis-declaration of assets

is tantamount, prima facie, to hiding of assets and tax

evasion.

Response:

13. As mentioned above, complete details have been given in the

declarations / tax returns and ECP returns, all of which are

duly reconciled / acknowledged in accordance with law. The

Statement of Reconciliation of income and wealth of

Respondent no.10 from 1983 to 2016 (Annex-A/1-3)

includes the period 2003-2008 when Respondent no.10 was

tax non-resident in Pakistan. As is evident from the said

Reconciliation Statement, there are no dichotomies,

mis-declaration of assets, or hiding of assets

whatsoever throughout the period of more than 34

years. Hence, there is no basis for the perverse finding

of tax evasion, which clearly reflects mala fide on the

part of the JIT.

Finding:

d. Respondent No. 10 gave substantial amount of funds

(Rs. 169.27 million) in Charity. Major chunk of charity

was given to his own organization and keeping the

funds within his own access. These donations were

mentioned in his personal expenses in his wealth

statements. Thus, availing tax exemption on these

hefty amounts is, prima facie, tantamount to tax

evasion.

Response:

14. Respondent No. 10 has never publicized details of his charity

donations, as he has firm belief that charities are given in the

way of Allah, and not for the sake of publicity. However, he

has now been compelled to provide these details in order to

address allegations levelled against him in the JIT Report.

15. A total amount of Rs. 169.27 million was donated to charity by

Respondent No. 10 from 2009 to 2016. Of this amount,

Hajveri Trust and Hajveri Foundation, established by

Respondent No. 10 in the name of Hazrat Data Ali Hajveri

Data Gunj Baksh, were donated Rs. 86.18 million. Financial

statements of Hajveri Trust and Hajveri Foundation, detailing

all the donations received from Respondent No. 10 as well as

the humanitarian activities carried out by them are at Annex-

N and Annex-O respectively. These financial statements are

independently audited annually as per legal requirements.

Hajveri Trust runs an orphanage which currently has 92

children. Hajveri Foundation pays for free dialysis of poor and

deserving patients, makes contributions to relief efforts after

national calamities, distributes ration in Ramzan to poor

families, arranges pool marriages for poor and deserving girls,

facilitates medical and educational assistance for the poor, and

provides assistance to other NGOs for public welfare.

16. In addition to Hajveri Trust and Hajveri Foundation,

Respondent No. 10 has also made donations to other

organizations, including the following:

i. In 2009, a sum of Rs. 50 million was donated to the CM

Punjab Relief Fund for IDPs of NWFP, which was utilized

for construction of 100-bed kidney hospital in Swat which

is operational and serving a large number of poor

patients. Previously, kidney patients of Malakand Division

had to travel to Peshawar and Islamabad for their dialysis

and treatment of kidney diseases.

ii. In 2009, a sum of Rs. 10 million was donated to the CM

Punjab Flood Relief Fund. Additional amount of Rs. 10

million was donated to this Fund in 2015.

17. It may again be emphasized that all donations have been

made from lawful and declared income, duly reflected in

wealth reconciliation statements, and disclosed in the

Statements of Assets and Liabilities filed with the Election

Commission of Pakistan in the respective years.

18. The aforementioned donations have also been duly reflected

in annual wealth reconciliation statements, including those for

the years 2012-2016. Therefore, the observation of JIT, in

para 12(d) on page 247 of the Report, that “donations

declared in ROPA of years 2012-16 were not declared in

wealth statement of said years” is factually incorrect.

19. There is no justification whatsoever for the JIT to jump to the

conclusion that Respondent No. 10 donated funds to Hajveri

Trust and Hajveri Foundation for the purpose of tax

exemption / tax evasion, without even consulting the financial

statements of these organizations, which would have shown

the very genuine expenditure incurred by them. It may be

noted that Respondent No.10 has never claimed any

tax exemption on these donations.

20. It is extremely regrettable and deplorable that

commendable philanthropic donations to registered

charitable organizations, benefitting the poor and

needy, should be termed as tax evasion. Again, mala

fide is self-evident. The allegation is false, unfounded

and malicious.

Finding:

f. Financial analysis of Respondent’s No.10 [sic] assets

and his available record of FBR reflects that Ishaq Dar

possesses, prima facie, ASSETS DISPROPORTIONATE

AND BEYOND KNOWN SOURCES OF MEANS.

Response:

21. From the above facts, it is conclusively established, beyond

shadow of doubt, that all assets and sources of income have

been duly declared in tax returns, wealth statements and

declarations to ECP for the relevant years, in accordance with

law. The Reconciliation Statement at Annex-A/1-3 is

irrefutable proof that annual income and expenditure

together with corresponding assets / wealth for 34

years till 30th June 2016 are fully substantiated. All

assets are supported / justified by declared and lawful

sources of means / income and there are no

dichotomies, mis-declaration of assets, or hiding of

assets or tax evasion, whatsoever.

22. Financial statements of Hajveri Trust and Hajveri Foundation,

detailing all donations received from Respondent no.10 as well

as humanitarian activities carried out by them, have also been

enclosed in order to dispel any doubts whatsoever with

regard to allegations of tax exemption / tax evasion

which have evidently been fabricated.

23. Income Tax Returns and Wealth Statements for

Respondent no. 10 and his wife, for a period spanning

23 years, from 1985 till 2007, have already been

investigated by NAB. The said investigation revealed

no irregularities of any kind and was closed by NAB.

24. In the light of the above, no question whatsoever

arises as to assets of Respondent no.10 being

“disproportionate and beyond his known sources of

means”. Indeed, the allegation is clearly false,

baseless and mala fide.

PRAYER:

In view of the above submissions, it is respectfully

prayed that the Findings of the J.I.T in its Final Report in respect

of Respondent no.10 may be summarily rejected and Respondent

No. 10 may be granted such other relief that this Honorable Court

deems appropriate in the circumstances of the case.

Drawn by

(DR. TARIQ HASSAN)

Advocate

Supreme Court of Pakistan

Filed by

(Arshad Ali Ch.)

Advocate-on-Record

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