2.5. Providing evidence of record Under clause (a), (b) (c) (d) subsection 2 of section 114 of Income tax Ordinance 2001 has make it obligatory on every person and company regarding providing evidence of the records,

A return of income (a) shall be in the prescribed form; (b) shall state the information required by the form, including a declaration of the records kept by the taxpayer; (c) in the case of a person carrying on a business, shall include an income statement, balance sheet, and any other document as may be prescribed for the tax year; and (d) shall be signed by the person or the persons representative.

The validation of the details of any business transaction requires an ability to follow a similar audit trail as that which exists for conventional commerce. The following elements must therefore be present- access to the basic records related to a transaction must be available; and the integrity of those records must be authenticated.

Taxpayers are required to keep accurate books and records , which are subject to examination by the income tax authorities in order to verify the income and expenses reported on the taxpayer's return.

Although many taxpayers rely on computerized record keeping systems to a large extent, many transactions still originate as paper records which can be used to verify the accuracy of the electronic records.

However, for taxpayers engaged in the sale of electronic goods or services, no paper records are likely to be created because customer orders are placed and fulfilled electronically and therefore the only record that exists of these transactions could be an electronic one. As all users of computers know, this creates the possibility for tax evasion and fraud because computerized records can be altered without a trace.

The "digital notarization" has been introduced in much state. This system has been developed which are intended to make it possible to verify that electronic documents and records have not been altered.

Public key encryption scientific technique also permits a taxpayer to encrypt his financial records to prevent their examination on audit for evasion of taxation . It would seem that this should be treated no differently from failing to keep or destroying e-records because it is possible to alter or destroy it within fraction of time.

Even taxpayers engaged in the sale of physical, as opposed to electronic, goods may soon receive orders and issue invoices electronically. Electronic "documents" must be verifiable by scientific legal authorities in order to minimize the potential for tax evasion.

3 Getting extrinsic aid in statutory construction The following extrinsic aid can assist us to erection of the legislative construction. 7.3.1. Existing provisions of tax returns

There is no existing tax provision for the tax compliance of e-business of every person and company whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year ; Like income tax returns similar tax provision are available in sale tax and also in central excise duties

3.2 Defining evidential parameters I have deal at length in chapter on records, how we can maintain record and production of record can be placed before the court for adjudication of taxes disputes. I recommend that such a review should be undertaken at the same time as the review of return filing obligations.

I also consider that if record-keeping requirements are increased, taxpayers should receive some education on the necessity for those requirements. To help in this matter, that is also noted that it would be eminently worthwhile to encourage taxpayers on their own initiative to maintain e-record relevant information considered by them in adopting a particular tax position.

7.4. Proposals for legislative construction I recommends that section 114 of income tax ordinance 2001 and section 26 of sale tax act 1990, which states that taxpayers must disclose to the Commissioner in a timely and useful way all information required to be disclosed under the tax laws, should be amended to identify the different categories of required disclosures: information specifically required by statute, information required by the department in a prescribed form, and information requested by the department from specific taxpayers.

Generally, apart from required disclosures, taxpayers are not obliged to disclose information, but anything that is disclosed must not be misleading. Sanctions may be imposed for deliberately misleading disclosures, and taxpayers open themselves up to the risk that a deliberately misleading disclosure could suggest tax evasion on their part.

Intent to evade may also be inferred from a failure to disclose relevant information regarding e-commerce transaction to the tax authorities. The risk also arises that defaults of this nature may preclude the application of a time bar. 7.4.1. E- filing of tax returns No online e-filing of the tax return has yet been introduced in Pakistan.

This modern device are used to encourage e-filing of tax returns in other words online tax returns but there are many problems are associated with e-filing of the tax returns. The electronic filing of the tax returns provide room for unauthorized users and unknown person filing of tax returns and attachment of documents as evidence often create more problems instead of increasing tax compliance turn over of the taxpayers.

Even for required disclosures, some real issues arise, including the way in which the obligations to disclose are affected by e-filing procedures, and the use of e-filing under self-assessment.