LHC Issues Guidelines For Audit Selection Of Taxpayers

LHC issues guidelines for audit selection of taxpayers

LAHORE, Feb 2 (Pakistan Point News - APP - 02nd Feb, 2017 ) : The Lahore High Court allowing 828- petitions challenging Federal Board of Revenue's (FBR) Audit Policy 2015 issued guidelines for selection of tax payers. A detailed 46-pages judgement in this regard was issued by Justice Shahid Jamil Khan here on Thursday. In his judgement, the court asked the federal Board of Revenue to incorporate guidelines in audit policy 2015 and future policies.

The court held: " A taxpayer selected and audited in preceding tax year/period shall not be selected and audited without giving reasons for such selection. FBR shall enhance its capacity to audit a selected taxpayer for last five years to give respite from consecutive selections". The court observed that audit, being administrative proceedings, should complete on issuance of Audit Report." If audit is not completed within the given time frame, the selection shall be deemed to have been dropped.

After issuance of Audit Report; adjudication proceedings shall be carried out by some other taxation officer to satisfy command of the Constitution under Article 10A", it added. The court further held that after selection for audit, any demand for increase in payable tax to drop audit proceedings was not only against the spirit of audit but in violation of the provisions relating to audit under the Federal Taxing Statutes as well. Earlier, the petitioners, Nestle Pakistan and others, had submitted before the court that the FBR had issued notices to the petitioners for sales tax, federal excise duty and income tax audit after selecting them through random computer ballot.

They contended that the selection had not been made as per directions of the court. They said that the LHC had already ordered the FBR to form rules for selection first and then initiate selection process. But the board made the selection without forming rules, they added. They further pointed out that many individuals including salaried persons were not included in the balloting process which was a violation of Article 27 of the Constitution.

They pleaded the court to declare selection of the petitioners for audit invalid. However, FBR's counsel Barrister Asjad Saeed opposed the request and submitted that the court asked the board to form rules for selection, if it was considered necessary. He said that instead of forming rules, the board introduced the policy as it was easy to amend a policy than the rules in case of any shortcoming. He further said that the petitioners also failed to point out any discrimination in the selection process.He pleaded the court to dismiss all petitions.