FBR empowered for closure of automatic audit selection

ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to conclude cases which were automatic selected for audit.

The recently promulgated Tax Laws (Second Amendment) Ordinance, 2019 empowered the FBR to issue procedure to conclude cases that were automatically selected for audit.

In its commentary, PwC A F Ferguson Chartered Accountants said that through the Finance Act, 2015, Section 214D was inserted in the Income Tax Ordinance, 2001 which enabled the FBR to automatically select a taxpayer (other than persons registered as retailers under Sales Tax Special Procedures Rules 2007) under section 177 of the Ordinance if:

— Complete return of income is not filed within the due date; and

— Tax payable as per return is not paid.

The above-referred section allowing automatic selection for tax audit was deleted through the Finance Act, 2018.

To enable closure of tax audits already initiated under section 214D for prior years, a new section 214E was inserted through the Finance Supplementary (Amendment) Act, 2018 enabling FBR to close the audit proceedings (initiated under omitted section 214D) after payment of certain amount of tax / penalty by due date.

For those cases of audit selection which are not yet closed, necessary amendment has been made in section 214E so as to enable the FBR to prescribe the procedure for conclusion of such audits (including empowering FBR to accept the income declared by taxpayer subject to such conditions as may be prescribed by FBR).

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