KARACHI: Karachi Tax Bar Association (KTBA) on Tuesday urged the Federal Board of Revenue (FBR) to withdraw a notification issued allowing tax offices to complete audit related to past year.
In a letter to FBR Chairperson, the KTBA pointed out selection of audit through Section 214C of Income Tax Ordinance, 2001 and said that courts had ordered the tax authorities to complete audit of selected cases within the year for which year a case was selected.
The tax bar said that tax offices had intimated taxpayers that the audit wing of the FBR condoned the time limit for completing audit in 459 cases related to tax year 2014 up to June 30, 2020.
The tax bar pointed out that as per Audit Policy 2015 which governed audit cases selected for tax year 2014 had clearly mentioned: “the cases selected during a financial year would be disposed of during the same year.”
It is further stated that the audit policy 2015 was challenged in the Lahore High Court in 2017 and the court allowed the completion of audit time limit up to June 30, 2019. An intra court appeal was filed against the judgment, where a division bench extended the cut-off date to December 31, 2019.
The KTBA further highlighted a reported judgment Supreme Court of Pakistan in which the apex court observed: “… while an extension could be granted by the FBR for conducting and audit, the same should be supported by application of mind, appropriate reasoning and could not be granted casually, repeatedly or as a matter of routine.”
The tax bar said: “FBR has allowed the time period for completing the audit, all by itself, till June 30, 2020, through its latest circular … The extension, which has been issued completely on its own motion by the FBR, has been give to all the pending 459 cases audits of tax offices in Karachi.”
It said that the extension is in total contravention of the findings and directions of the Supreme Court, which laid down the principles.
It further said that extension granted in the 459 cases will open the floodgate of litigations against the State.
The KTBA said that the tax bar associations in the country should be taken into the folds before any decision of the sort are taken, which are prone to become contentious and consequently subject of litigation.