KARACHI: The Federal Board of Revenue (FBR) has directed the tax offices to stop the proceedings of audit cases, which were selected in violation of the audit policy. “The field units have been instructed to keep the proceedings in abeyance in the cases till a decision is taken by the board in this behalf,” a FBR letter sent to the Karachi Tax Bar Association (KTBA) on Tuesday. The letter has raised the issue of wrong selection of cases for audit for the tax year 2013. The letter informed Syed Wasim Hashmi, president of the KTBA, the matter of selection of cases for the audit in violation of the Audit Policy, 2014 was under consideration of the board. The KTBA in its letter, which was sent in December 2014, had said the revenue authority had selected cases for audit through random computerised balloting, which were excluded in the approved Tax Audit Policy for the tax year 2013. The FBR Board-in-Council had approved the Tax Audit Policy 2014 for the tax year 2013 in September 2014. “As per the policy decision of the Board-in-Council, certain classes of taxpayers were to be excluded from the selection of cases for the audit through random computerised ballot,” according to the KTBA. Hashmi said under the approved policy, the FBR had no authority to include the cases for the audit for selection through random balloting, which included cases under the Final Tax Regime (FTR) and taxable income only from salary. In the non-corporate returns, the revenue authority has also agreed not to select cases qualifying for immunity under Section 214C of the Income Tax Ordinance, 2001 under the “Prime Minister’s Tax Incentive Scheme” issued through SRO 1040 (I) / 2013, dated December 5, 2013 along with the FBR’s Circular No 15 of 2013. It was an approved policy that cases already taken up for the audit under Section 177 of the Income Tax Ordinance, 2001 for the tax year 2013 whether finalised or pending for assessment would not be selected, besides the cases already selected for the audit through random computerised balloting for the tax year 2012, whether under process or finalised, would also be exempted from selection. It was also approved where no business conducted for the tax year 2013, besides income only from house property and income from share association of persons would not be selected for the audit, as well. The approved policy also applied the similar provisions for not selecting the cases in corporate cases. The tax bar said when the computer balloting took place for selecting the cases for audit, through errors and flaws in PRAL data base, the cases that were to be excluded from the selection for audit as per the policy decision of the Board-in-Council wrongly got selected for the audit. The KTBA had urged the FBR to authorise chief commissioners of respective Large Taxpayers Units (LTUs) and Regional Tax Offices (RTOs) to exclude such cases from the audit and drop the audit proceedings.
