‘No electronic selection of tax cases for audit during FY2021-22 by FBR’

LAHORE: The Federal Board of Revenue (FBR) had not selected tax cases for audit electronically during the fiscal year 2021-22 as it had opened up so many cases through verbal instructions that there was not electronic selection for audit purposes, said sources.

They said the Board had failed to carry out audit exercise in the spirit of law prescribed in section 214C of the Income Tax Ordinance, 72B of Sales Tax Act and 42B of federal excise duty.

Accordingly, there was no audit policy announced for the outgoing fiscal year, said the sources. They said the Board had opened up so many cases through verbal instructions that it had factually carried out audit of five years in five months.

They said cases of taxpayers were being examined on merit earlier and most of them were cleared if no major legal contravention was found. They said the Board was seeking daily, weekly and monthly reports of fake demands from the field formations on a regular basis.

As a result, said the sources, the overworked mid-career officers in the field formations of Inland preferring to opt for foreign missions job keeping in view the stress out of workload in the Board against low allowances and salaries. Majority of the mid-career officers are facing stress as the Board keeps exerting pressure through setting unrealistic targets for them.

They said majority of the mid-career officers are wildly involved in conducting tax audits of taxpayers to meet targets. They said creating fake demands has become a norm of the day, most of which are challenged and turned down by the courts.

Accordingly, they said, the officers carry out desk audits while relying on the tools available within the system to create fake tax demands. So much so, they beg tax consultants and chartered accountants of taxpayers for letting them impose tax demands and get them strike off by the courts.

It may be noted that the Advisory Committee of Federal Tax Ombudsman (FTO) had also objected to the practice of creating fake demands to collect taxes coercively by the field formations of FBR. The objection was raised by the business coordinators and advisors in the Advisory Committee of FTO in a meeting on budget proposals.

The committee included presidents of chambers of commerce and industry, chairman of export-oriented associations and tax consultants. Representatives from the business associations registered their protest over the creation of extra tax demands by the field formations against their members as and when they resist to the imposition of unfair tax liability. They urged the FTO to make part the wrongdoings of tax officials to their annual confidential reports (ACRs) in order to check the practice of raising undue tax demands to coerce taxpayers.

However, a change of guard in the Federal Board of Revenue (FBR) has led to an end to the culture of creating excessive tax demands against specific sectors, brining a sigh of relief to the officers in all the field formations, said sources.

It may be noted that the FBR, under the former chairman Dr Muhammad Ashfaq Ahmed, had started issuing instructions/directions to the chief commissioners in the field formations for sector-wise selection of cases for audit purposes. These sectors included oil & marketing companies (OMCs), edible oil manufacturers, auto industry, aerated water manufacturers, beverages, traders of electronics, cement and housing societies.

Copyright Business Recorder, 2022