Taxpayer claims audit proceedings conducted under repealed provisions

LAHORE: A taxpayer has alleged the income tax department to have used repealed provisions of the law to carry out audit proceedings against him.

According to details, a taxpayer had e-filed income tax return that was treated as assessment order by the department. However, owing to the late filing thereof, the taxpayer’s case was selected for audit under an already repealed provision of the law. Later, on account of certain discrepancies found in the return and wealth statement, a show-cause notice was issued to the taxpayer.

The department had carried out audit proceedings against the taxpayer on the stance the period covered under the repealed provisions of the law can be brought under scrutiny. It further stressed that it was not justified to assume that the powers under the repealed provisions of the law were not available to use after their omission from the Act.

It may be noted that the relevant provision of the law used to authorize the tax authorities to automatically select for audit if the return is not filed within the date it is required to be filed.

However, the taxpayer contested that the aforesaid provision of the law has been omitted, therefore, the audit power is not available to be exercised by the tax officers subsequent to the omission. He also referred to a judgment by the Federal Tax Ombudsman wherein the Commissioner Inland Revenue was directed to withdraw the audit proceedings regarding late filing of return and a review petition by the department was also rejected by the President of Pakistan.

He said that no right can be accrued in favour of the department at the time of issuance of notice when the relevant provision of the law was no more in the field. However, the situation might have been different if any such notice was issued prior to the omission of the relevant provision from the Act.

The taxpayer also maintained that the legislature might have incorporated a saving clause or provision in the amending statute had it intended to preserve any inchoate right under a repealed provision. The relevant appellate forums favoured the taxpayer against the department.

Copyright Business Recorder, 2024