The computerised random ballot for tax year 2013 of the Federal Board of Revenue (FBR) has wrongly selected cases of salaried individuals, property income and share income from Association of Persons (AOPs) in contradiction of Audit Policy, 2014.
It was learnt on Wednesday that the violations of the Audit Policy has been officially conveyed by Chief Commissioner Regional Tax Office, Faisalabad to the FBR during the visit of former Member Taxpayers Audit Haroon Muhammad Khan Tareen to RTO Faisalabad to review progress on disposal of audit cases pertaining to tax years 2008 to 2012 and discuss strategy for disposal of audit cases of tax year 2013.
RTO Faisalabad officers pointed out that the selection of cases of Salaried Individual, property income and share income from AOP for Audit is in contradiction of Audit Policy, 2014. The matter may be looked into at Board's level. RTO Faisalabad said the cases of PTR Income should also be excluded from selection for audit, Chief Commissioner Regional Tax Office, Faisalabad added.
When contacted a tax expert said that Board-in-Council of the Federal Board of Revenue (FBR) had approved certain categories of cases which were exempted from random computerised ballot for selection of cases for audit for tax year 2013 (income tax) /tax period July 1, 2012 to June 30, 2013 (sales tax/FED) for audit. Within the category of Income Tax Non-Corporate Returns, exclusions included cases falling under the Final Tax Regime (FTR), taxable income only from salary, all cases qualifying for immunity from audit under section 214C under "Prime Minister's Tax Incentive Scheme" under SRO 1040 (I)/ 2013 dated 5th December, 2013 read with Board's circular number 15 of 2013, taxable income only from house property, taxable income only from share from Association of Persons (AOPs), all cases already taken up for audit u/s 177 of the Income Tax Ordinance, 2001 for tax year 2013 whether finalised or pending for assessment, all cases already selected for audit through computer random ballot for tax year 2012 whether under process or finalised, all cases where no business is stated to have been conducted for tax year 2013, he added.
Meanwhile, during the meeting at RTO Faisalabad it was discussed that the expeditious liquidation of pending audit cases relating to tax year 2012 as directed by the Board. The meeting also discussed the disposal of cases pertaining to Tax Year 2013 as per guidelines of the Board circulated vide Audit Policy, 2014.
Tax authorities emphasised speedy disposal of cases, especially those related to Tax Year 2013, and directed that quality of assessment should not be compromised while finalising the cases. Moreover, authorities directed the Audit Officers to refrain from unnecessary requisitioning of documents, especially in cases where revenue potential was not very high. The Chief Commissioner IR and Commissioners apprised the Board that standardised parameters for disposal of cases pertaining to different sectors and classes of persons will be devised and disseminated among all Audit Officers for speedy disposal of cases in a consistent manner.
The Audit Officers highlighted that it was difficult to meet the timeliness for disposal of cases in view of large number of cases selected for Tax Year 2013. Besides, following specific issues/problems came up for discussion: With available strength of 12 Audit Officers and thin support staff, processing of 6778 cases selected for Audit for Tax Year/Tax Period 2013 as well as pendency of previous years is a difficult task.
It generally takes 10 to 15 minutes for entry of letter/notice/orders per case in TAMS. Therefore, there is urgent need to make TAMS more efficient and "user friendly". After issuance of intimation letter/IDR, minimum time of 15 days is to be allowed for compliance. In case of non-compliance/response, at least 03 notices have to be given before issuance of final show cause notices. This causes delay in finalisation of the cases as per given timeliness.
It was pointed out that as per check list multiple documents are to be requisitioned from the taxpayer, which causes delay in finalization of the cases as the taxpayers are unwilling to comply with. Where no definite information is available, an institutional mechanism should be devised for disposal through mutual agreement with the taxpayer to realise some quantum of revenue.
Tax authorities assured that due consideration will be given to the points raised in the discussion. They also promised special reward for efficient, judicious and pro-revenue assessments in audit cases, Chief Commissioner Regional Tax Office, Faisalabad added.
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