‘Misuse’ of Sec 122(5A) of IT Ord: PTBA urges FBR to stop field forces from issuing notices

ISLAMABAD: The Pakistan Tax Bar Association (PTBA) has asked the Federal Board of Revenue (FBR) chairman to stop field formations from issuing notices by blatant misuse of section 122(5A) of the Income Tax Ordinance.

The PTBA has also cautioned the FBR chairman that if the FBR chairman cannot stop the overabundance of notices issued under section 122(5A) of the Ordinance, it will enhance the trust deficit of the tax filer and jeopardise the actual potential of the Pakistan tax system.

In this regard, the PTBA has written a letter to the FBR chairman.

The PTBA understands the situation of the economy in general and the tax system in particular and we are conscious that in Pakistan the number of tax filers is very low and not up to the potential of Pakistan’s economy. However, the tax filers are being squeezed under different provisions of the Ordinance, which includes but is not limited to Section 122(5A) of the Ordinance.

We and our member bars have time and again been highlighting that the tax machinery is invoking Section 122(5A) of the Ordinance on the drop of a pin without considering the conditions stipulated in the said Section whereby the legislature has clearly intended that wherever any notice under Section 122(5A) of the Ordinance to be issued it has to be issued when the return is erroneous and prejudicial to the interest of revenue.

The PTBA stated that the notice under section 122(5A) of the Ordinance is vehemently being issued even after the clear directions of the FBR and the Apex Courts who have decided a number of cases and held that the two conditions need to co-exist i.e. one of it being erroneous and the other of it being prejudicial to the interest of revenue.

The legislature was conscious of the compliance burden on the tax filers, therefore, they have made the amendment under the audit proceedings that once the tax payer’s audit has been conducted the taxpayer will not be selected for audit for four years. But the naked sword of Section 122(5A) of the Ordinance is always hanging on the taxpayer and the department is misusing blatantly under the nose of the FBR.

The overabundance of notices issued under Section 122(5A) of the Ordinance subsides the relief provided by the legislature by limiting the selection of cases for audit under the provision of the Ordinance. Every year the tax filer has to comply with the notices under Section 122(5A) of the Ordinance which increases the cost of doing business and creates hardship for the tax filer.

In view of the above submission, the PTBA strongly urged the FBR to direct its field force not to misuse section 122(5A) against the clear scheme of invoking the said Section and if the FBR chairman cannot stop the same, it will enhance the trust deficit of the tax filer and jeopardise the actual potential of the Pakistan tax system, the PTBA added.

Copyright Business Recorder, 2024