Lahore High Court (LHC) has granted stay order against the selection of cases for audit by the Commissioners Inland Revenue under section 177 of the Income Tax Ordinance, 2001 after the addition of explanation to section 177 and 214 C of the Ordinance, 2001 by Finance Act, 2013. Sources told Business Recorder on Saturday it has been contended that despite the addition of the explanation by the FBR still the law does not permit the commissioner to select the case for audit as the power to do so still rests with the board.
The case has been pleaded by the Naved A Andrabi Advocate Supreme Court on the behalf of the petitioner and LHC has granted interim relief to the taxpayer. The counsel for the petitioner contends that petitioner's case for Tax Year 2012 for audit has been selected u/s 177 of the Income Tax Ordinance, 2001. As per the law laid down by the court in ChenOne Stores Ltd. vs. The Federal Board of Revenue etc. (2012) 106 Tax 109 (H.C. Lah), the power of selection for audit u/s 214-C read with section 177 of the Ordinance rests with the FBR and the commissioner can only conduct audit but not selection of audit. Contends that said judgement of this Court holds field and is a good precedent.
He further contends that even the explanation added in section 177 on 01.07.2013 does not specifically mention that the powers of selection have been vested with the respondent No.1 and even otherwise, the said explanation added on 01.07.2013 cannot be applied retrospectively to the case of petitioner for tax year 2012, Naved Andrabi added.
It has also been argued that under section 177 of the Ordinance, 2001 and section 214(c) of the Income Tax Ordinance, 2001 as amended through Finance Act 2013, the powers to select an assessee's case for audit vests in the FBR. The Commissioners Inland Revenue has no power to select an assessee's case for audit. LHC has issued notices to the department who will file their report and para-wise comments before the next date of hearing.
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