LAHORE: A cable manufacturer has challenged automatic selection of his case for audit, saying that the audit provisions could only be invoked by the department after going through various statutory filters set out in various circulars issued by the Federal Board of Revenue.

As per details, the taxpayer failed to file his return within the date required. On the last date of filing, he filed an application for extension of time. The concerned tax authority did not respond to said request and preferred to serve notices for automatic selection of his case for audit.

The taxpayer maintained that the Commissioner could only invoke provisions of law related to automatic selection of his case for audit if he had extended the period for filing the return (subject to a thirty day condition) and the return was not filed within such extended period.

According to him, the Commissioner never took any action on the application, which was otherwise properly filed for extension. He said the law requires from the tax authority to grant the extension in writing as no relevant provision of the law could be invoked against him unless the Commissioner has given his refusal for extension in writing.

Also, he stressed that his application for extension should be taken as pending on account of inaction on the part of the Commissioner, or a failure to reject or refuse the application in any manner other than writing. He added that there could be no refusal or denial of extension by implication or a deemed basis.

The taxpayer maintained that until the application for extension was actually disposed of by an order in writing, his case could not be selected automatically for audit.

He further said that the condition of 30 days would have to apply not from the due date for the filing of the return, but the date of the order made by the Commissioner granting an extension.

Copyright Business Recorder, 2024