Lahore High Court on Friday declared parametric selection of corporate and non-corporate cases for audit by the Federal Board of Revenue (FBR) as illegal - not sticking to provisions of the law. It is learnt that Lahore High Court Friday issued an order on a writ filed by Syed Naved Andrabi Advocate Supreme Court declaring the selection of cases for audit as illegal and not under the relevant provisions of the tax laws.
Justice Syed Mansoor Ali Shah while allowing the petition held that the objective criteria in shape of parameters for the selection of a case have to be laid down independently under three different laws for selection through computer balloting under section 214C of the Income Tax Ordinance, 2001; u/s 72B of the Sales Tax Act, 1990 and u/s 46B of the Federal Excise Act, 2005. The parameters must be made public before the selection of cases. It was also held that the independent parameters under the three laws are to be fed in separately for selection through computer balloting. No person can be selected for composite audit on the basis of criteria under another law. A person can be selected in Income Tax only on the basis of criteria laid down under Income Tax law and balloting held only under the said law.
LHC also held that the powers of the Board to select are to be applied strictly in accordance with the law and it can neither be delegated nor assumed to have been exercised without following the due process as laid down in the respective laws and especially the Federal Board of Revenue Act, 2007. It was also held that after the selection of the case for audit the Commissioner concerned shall inform the taxpayer as on what basis his case has been selected for audit under Income Tax or Sales tax or Federal Excise Act or all the three laws. The LHC further held that the FBR may initiate fresh selection strictly in accordance with law and following the statutory provisions of the relevant laws, sources added.