Tax notices issued in time-barred cases

The income tax department has issued notices to a number of registered persons in time-barred cases, involving frivolous demands. Sources told Business Recorder here on Wednesday that the Income Tax Bar Association (ITBA) has issued a letter to the Federal Board of Revenue (FBR) highlighting issues relating to audit objections raised by the income tax department in time-barred cases.
According to sources, the audit department and internal inspection department of the FBR have raised income tax demands in cases where 5 years have passed. In such cases, most of the demands have been raised in time-barred cases where legally demands could not be raised against the taxpayers. Moreover, the tax department has created demands in old income tax cases which could not be reopened under the law.
In a letter to the FBR, ITBA informed the tax authorities that various complaints have been received by the Bar from members regarding notices issued by the Income Tax Department in respect of audit paras. In this connection, the ITBA has observed that the Income Tax Department is issuing audit paras even in the time-barred cases, which is purely a futile exercise.
Moreover, the taxation officers are even passing orders with huge demand in the said cases, which cannot meet the criteria for the test of appeal. It is further understood that it is creating unnecessary burden for compliance to the taxpayers, which is not statutory requirement under the Income Tax Ordinance 2001.
Therefore, the ITBA has suggested that the audit paras should not be issued in time-barred cases, which not only facilitates the taxpayers but also restrict the department from creating unreasonable, uncalled for and frivolous demands. The FBR should issue directions to the field offices to avoid raising such demands in time-barred cases to facilitate the taxpayers, ITBA added.