Achieving budgetary target: FBR begins manual selection of cases for audit

In a clear violation of Section 214C of Income Tax Ordinance, 2001, the Federal Board of Revenue (FBR) has manually started selecting cases for tax year 2010 and 2011 for audit to achieve its budgetary target. According to sources, the board instead of exploring new venues to generate substantial revenue to achieve its budgetary target has adopted stereotype approach for the purpose.
They said the exercises of collecting advance payments and holding of tax refunds have been started practising in Large Taxpayers Units (LTUs) and Regional Tax Offices (RTOs). Besides all above, the board, which is not supposed to allow LTUs and RTOs to start manual selection of cases for audit after the insertion of Section 214C of Income Tax Ordinance, 2001, has granted permission to the LTUs and RTOs to select cases manually for tax year 2010 and 2011 for audit.
Resultantly, the LTUs and RTOs have started manual selection of cases and are issuing audit notices under Section 214C of the Ordinance, dragging the taxpayers in the state of hysteria, they maintained. When contacted, Munawwar H. Shaikh confirmed that the Karachi Tax Bar Association (KTBA) has received immense complaints from its members in this regard.
He said although the KTBA has addressed the said issue through its letter dated February 17, 2012, the issue is still alive and the commissioners from RTOs and LTUs are selecting cases tax year 2010 and 2011 for audit. Moreover, he said that after insertion of Section 214C through the Finance Act, 2010, the FBR is the only authority to select cases for audit of income tax affairs of persons or classes of persons through computer ballot, which could be either random or parametric.
Simultaneously, the legislature made appropriate amendments in Section 177 and Section 120(1A) of the Ordinance, respectively. Munawwar said the board in exercise of the Section 214C has already conducted the computer ballot for the tax year 2010. In similar circumstances in the tax year 2008, the notices issued under Section 177 of the Ordinance, 2001 were withdrawn by the board.
Keeping all these in view, KTBA has recommended to the Chairman FBR Mumtaz Haider Rizvi to direct all RTOs and LTUs to withdraw the cases manually selected for audit prior to the computer balloting as it is unfair to proceed the cases, which have been selected manually in the presence of computer balloting, he maintained.