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LAHORE: A Readymade Garment (RMG) chain store could not prove misuse of authority by Commissioner Inland Revenue Service (IRS) for entering and accessing premises unlawfully, said sources.

However, the department kept stressing that the action was taken in line with provisions of income tax law initiated after continuous obstruction to the audit proceedings by the taxpayer on one or the other pretext.

According to details, the department had served a notice upon the chain store for providing documents required for audit of monthly return under the sales tax law. But the taxpayer, instead of providing the required documents, preferred to file objections before the competent authority.

The competent authority found no weight in objections filed by the taxpayer and upheld the demand notice requiring production of documents required for audit. The taxpayer kept ignoring follow up notices, which led to recovery proceedings and the Commissioner Inland Revenue issued an authorization letter to the field staff for gaining access to premises of taxpayer and recover the relevant documents. The taxpayer challenged the authorization letter, alleging a hidden and collateral purpose of entering the premises under the pretext of recovering the documents.

The controversy led to litigation between the taxpayer and the department where the departmental representative stated that there was no hidden or collateral purpose for gaining access to premises except facilitation and expeditious conclusion of the ongoing audit proceedings.

The appellate forum held after thorough inquiry that the Commissioner had authorized entry and access to premises in wake of failure to comply with provisions of law and the authorization letter contained reasoning and causes leading to invocation of authority.

Therefore, no illegality was found with regard to the exercise of jurisdiction by the Commissioner Inland Revenue Service. It was further maintained that no bias, mala fide, or misuse of authority could be established by the taxpayer, who was unable to cooperate with the tax authorities for the finalization of audit proceedings.

Copyright Business Recorder, 2024

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