ISLAMABAD: The Federal Board of Revenue (FBR) has barred all Inland Revenue field formations from recklessly issuing notices under the Income Tax Ordinance, 2001 for amendment of income tax assessments of taxpayers in the name of audit or 'definite information' without fulfilling the legal requirements.

In this regard, the FBR has issued strict instructions to the Chief Commissioners of the IR field formations regarding amendment proceedings under section 122 (5) of Income Tax Ordinance, 2001.

Tax experts told Business Recorder that the FBR should strictly monitor such cases in the field formations and take necessary action against the tax officials, who violate these instructions. Merely issuance of such instructions would not help the taxpayers. The definition information means that the true particulars of the income has been concealed or mis-declared. There are many case laws in courts on the concept of the 'definite information' and therefore the FBR should develop some monitoring mechanism to avoid issuance of such kinds of notices in future, they added.

According to the FBR's directive, the representations have been received in the Board suggesting that field officers are recklessly issuing notices u/s 122(5) read with 122(9) of Income Tax Ordinance, 2001 (hereinafter "the Ordinance") where purportedly the threshold of "definite information" as defined u/s 122(8) is not met.

The FBR said that it goes without saying that amendment proceedings u/s 122(5) of the Ordinance, merely on the basis of audit suspicion picked from within the declarations lodged by the taxpayers themselves, is an enforcement travesty and need to abate. The scheme of law warrants that a taxpayer must be dealt with precisely as per principles of justice and fairplay.

The FBR has further directed to state that adherence to law and due diligence must be ensured in respect of each taxpayer and no case be opened merely on surmises and assumptions. All taxpayers must be provided adequate opportunity of being heard, too, FBR added.

Copyright Business Recorder, 2021