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LHC orders FBR to inform taxpayers about parameters before selecting them for audit

LHC orders FBR to inform taxpayers about parameters before selecting them for audit

LAHORE: The Lahore High Court has passed the order that the Federal Board of Revenue (FBR) is bound to inform taxpayers about the parameters on the basis of which they are selected for audit.

Justice Abid Aziz Sheikh of Lahore High Court (LHC) heard petitions challenging the power of the FBR to keep the parameters confidential for being contrary to fundamental rights.

Once a person or classes of persons are selected for audit under section 214C of Income Tax Ordinance, 2001, they shall be informed about the particular risk parameter applied to them for selection of audit, if demanded by them for their information,” said a judgment announced by LHC.

Counsel for appellant Mohammad Ajmal Khan argued that the provision of subsection (1A) of section 214C of Income Tax Ordinance, 2001, which required the FBR to keep the parameters for selection of case for audit confidential was ultra vires of provision of Articles 4,8,10-A,19 and 19-A of the Constitution.

Added more, the decision of the board to keep the parameters for selection of audit confidential was also against the law settled by the high court.

Another counsel, Naveed A. Andrabi, argued that the impugned section did not specifically restrain the FBR after selection from disclosing the specific parameter on the basis of which the taxpayer persons or classes were selected for audit. He said the board had been misconstruing the provision.

Advocate Liaqat Ali Chaudhry on behalf of the FBR argued that mere selection for audit did not cause any actionable injury to taxpayers. He said guidelines for selection of audit were administrative in nature and meant only for internal consumption of tax authorities, therefore, no fundamental right of the petitioners had been infringed for not disclosing the guidelines.

On the other side, deputy attorney general representing the federation adopted the arguments of the FBR and also questioned the maintainability of the petitions.

Partially allowing the petitions, the judge declared that the impugned orders for not disclosing the specific parameters to petitioners for selection of their cases for audit were illegal and without lawful authority.

“The FBR is directed to inform the petitioners forthwith if requested by them, the specific parameters on the basis of which, their cases were selected for audit under section 214C of the Ordinance,” the judgement concluded.