The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to revisit its assessment of Income Tax returns of Zeenat Drug Agency Narowal as its audit was not conducted as per law.
“Invoke revisionary jurisdiction under Section 122A of the Ordinance to revisit the assessment made under Section 122(4) of the Ordinance, as per law; and submit compliance report within 30 days.” The FTO directed the FBR.
According to FTO findings, the audit of a return not formally selected by the competent authority is contrary to law and tantamount to maladministration under Section 2(3) of the FTO Ordinance.
The protracted delay in finalization of audit was also tantamount to maladministration, it added. According to details, Muhammad Umer Farooq, Proprietor Zeenat Drug Agency Katchery Road Narowal had made complaint against illegal assessment under section 122(4) of the Income Tax Ordinance 2001 (the Ordinance) in FTO on 10 August 2012.
The Complainant’s income tax Return for Tax Year 2007 was selected for audit by the Commissioner IR, Audit Division, RTO, Sialkot, vide letter No.1223 dated 27.06.2008. The Complainant revised the Return for Tax Year 2007 twice, however, the assessing officer continued with the original audit proceedings, as if no revision of Return had taken place.
The audit was concluded on 28.06.2012, after a lapse of 4 odd years and the complainant’s total Income for Tax Year 2007 was determined at Rs3,657,737 as against declared Rs272,513 and an additional tax liability of Rs914,434 was raised. The Complainant assailed the treatment accorded by the department as harsh, illegal, oppressive and whimsical and took strong exception to the conduct of audit with reference to the original Return, ignoring the revised returns.
He said that when the revised Returns were admitted by the department and taken on record, for the audit proceedings to continue legally a fresh audit selection order was required to be made after each revision. The complainant has also pointed out that stay against arbitrary selection of his return was granted by the LHC but the department continued the audit proceedings after expiry of six months on the ground that this being a revenue matter stay could continue only for a six-month period. The complainant further drew the attention to the fact that the department having accepted declared turnover and gross profit as per the second revised return was not justified to make arbitrary additions in the manner done by the assessing officer.
