"\u003chtml xmlns:o=\"urn:schemas-microsoft-com:office:office\"\r\nxmlns:w=\"urn:schemas-microsoft-com:office:word\"\r\nxmlns=\"http://www.w3.org/TR/REC-html40\"\u003e\r\n\r\n\u003chead\u003e\r\n\u003cmeta http-equiv=Content-Type content=\"text/html; charset=windows-1252\"\u003e\r\n\u003cmeta name=ProgId content=Word.Document\u003e\r\n\u003cmeta name=Generator content=\"Microsoft Word 11\"\u003e\r\n\u003cmeta name=Originator content=\"Microsoft Word 11\"\u003e\r\n\u003clink rel=File-List href=\"2017J19_files/filelist.xml\"\u003e\r\n\u003ctitle\u003ePARAMETRIC SELECTION FOR AUDIT WITHOUT\u003c/title\u003e\r\n\u003c!--[if gte mso 9]\u003e\u003cxml\u003e\r\n \u003co:DocumentProperties\u003e\r\n  \u003co:Author\u003eMuhammad Adil Hafeez\u003c/o:Author\u003e\r\n  \u003co:Template\u003eNormal\u003c/o:Template\u003e\r\n  \u003co:LastAuthor\u003eMuhammad Adil Hafeez\u003c/o:LastAuthor\u003e\r\n  \u003co:Revision\u003e2\u003c/o:Revision\u003e\r\n  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@page\r\n\t{mso-page-border-surround-header:no;\r\n\tmso-page-border-surround-footer:no;}\r\n@page Section1\r\n\t{size:8.5in 11.0in;\r\n\tmargin:1.0in 1.25in 1.0in 1.25in;\r\n\tmso-header-margin:.5in;\r\n\tmso-footer-margin:.5in;\r\n\tmso-paper-source:0;}\r\ndiv.Section1\r\n\t{page:Section1;}\r\n--\u003e\r\n\u003c/style\u003e\r\n\u003c!--[if gte mso 10]\u003e\r\n\u003cstyle\u003e\r\n /* Style Definitions */\r\n table.MsoNormalTable\r\n\t{mso-style-name:\"Table Normal\";\r\n\tmso-tstyle-rowband-size:0;\r\n\tmso-tstyle-colband-size:0;\r\n\tmso-style-noshow:yes;\r\n\tmso-style-parent:\"\";\r\n\tmso-padding-alt:0in 5.4pt 0in 5.4pt;\r\n\tmso-para-margin:0in;\r\n\tmso-para-margin-bottom:.0001pt;\r\n\tmso-pagination:widow-orphan;\r\n\tfont-size:10.0pt;\r\n\tfont-family:\"Times New Roman\";\r\n\tmso-ansi-language:#0400;\r\n\tmso-fareast-language:#0400;\r\n\tmso-bidi-language:#0400;}\r\n\u003c/style\u003e\r\n\u003c![endif]--\u003e\r\n\u003c/head\u003e\r\n\r\n\u003cbody lang=EN-US style=\u0027tab-interval:.5in;text-justify-trim:punctuation\u0027\u003e\r\n\r\n\u003cdiv class=Section1\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003ePARAMETRIC\r\nSELECTION FOR AUDIT WITHOUT\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eDISCLOSING\r\nPARAMETERS\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eBy\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eSayyid\r\nAli Imran Rizvi,\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eAdvocate\r\nSupreme Court\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eNecessity of audit into a Tax-payer\u0027s income tax/sales\r\ntax/ F.E.D. affairs arises out of the fact that all the Tax-payers do not\r\nreturn their income truly, and some of them do file untrue particulars of their\r\nincome. The ratio of such untrue declarations is the same, as is the ratio of\r\ncrime in our society. As all the citizens of a country cannot be said to be\r\ncriminals because some of some them commit crimes, likewise all the Tax-payers\r\ncannot be said to be tax-dodgers and liable to be treated as criminals. As an\r\naccused is a favourite child of law and he is punished only if his case\r\nsquarely falls within a particular provision of Penal Code, likewise a\r\nTax-payer guilty of tax fraud cannot be condemned merely on suspicions, and he\r\ncannot be taxed until and unless the income sought to be evaded squarely falls\r\nwithin a taxing provision.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eWe do subscribe to the necessity of audit in case of\r\nuntrue declarations of income, but we do agitate against the notion prevailing\r\namong the tax collectors that all the Tax-payers are the tax-dodgers, and they\r\nhave unquestionable discretionary powers to pick any of them for audit, and the\r\nperson arbitrarily picked up for audit has no right to agitate against his\r\nselection for audit, as the selection for audit does not cause any prejudice to\r\nthe Tax-payer.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eWhile making selection for audit for the Tax Year 2015\r\nunder section 214-C of the Income Tax Ordinance, 2001, the F.B.R. gave a policy\r\nstatement in the Audit Policy, 2016 that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;For the audit purposes, the selection of cases\r\nin the past was mostly through random ballot. The \u0027Audit Policy 2016\u0027 has\r\nproposed a paradigm shift from the past. Its focus has been realigned from\r\nrandom to parametric selection and from general to risk based approach.\u0026quot;\r\n(at p. 2 of the Policy)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ebut\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ewhen the learned Commissioners Inland Revenue\r\nintimating selection of the cases for audit on the basis of PARAMETERS were\r\nrequested to disclose the PARAMETERS on the basis of which cases of the\r\ntax-payers were selected, they have come forward with a reply that--\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(1)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003ethe\r\nPARAMETERS are embodied in the Audit Policy, 2016; and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(2)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003esubsection\r\n(1A) of section 214-C of the Income Tax Ordinance, 2001 provides that the\r\nPARAMETERS would be kept confidential.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eWhen one lays it hands to the Audit Policy 2016, it is\r\nfound that there are no PARAMETERS for selection of cases for audit in the\r\nAudit Policy, 2016 for the Tax Year 2015 available on the F.B.R.\u0027s website,\r\nwhich renders a tax-payer totally ignorant of the bases of selection of his\r\ncase for audit,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ewhereas\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003ethe Audit Policy 2016\r\nclearly declares that the selection has been made on the basis of some\r\nPARAMETERS,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ebut\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003ewhat they are, is not\r\nknown.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eThe learned C.I.Rs. have relied on subsection (1A) of\r\nsection 214-C of the Income Tax Ordinance, 2001 for refusing to disclose\r\nPARAMETERS for selection of the cases for audit,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ewhich\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eis un-constitutional,\r\nhence, illegal and without lawful authority for the\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eR E A S\r\nO N S\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(1)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003ethat\r\nArticle 19-A of the Constitution of the Islamic Republic of Pakistan, 1973\r\nreproduced hereunder:--\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cb\u003e\u0026quot;19-A Right to information.---\u003c/b\u003eEvery\r\ncitizen shall have the right to have access to information in all matters of\r\npublic importance subject to regulation and reasonable restrictions imposed by\r\nlaw.\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003erecognises a fundamental\r\nright of this Tax-payer, being a citizen of Pakistan, to have access to the\r\ninformation in all matters of public importance.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eSelection of cases of the Taxpayers to the extent of 7.5%\r\nof the total return-filers is a \u0026quot;matter of public importance\u0026quot;, hence,\r\nthe Tax-payers whose cases have been selected for the Tax Year 2015 do have a\r\nright to know the bases of selection of their cases for audit, when the Audit\r\nPolicy, 2016 specifically says that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;For the audit purposes, the selection of cases in\r\nthe past was mostly through random ballot. The \u0027Audit Policy, 2016\u0027 has\r\nproposed a paradigm shift from the past. Its focus has been realigned from\r\nrandom to parametric selection and from general to risk based approach.\u0026quot;\r\n(at p. 2 of the Policy)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(2)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat Section\r\n24-A of the General Clauses Act, 1897 provides that \u0026quot;Where, by or under\r\nany enactment, a power to make any order or give direction is conferred on any\r\nauthority, office or person, such power shall be exercised reasonably, fairly,\r\njustly and for the advancement of the purpose of the enactment,\u0026quot; and the\r\nauthority making any order shall give reasons for making the order.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eEven prior to insertion of section 24-A in the General\r\nClauses Act, 1897, the hon\u0027ble Supreme Court of Pakistan has always deprecated\r\nsummary disposal of a lis by passing purfunctory and unreasoned orders.\r\nReliance is placed on: PLD 1970 SC 173 wherein the hon\u0027ble apex Court held as\r\nunder:-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;If a summary order of rejection can be made in\r\nsuch terms, there is no reason why a similar order of acceptance saying:\r\n\u0026quot;there is considerable substance in the petition which is accepted\u0026quot;,\r\nshould not be equally blessed.\u0026quot; (at p. 175)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIn another case reported in PLD 1970 SC 158, the hon\u0027ble\r\nSupreme Court held as under:--\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;Such an order, we regret to say, does not\r\ndisclose a proper application of the mind of the High Court to the merits of\r\nthe case that was before it.\u0026quot; (at p. 161)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eFollowing the above law and dicta, the Hon\u0027ble Lahore\r\nHigh Court and other High Courts have also been laying great stress upon\r\nrecording of reasons for an order. Some of the cases are referred to\r\nhereunder:-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;text-indent:\r\n.5in;mso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003e\u003cspan\r\nstyle=\u0027mso-spacerun:yes\u0027\u003e \u003c/span\u003e(a)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e       \u003c/span\u003e\u003cu\u003e2005\r\nMLD 1844\u003c/u\u003e\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;Under law, every Court or authority dispensing\r\njudicial or quasi-judicial functions is required to give reasons in support of\r\nits decisions/orders, especially when those deprive someone of his vested\r\nrights\u0026quot;. (at p. 1853)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;text-indent:\r\n.5in;mso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003e(b)\u003cspan\r\nstyle=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003e\u003cu\u003e2005 YLR 1719\u003co:p\u003e\u003c/o:p\u003e\u003c/u\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;It is pertinent to mention here that Courts\r\ninsisted upon disclosure of reason in support of order on the following\r\nreasons:-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;(A) The party aggrieved has the opportunity to\r\ndemonstrate before the appellate, or revisional Court that reasons which\r\npersuaded the authority to reject his case were erroneous;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(B) The obligation to record reasons operates as a\r\ndeterrent against possible arbitrary action by executive authority invested\r\nwith judicial power; and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(C) It gives satisfaction to the party against whom\r\nthe order is made.\u0026quot; (at p. 1723)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eDespite all the above ordains of law,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cb\u003ethe F.B.R. has arbitrarily resorted to make the\r\nimpugned selection without any reason whatsoever,\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ewhich is\r\nutterly against\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ethe Federal\r\nBoard of Revenue\u0027s own\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003eLetter C.\r\nNo. 6(8) Rev. Bud/2008,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003edated\r\n22.07.2008\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ewherein the Board has laid great stress on giving\r\njustified reasons for selection, as, according to the Board, unjustified\r\nreasons for selection \u0027not only defeats the spirit of Universal Self Assessment\r\nScheme, rather affects negatively on the reforms agenda of the F.B.R.\u0027 \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIn view of this, the F.B.R. decided that \u0027the officer\r\nwould henceforth explain the justification for selection of cases\u0027. \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eThe F.B.R. could have very conveniently convey the\r\nreasons of committing the Petitioner/Tax-payer\u0027s case for audit, and after\r\nobtaining the tax-payer\u0027s reply could have made a better decision as to whether\r\naudit into the tax affairs of the Tax-payer was warranted or not.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eOut-right selection of a case for audit not only shows\r\nthe arbitrariness of the decision, but also it makes the selection for audit\r\nunreasonable, unfair, unjust, unlawful and mala fide. Selection for audit in\r\nsuch a manner has been deprecated by the higher judicial fora.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(3)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\nSection 3 of the Freedom of Information Ordinance, 2002 mandates that \u0027no\r\nrequester shall be denied access to any official record\u0027.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(4)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\na learned D.B. of the hon\u0027ble Lahore High Court has held in I.C.A. No.\r\n116/2013, dated 23.05.2013 reported in 2013 PTD 1274 that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;21. ..... Audit Policy is a serious matter and\r\naffects a large number of taxpayers in the country. Such a policy must be open,\r\nlucid, transparent and self explanatory. We find it odd that the Audit Policy\r\nfor the Tax Year 2011 is in the shape of Minutes of the Meeting of the FBR\u0027s\r\nBoard-in-Council and has not been formalized into a policy document and\r\nuploaded as such on the website of the FBR.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e22. FBR shall ensure that in future, the Audit Policy\r\ncarrying the risk parameters and the mode and manner of segregation through\r\nrisk analysis for the purposes of parametric balloting is clearly laid out in a\r\npolicy document. This will help avoid litigation and will also allay the\r\napprehensions of the taxpayers which stem from lack of openness and\r\nclarity.\u0026quot;,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ebut\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003econtrary to the above crystal-clear directions of the\r\nhon\u0027ble Lahore High Court, Lahore, the F.B.R. did not make public any Audit\r\nPolicy for the Tax Year 2015 prior to the impugned selection of cases for\r\naudit,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ewhich\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003enot only amounts to blatant contempt of Court, but\r\nalso manifests the height of maladministration, arbitrariness, and\r\ndisrespect/dis-loyalty to the law and Constitution on the part of the F.B.R.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(5)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\nthe giving of reasons is one of the fundamentals of good administration. The\r\ncondition to record reasons introduces clarity and excludes arbitrariness and\r\nsatisfies the party concerned against whom order is passed. To provide a\r\nsafeguard against the arbitrary exercise of power by the public functionaries\r\nthe condition of recording reasons is imposed on them after addition of section\r\n24-A in the General Clauses Act. If the statute requires recording of reasons,\r\nit becomes a statutory requirement, and there is no scope for further inquiry.\r\nBut even when statute does not impose such an obligation, it is necessary for\r\nquasi judicial authority to record reasons, as it is the only visible safeguard\r\nagainst the possible injustice and arbitrariness and affords protection to the\r\nperson who is adversely affected. The reasons are the links between materials on\r\nwhich certain conclusions are based and actual conclusions. They disclose how\r\nthe mind was applied to the subject-matter for a decision, whether it is purely\r\nadministrative or quasi-judicial. They should reveal rational nexus between the\r\nfacts considered and conclusions reached. Only in this way can opinions or\r\ndecisions recorded be shown to be manifestly just and reasonable. Courts insist\r\nupon disclosure of reasons in support of order on the following grounds:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ea) The party aggrieved has the opportunity to demonstrate\r\nbefore the appellate, or revisional Court that the reasons which persuaded the\r\nauthority to reject his case are erroneous;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eb) The obligation to record reasons operate as a\r\ndeterrent against possible arbitrary action by executive authority invested\r\nwith judicial power; and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003e(c) It gives satisfaction to the party against whom the\r\norder is made.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(6)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\nthe rule requiring reasons to be given in support of order is, like principle\r\nof audi alteram partem - a basic principle of natural justice, which must be\r\nobserved in its proper spirit and mere pretence of compliance with it would not\r\nsatisfy the requirement of law. State functionaries are expected to act fairly\r\nand justly in a manner which should not give to any one any cause of complaint\r\non account of discriminatory treatment or otherwise.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eOutright selection of a case through parametric\r\nballot without assigning any reason whatsoever is, thus, in blatant\r\ntransgression of the principle of audi alteram partem, infraction whereof\r\nrenders the impugned action void ab initio, illegal, and without lawful\r\nauthority, as held by the hon\u0027ble Supreme Court of Pakistan in the following\r\ncases:-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(a) PLD 2008 SC 663; (b) 2007 SCMR 330; (c) 2005 SCMR\r\n678; (d) 2005 SCMR 1814; and (e) PLD 2004 SC 441.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(7)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\nif the learned Commissioner\u0027s logic is accepted, the F.B.R. would be equipped\r\nwith unfettered discretionary powers to select any case for audit without any\r\nrhym or reason, which is against the hon\u0027ble Supreme Court\u0027s verdict in 1997\r\nSCMR 1804. Relevant excerpt is reproduced hereunder:-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;The general principles that discretionary\r\ndecisions should be made according to the rational reasons means; (a) that\r\nthere be findings of primary facts based on good evidence, and (b) that\r\ndecisions about the fact be made for reasons which serve the purposes of the\r\nstatute in an intelligible and reasonable manner   The actions which do not\r\nmeet these threshold requirements are arbitrary, and may be considered a misuse\r\nof powers.\u0026quot; [at p. 1810]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;Wherever wide-worded powers conferring discretion\r\nexist, there remains always the need to structure the discretion  . The\r\nstructuring of discretion only means regularizing it, organizing it, producing\r\norder in it, so that decision will achieve the high quality of justice. The\r\nseven instruments that are most useful in the structuring of discretionary\r\npower are open plans, open policy statement, open rules, open findings, open\r\nreasons, open precedents and fair informal procedure. Somehow the wide-worded\r\nconferment of discretionary powers or reservation of discretion, without\r\nframing rules to regulate its exercise, has been taken to be an enhancement of\r\nthe power and it gives that impression in the first instance but where the\r\nauthorities fail to rationalize it and regulate it by rules, or policy statements\r\nof precedents, the courts have to intervene more often than is necessary, apart\r\nfrom the exercise of such power appearing arbitrary and capricious at\r\ntimes.\u0026quot; [at p. 1810]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThe above-enunciated principle of law has to be\r\nadhered to in letter and spirit by the F.B.R. while making selection of a\r\nperson or class of persons for audit, as it is the command of Article 4 read\r\nwith Articles 189, 190 and 201 of the Constitution of the Islamic Republic of\r\nPakistan, 1973, and any deviation from the law laid down by the hon\u0027ble Supreme\r\nCourt of Pakistan renders the impugned action void ab initio, illegal and\r\nwithout lawful authority.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSelection of cases for audit through parametric\r\nballot without any reasons is, thus, void ab intio, illegal and without lawful\r\nauthority.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(8)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\neven if the selection for audit through parametric ballot is presumed to be an\r\nexecutive order, it too could not be made without valid reasons.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIt has been held in the case reported as 2005 CLD 126\r\nthat \u0027public functionaries are obliged to pass the order even on the executive\r\nside with reasons\u0027.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eAnother judgment reported as 2003 YLR 2736 says that\r\n\u0027an order not containing any reasons and passed without proper application of\r\nmind is not sustainable in the eyes of law\u0027.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIn PLD 2010 Lah. 230, it has been laid down as under:--\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;44   the Ministry of Interior never applied its\r\nmind before placing the name of the petitioner on the ECL as the impugned order\r\nis a result of dictation from the Finance Division/State Bank of Pakistan.\r\nDiscretion exercised under dictation, without reasons, based on irrelevant\r\nfacts is not lawful exercise of discretion and therefore placing the name of\r\nthe petitioner on the ECL in the present case shows that he has not been dealt\r\nwith in accordance with law as provided in Articles 4 and 9 of the\r\nConstitution. Not to furnish reason for the decision violates the principle of\r\nfairness, procedural propriety and natural justice besides section 24-A of the\r\nGeneral Clauses Act, 1897. The impugned Memorandum fails to meet the requirement\r\nof procedural due process.\u0026quot;.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThere is no concept of \u0026quot;unfettered\r\ndiscretion\u0026quot; in the laws of this Land, and arbitrary exercise of\r\ndiscretionary power has to be struck down by the Courts as held in 1999 MLD\r\n3001.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(9)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThat\r\nselection of a case on the basis of unknown PARAMETERS smacks arbitrariness,\r\nwhich makes the selection under section 214-C of the Income Tax Ordinance, 2001\r\nclearly discriminatory and oppressive adversely affecting the liberty and\r\nproperty of the Tax-payers selected for audit, whereas other similarly situated\r\nTax-payers have been spared.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIt has been held in 2001 SCMR 256 that discretion\r\nbecomes an act of discrimination when it is improper or capricious exercise or\r\nabuse of discretionary authority and the person against whom that discretion is\r\nexercised faces certain appreciable disadvantages which he would not have faced\r\notherwise.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIn another case reported in 1999 SCMR 467, the\r\nhon\u0027ble Supreme Court held that the Government is not supposed to discriminate\r\nbetween the citizens and its functionaries cannot be allowed to exercise\r\ndiscretion at their whims, sweet-will or as they please, rather they are bound\r\nto act justly.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eImproper, capricious exercise or abuse of\r\ndiscretionary authority is subject to judicial review. [Ref. 1992 CLC 219]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(10)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e      \u003c/span\u003eThat\r\nthe selection for audit on the basis of unknown PARAMETERS is mala fide. It has\r\nbeen instituted in order to nullify the higher Judicial Fora\u0027s decisions on the\r\nparametric selection for audit,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ewhich\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003erequired that the Audit Policy should, not only \u0027be\r\nopen, lucid, transparent and self-explanatory\u0027, but also it was made clear in\r\n2013 PTD 1274 that---\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;22. FBR shall ensure that in future, the Audit\r\nPolicy carrying the risk of parameters and the mode and manner of segregation\r\nthrough risk analaysis for the purposes of parametric balloting is clearly laid\r\nout in a policy document. This will help avoid litigation and will also allay\r\nthe apprehensions of the taxpayers which stem from lack of openness and\r\nclarity. It is clarified that we have not gone into the neutrality or the\r\nfairness of the individual risk parameters framed by the FBR as it was not\r\nchallenged before us and can be looked into in some other case.\u0026quot;.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ebut\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003einstead of doing the needful, the F.B.R. has resorted\r\nto a blind and arbitrary mode of selection, which spells out the malicious\r\nintent of the F.B.R.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIn this way, not only the Tax-payers have been\r\nsubjected to a process of audit without pointing out any fault on their part,\r\nbut also the Courts of law have been debarred from making judicial review of\r\nthe selection for audit.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eWhen malice is manifest on the face of an action, it\r\nbecomes illegal and untenable, howsoever solemn it is.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(11) That the hon\u0027ble Lahore High Court, Lahore has\r\nunequivocally laid down in W.P. No. 5083/2015 that an Audit Policy cannot\r\nprovide for selection without reasons. Relevant excerpt is reproduced\r\nhereunder:-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;5.....Needless to say that any such Policy must\r\nbe based on reason besides being fair, transparent, just and equitable.\u0027. (at\r\np. 4 of the Judgment),\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003ehence,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ethe selection for audit without any rhym or reason is\r\nliable to be set at naught, being un-constitutional, illegal and without lawful\r\nauthority.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(12) That it is worth-mentioning that the hon\u0027ble\r\nLahore High Court has found the impugned method of selection faulty in W.P. No.\r\n30253/2014, as \u0027some small tax-payers are selected for audit and potential\r\ncases are skipped\u0027.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThe learned Judge also expressed his concern in that\r\ncase that \u0027the Board it appears, is unable to evolve an undisputed and transparent\r\npolicy for selection of cases for audit on parametric basis\u0027.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eAfter expressing the above concern, the learned Judge\r\nobserved that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e*\u003cspan style=\u0027mso-tab-count:1\u0027\u003e          \u003c/span\u003e\u0026quot;Nevertheless,\r\npower of FBR to select for audit is not unbridled, the discretion has to be\r\nexercised justly, fairly and in transparent manner. The Apex Court in\r\nGovernment of NWFP through Secretary and 3 others v. Majee Flour Mills\r\n(Private) Limited (1997 SCMR 1804), while following its earlier decision in\r\nAmanullah Khan and others v. The Federal Government of Pakistan through\r\nSecretary, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092), has\r\nreiterated the doctrine of \u0026quot;structuring the discretion\u0026quot;.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e*\u003cspan style=\u0027mso-tab-count:1\u0027\u003e          \u003c/span\u003e\u0026quot;Needless\r\nto say that FBR is bound to structure the discretion vested in it under section\r\n214C of the Ordinance and under parallel provision of Sales Tax Act, 1990 and\r\nFederal Excise Act, 2005. Federal Government, so far, has not been able to\r\nframe Rules to regulate FBR\u0027s discretion and FBR has not given any procedure. A\r\ntaxpayer, selected for audit is left on the mercy of an unskilled audit officer\r\nfor conducting audit. I am constraint to observe that FBR\u0027s tax year based\r\nselection for audit is tainted with an intention to achieve budgetary targets,\r\ntherefore, is creating panic amongst the tax-payers, who are rushing to Courts\r\nafter their selection. One of the reasons for challenging each case of\r\nselection under audit appears that department has not come out of the mind set\r\nof assessment under the Repealed Ordinance of 1979. After selection of\r\ntaxpayers, the additions are made on gross-profit and parallel cases basis.\r\nEven estimations are made, which are alien to the new concept of amending\r\nassessment under Ordinance of 2001.\u0026quot;.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e*\u003cspan style=\u0027mso-tab-count:1\u0027\u003e          \u003c/span\u003e\u0026quot;  As\r\nordained by Hon\u0027ble Supreme Court, in the referred cases, FBR needs to frame Rules,\r\nkeeping in view the doctrine of \u0026quot;structuring the discretion\u0026quot;. If FBR\r\nfails to rationalize and regulate powers of selecting and conducting audit\r\nthrough Rules, the Courts might intervene more often than is necessary to undo\r\nan exercise of power, appearing arbitrary and capricious at times.\u0026quot;.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eAdhering to the above findings of the hon\u0027ble Lahore\r\nHigh Court, Lahore, the F.B.R. could not make selection of cases on the basis\r\nof PARAMETERS kept confidential even from the Tax-payers whose cases have been\r\nselected for audit.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(13)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e      \u003c/span\u003eFixation\r\nof a percentage of 7.5% of the total return-filers in itself is a negation of\r\nany PARAMETERS.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIf any PARAMETERS would have been formulated, the\r\nsaid percentage could not have been fixed. All the taxpayers, irrespective of\r\ntheir number, if hit by the PARAMETERS ought to have been selected for audit.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSelecting some of the Tax-payers falling within the\r\nfixed percentage of 7.5% and sparing the rest is not only against Article 25 of\r\nthe Constitution, but also it is a mockery of fair trial and due process\r\nguaranteed by Article 10-A of the Constitution.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(14)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e      \u003c/span\u003eF.B.R.\u0027s\r\nshyness to disclose the PARAMETERS smacks arbitrariness, malice and\r\nunreasonableness of the undisclosed PARAMETERS.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eHad the alleged PARAMETERS been fair, neutral,\r\nreasonable and just, there would have been no rationale behind their\r\nnon-disclosure at least to a tax-payer whose case has been selected for audit.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThis mode of selection for audit is not countenanced\r\nby any provision of the Income Tax Ordinance, 2001, that\u0027s why, it has created\r\na hue and cry among the selectees, and the F.B.R. is again facing writs against\r\nthis audit, wherein the hon\u0027ble High Courts would stay the audit proceedings,\r\nand the Department would again be helpless in generating anymore revenue from\r\nthe audit of cases selected through the PARAMETRIC ballot. None else, except\r\nthe policy-makers of the F.B.R., can be accused for this sorrow state of\r\naffairs, as they come forward with half-baked, rather totally raw and\r\nill-based, policies, which fail to stand the test of judicial scrutiny, and are\r\nset at naught by the judicial fora.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIf the big guns of F.B.R. pay heed to the case-law\r\nbeing developed on the issue, and associate eminent tax practitioners in policy\r\nmaking, there will be little chance of facing any adverse situation like the\r\none which the F.B.R. has been facing since the Assessment Year 2002-03.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThough the military rule in our country has come to\r\nan end, and our statesmen are trying to make us believe that we are now living\r\nas a democratic nation, yet we, instead of reaping the fruits of democracy, are\r\nstill prone to face the despotic decisions of democratic rulers.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eEverybody knows that democracy means government of\r\nthe people, by the people, for the people. We should now be having every right\r\nto ask our rulers to eliminate the autocratic trends from the income tax law in\r\nvogue, and bring it in harmony with the norms of Islamic democracy where every\r\ncitizen has an inherent right to challenge the decisions of the rulers\r\nadversely affecting the citizens.\u003c/p\u003e\r\n\r\n\u003c/div\u003e\r\n\r\n\u003c/body\u003e\r\n\r\n\u003c/html\u003e\r\n"