Law: Income Tax Ordinance, 2001

Section: 177,214C

Law: Federal Excise Act, 2005

Section: 42B

Law: Sales Tax Act, 1990

Section: 72B

Income Tax Ordinance (XLIX of 2001)- -Ss. 214C & 177- Sales Tax Act (VII of 1990), S. 72B-Federal Excise Act (VII of 2005), S. 42B-Federal Board of Revenue Taxpayers* Audit Policy, 2016-Audit of taxpayers-Random parametric selection of taxpayers for audit-Parameters for computer balloting be clearly defined-Petitioner (taxpayer) impugned notices for selection for audit under Department's Taxpayers' Audit Policy, 2016, on the ground that same was done without defining proper parameters- Validity-Essential requirement for validity of random selection for audit was that risk parameters should be laid down and clearly defined along with audit policy by the Department and such risk parameters should form basis for parametric selection-In the present case, no risk parameters were provided by Department which would give unbridled and unstructured powers to the officers of the Department-Mere framing of Audit Policy was insufficient until it was supported by clearly defined risk parameters on basis of which computer ballot was to be held for selecting cases for audit, and Taxpayers' Audit Policy, 2016 was lacking in the same-Notices for selection for audit of the petitioner were set aside, however the High Court refrained from declaring the Taxpayers' Audit Policy, 2016 as unconstitutional with the observation that the same should not be implemented until risk parameters were clearly defined-Constitutional petition was allowed, accordingly. Messrs Ittefaq Rice Mills v. Federation of Pakistan and others 2013 YLR 1274; Premier Industries Chemical Manufacturing Co. v. Commissioner Inland Revenue and others 2013 PTD 398 and Defence Housing Authority v. Commissioner Inland Revenue and others 2015 PTD 2538 rel. THIS JUDGMENT DELIVERED BY: SHAHID KARIM, JUSTICE:---.--- This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 challenges the Tax Payers Audit Policy, 2016 (Audit Policy, 2016) which as a preamble has the following statement "Since 2001 voluntarily compliance has been the primary focus of Federal Board of Revenue (FBR). FBR has always trusted taxpayers for their declaration. In order to promote tax culture and compliance many…

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