Law: Income Tax Ordinance, 2001

Section: 120,120(1A),121,122,122(1),122(5),122(2) ,122(9),127,174,177(1),177(4),177(9),214 C

Law: Federal Excise Act, 2005

Section: 46

Law: Federal Board of Revenue Act, 2007

Section: 7

Law: Sales Tax Act, 1990

Section: 25,25(1),25(2)

Section: 177(1) - Sales Tax Act, 1990, Section: 25 - Federal Excise Act. 2005, Section: 46 - Audit - Selectionfor audit by Board - Notices for the purpose of audit - Whether such notices have been issued withoutlawful authority and in breach of provisions of law - Question for determinationFACTSThe fundamental question involved in these petitions relates to the statutory prerequisites for exercise of authority by the Commissioner to conduct an audit under section 177(1) of the Income Tax Ordinance, 2001 (�Ordinance of 2001�), and sections 25 and 46 of the Sales Tax Act, 1990 (�Sales Tax Act�) and the Federal Excise Act, 2005 (�Federal Excise Act�), respectively. The additional question raised in some of the petitions is whether the Commissioner is vested with authority section 177(1) of the Ordinance of 2001 to select a taxpayer for audit independent of any selection by the Federal Board of Revenue (FBR) under section 214C of the Ordinance of 2001, even though it was conceded that the said question has been decided by a larger bench of this Court in Pakistan Telecommunication Company Ltd. Vs Federation of Pakistan (2016 PTD 1484). A further question that arises in view of the arguments made on behalf of FBR is whether the petitions are maintainable in view of the fact that selection for audit does not cause an actionable injury.ARGUMENTSMr. Hyder Ali Khan, learned counsel for the petitioners in Writ Petitions No. 1499 to 1507 and 1600 to 1606 of 2021 took the Court through the case Taw in relation to audit over various time-periods in view of amendments introduced within the Ordinance of 2001.He submitted that FBR was vested with the authority under section 214C of the Ordinance of 2001 to select a person for audit in compliance with requirements of such section, and such audit could be random or parametric. But that FBR had not undertaken such exercise and instead issued directions to Commissioners in order to force the exercise of discretion by the Commissioners under section 177(1) of the Ordinance of 2001 in an unlawful manner.He further contended that section 25(1) 25(2) of the Sales Tax Act provide for a two step-process for selection of…