FAIRDEAL EXCHANGE COMPANY (PRIVATE) LIMITED vs FEDERATION OF PAKISTAN through Ministry of Finance Ss

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FAIRDEAL EXCHANGE COMPANY (PRIVATE) LIMITED VS FEDERATION OF PAKISTAN through Ministry of Finance Ss.120, 171(1), 177(1) & 214C---Constitution of Pakistan, Art.199---Constitutional petition---Audit Selection Regime---Petitioners / taxpayers were aggrieved of selection of their cases for Audit---Validity---Selection for audit under S. 177(1) of Income Tax Ordinance, 2001, by Commissioner Inland Revenue was not contingent on selection for audit by Board under S.214C of Income Tax Ordinance, 2001---Such was the position regardless of creeping erosion of deemed assessment status of a tax return under S.120 of Income Tax Ordinance, 2001---Audit could or could not lead to an amended assessment and audit report was subject to audi alteram partem and was to be issued only after obtaining taxpayers explanation---Another opportunity of hearing was to be afforded before amending assessment following the hearing on audit report---Audit selection notice under S.177 (1) of Income Tax Ordinance, 2001, must place reasons for selection and the reasons must be communicated to taxpayer---If reasons given for selection were manifestly inadequate, the notices would be set aside or remanded for the revenue to give proper reasons after hearing the tax payer---Law did not invariably require a two step progression to audit where proper reasons were given in audit-selection notice---Audit could proceed without an intermediate hearing and speaking order by Commissioner and preliminary audit was not required---Where audit-selection notice identified discrepancies between salary expense and withholding taxes deducted on salaries, incorrect proration of expenses, unexplained cash expenses and several others with discrepant numbers given where available, such reasons met the required standard---Constitutional petition was disposed of accordingly.

FAIRDEAL EXCHANGE COMPANY (PRIVATE) LIMITED vs FEDERATION OF PAKISTAN through Ministry of Finance Ss — 2023 PTD 919 ISLAMABAD

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