LAHORE – Lahore High Court on Thursday declared unconstitutional theFederal Board of Revenue (FBR) powers under 1A of section 214C of IncomeTax Ordinance 2001 to keep confidential the parameters under which thetaxpayers are selected for their audit selections.
The court also set aside all the notices issued under sub-section 1A ofsection 214c to the various taxpayers selected for audit also denying theiraccess to from parameters under which they are selected for audit.
Justice Abid Aziz Sheikh partially allowed all the writ petitions moved bythe taxpayers challenging the 1A of section 214C of Income Tax Ordinance2001 by interpreting that sub-section 1A of section 241C is a violation ofArticle 10-A and 19-A of the constitution of Pakistan which guarantees theright of fair trail of every citizen and provision of every information.
Muhammad Ajmal Khan Advocate, counsel of a tax payer ‘happy manufacturing’,argued that impugned provision of section 214C(1A) of the Ordinance, whichrequired the Board to keep the parameters for selection of case for auditconfidential is ultra vires of provision of Articles 4,8,10-A,19 and 19-Aof the Constitution. He remarked that decision of Board to keep theparameters for selection of audit confidential is also against the lawsettled by the court. He further argued all the laws includingQanoon-e-Shahadat Ordinance in the country allows the accused persons toknow that charge on them, but only Income Tax Ordinance denies theinformation under which the tax payers are being trailed.
“How can a taxpayer defend himself and queries raised before him during theprocess of audit when parameters and reasons will not be disclosed to him”?Advocate Khan concluded.
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Naveed A. Andrabi, Advocate for some another petitioners submitted thatprovision of section 214C(1A) does not specifically restrain the Boardafter selection, from disclosing the specific parameter on the basis ofwhich, the petitioners are selected for audit and therefore, Board ismis-constructing the impugned provision of section 214C(1A).
He added that impugned provision is violative of petitioner’s fundamentalright of fair trial and due process guaranteed under Article 10-A of theConstitution and even petitioner’s right of business under Article 18 ofthe Constitution has been infringed as petitioners have unnecessarily beeninvolved in giving details of their accounts, during audit without anyspecific allegation.
FBR Counsels opposed the petitions by arguing that mere selection for auditdoes not cause any actionable injury to tax payers. Submits that guidelinesfor selection of audit are administrative in nature and meant only forinternal consumption of tax authorities, therefore, no fundamental right ofpetitioners has been infringed for not disclosing said guidelines.
