FBR

Taxpayer Alleges Use of Repealed Provisions in Audit Proceedings

Taxpayer Alleges Use of Repealed Provisions in Audit Proceedings

A taxpayer in Lahore has alleged that the income tax department used repealed provisions of the law to carry out audit proceedings against him. The case arose when the taxpayer’s e-filed income tax return was treated as an assessment order due to late filing, leading to the selection of the taxpayer’s case for audit under a repealed provision of the law. Subsequently, a show-cause notice was issued to the taxpayer based on discrepancies found in the return and wealth statement.

The department defended its actions, asserting that the period covered under the repealed provisions of the law could be subject to scrutiny and that the powers under the repealed provisions were still available for use. However, the taxpayer contested this, citing a judgment by the Federal Tax Ombudsman and highlighting that no right could be accrued in favor of the department when the relevant provision of the law was no longer in effect. The relevant appellate forums favored the taxpayer against the department.

The taxpayer also emphasized that the legislature should have incorporated a saving clause or provision in the amending statute if it intended to preserve any inchoate right under a repealed provision.

This case underscores the complexities that can arise when audit proceedings are conducted under repealed provisions of the law and the implications for taxpayers and tax authorities.