CIVIL QUARTERS ROAD, SHEIKHUPURA vs CENTRAL BOARD OF REVENUE
This matter concerns a tax-related dispute between the petitioner, Civil Quarters Road, Sheikhupura, and the respondent, Central Board of Revenue, regarding the selection of cases for audit. The core legal question involved the procedural validity of audit selection notices issued by the revenue authorities. The Lahore High Court, noting that the issues raised were identical to those previously adjudicated by the Supreme Court of Pakistan in Civil Petitions 1962 to 2205 of 2005, disposed of the petition in accordance with the Supreme Court's earlier directions. The Court held that the revenue authorities must issue fresh notices to the respondents under the relevant statutory provisions, specifically disclosing the criteria and reasons for selecting their cases for audit. Furthermore, the Court established that in cases where returns have been revised and payments made by the assessee in accordance with the specified circulars or relevant legal arrangements, no further action shall be taken against them. The petition was thus disposed of in terms of the consent arrangement and the Supreme Court's binding observations regarding audit selection procedures.
- Must tax authorities disclose the specific criteria or reasons when selecting a case for audit under Section 177 of the Income Tax Ordinance 2001?
- Are tax authorities required to issue fresh notices when previous audit selection procedures are found to be deficient?
- Does the revision of tax returns and subsequent payment by an assessee preclude further audit action under the relevant circulars?
- Section 177, Income Tax Ordinance 2001
NASIM SIKANDAR, J.---Learned counsel appearing for the revenue states and I will agree that the issues in hand already stand resolved by the Hon'ble Supreme Court of Pakistan earlier raised in identical Civil Petitions 1962 to 2205 of 2005.
2. The operative part of the order of Hon'ble Supreme Court of Pakistan, dated 1st March, 2006 reads as under:-- "In view of the above arrangement between the parties, the appeals are disposed of with consent, consequently, the portions of impugned judgment reproduced hereinabove are deleted with the observation that let appellants issue fresh notices to the respondents in terms of section 177 of the Ordinance, as it was A prevailing at the relevant time, disclosing criteria/reasons for selecting their cases for purpose of audit. As far as the cases in respect whereof observations have been made hereinabove relating to Circular C. No,1(1)s (ITAS) 2004 or otherwise if the returns have been revised and payment has been made by the assessee, no further action shall be taken against them. The parties are left to bear their own costs."
3. Learned counsel agrees that the petition in hand needs to be disposed of in the light of the observations made by the Hon'ble Supreme Court as reproduced above. .
4. Disposed of.