Tuesday, 28 May 2024
Procedure for Online Tax Audit

FBR issues SRO for procedure of electronic audit of income tax cases

The Federal Board of Revenue (FBR) on Tuesday issued a procedure for selection and conducting electronic audit of income tax cases. In this regard, the FBR has issued SRO 835(I)/2021, dated June 29, 2021, to make amendments in the Income Tax Rules, 2002. A new rule 231FA has been inserted into the Income Tax Rules, 2002 to make the e-audit part of the tax laws.

In the aforesaid Rules, after rule 231F of Income Tax Rule, 2002. Following new rule shell be added namely. The complete Section is reproduced here as under:

231FA, Procedure for E-Audit. – (1) the provisions of this rule shell apply for the conduct of audit proceedings electronically under sub-section (2A) of section 177 of Income Tax Ordinance, 2001(XI.IX of 2001)

  • Definitions: – in this rule, unless there is anything repugnant in subject or context-
  • “Adjudication officer” means an officer of Inland Revenue to whom a case is assigned for assessment on the basis of audit report under these rules.
  • “Audit Officer” means as officer of Inland Revenue to whom a case is assigned for conducting e-audit under these rules.
  • “Automated Case Selecting System” means an algorithm for randomized allocation of case by using suitable technological modes:
  • ) “Competent Authority” mean the Board in case of selection of audit under section 214C and Commissioner Inland Revenue having jurisdiction in case of selection under section 177 of the Ordinance:
  • e-audit” means the audit proceeding of registered person conducted through electronic means including video links, or any other facility as may be Specified by the Board from time to time; and
  • “Iris” means a web-based computer programmed for operation and management of Inland Revenue taxes and laws administrated by the Board
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(3)  Where a case has been selected under section 177 or section 214C of the Ordinance, as the case may be, and the competent authority may issue direction to conduct e-audit the following procedure shell be adopted namely

a) The Case selected for e-audit under sub-section (1) shell be processed through Automated Case Selection System which will create an assignment for issuing notices through Iris to the taxpayer against selection of cases for Audit;

b) For issuance of notices, Automated Case Selection System will configure the:

  • list of officers of Inland Revenue to whom the case can be assigned: and
  • list of the cases to be marked across the jurisdiction and thereafter, intimate to the Concerned Commissioner IR where the case has been assigned by the Automated Case Selection system.

C) The concerned Commissioner Inland Revenue to whom the case has been assigned by the Automated Case Selection System shell serve a notice under sub-section of section 177 of Income Tax Ordinance,2001, specifying the reasons for selection of his case for audit:

D) a taxpayer shell produces the record or document including books of accounts maintained under Income Tax Ordinance 2001 through Iris or electronic date carrier notified by the Board;

 E) A taxpayer shell not be required to appear either personally or through authorized Representative in connection with any proceedings under e-audit before the officer of Inland Revenue. In case of any explanation required by the taxpayer or officer of Inland Revenue, request For personal hearing, shall be made through Iris and may be allowed to do so in assigned Jurisdiction and such hearings shell be conducted exclusively Through video links from personal computer system or of the nearest Tax Facilitation Centre at the premises of the different Tax offices, as the case may be;

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f) an Audit Officer to whom the case is assigned after considering all the information, Documents or evidence, if finds no discrepancy and have no conclusive proof against taxpayer may close the audit and send it to the Automated Case Selection System:

G) after examination of record and after obtaining taxpayers explanation on all the issues raised, if the Audit Officer to whom the case is assigned does not agree with the declared version and proposes order for assessment of tax, shell prepare an audit report containing audit observation/ findings and forward the report to taxpayer through Iris and Automated Case Selection System simultaneously.

H) the Automated Case Selection System will once again configure and assign the case to any Adjudication officer across the jurisdiction to make an order for assessment of  tax under section 122 including imposition of penalty and default surcharge in accordance with sections 182 and 205 of the Ordinance, if required ,as pointed out in the audit report.

I) Notwithstanding anything contained in the income tax rules, 2002. The Jurisdiction assigned under sub-clause (b) of sub-rule (3) above, by the automated case selection system shall be deemed to have been made under the powers conferred by section 209 of the income tax ordinance, 2001 till such time proceedings under clause (k) are finalized for the purpose of section 177 of income tax ordinance 2001.

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J) the adjudication officer to whom the case is assigned under clause (h) of sub-rule (3) above, shall after a notice under section 122(9) of the ordinance through Iris to show cause to such person make an order for assessment of tax as pointed out in the audit report and issue Assessment order accordingly under section 122 of the income tax ordinance 2001 and send it to the Automated Case Selection System provided that in case the taxpayer applies electronically for agreed assessment under section 122D in the prescribed form to the committee constituted under section 122D (5) and the committee may:-

  1. Accept or modify the offer, and the taxpayer agree to that offer, the Adjudication Officer shall pass the amended assessment order accordingly ; or
  2. Rejects or unable to reach on consensus, the case will be referred back to Adjudication Officer for passing amended order under the section 122 on the basis of available record and reply of the taxpayer; and

the Automated Case Selection system shall forward the assessment order passed under section 122 of the ordinance for initiating recovery proceedings, if any under section 137 of the income tax ordinance,2001 to the jurisdiction where such person is originally registered.”

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Income Tax Audit | Electronic Audit of Tax | FBR | Federal Board of Revenue | SRO 835(I)/2021 | SRO | Procedures for Tax Audit | Online Tax Audit |

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