The Federal Board of Revenue (FBR) has introduced a new form of E-Audit idea to eliminate direct interaction between the audit officer and the taxpayer selected for audit to end harassment during the audit of taxpayers.
The FBR plans to adopt online audit (e-audit) proceedings, which will allow taxpayers to attend hearings without having to travel to tax offices or the FBR headquarters.
SRO 636(I)/2021 was issued by the FBR to alter the Income Tax Rules, 2002. The FBR has invited views on the proposed rules and has requested stakeholders to respond within 15 days of the SRO’s release.
The term “e-audit” refers to a registered person’s audit proceedings conducted via electronic means, including video links, or any other facility as determined by the Board from time to time.
The competent authority may issue a direction to perform an e-audit if a case has been selected under section 177 or section 2I4C of the Income Tax Ordinance. The Automated Case Selection System will handle the cases selected for e-audit, creating an assignment for issuing notices to the taxpayers via IRIS in response to the audit selection.
The Automated Case Selection System will configure a list of Inland Revenue officers to whom the case can be allocated, as well as a list of cases to be marked across the jurisdiction, and then notify the appropriate Commissioner IR.
Where the case has been assigned by the Automated Case Selection System, the responsible Commissioner of Inland Revenue shall serve a notification detailing the reasons for his case being selected for audit by the Automated Case Selection System.
The taxpayer must produce records or papers, including books of accounts, as required by the Income Tax Ordinance, 2001, via IRIS or an electronic data carrier.
In connection with any e-audit procedures before an officer of the Inland Revenue, the taxpayer is not needed to appear physically or through an authorised representative. Requests for personal hearings shall be made through IRIS and may be allowed to do so in assigned Jurisdiction, and such hearings shall be conducted exclusively through video links from the personal computer system or any of the nearest Tax Facilitation Centre situated at the premises of the different Tax Offices, as deemed necessary by the taxpayer or officer of the Inland Revenue.
If there is no discrepancy and no conclusive evidence against the taxpayer, the audit officer may close it and send it to the Automated Case Selection System. If the Audit Officer assigned to the case disagrees with the stated version and requests an order for tax assessment, an audit report comprising audit observations/ findings must be prepared and sent to the taxpayer via IRIS and the Automated Case Selection System at the same time.
As noted in the audit report, the Automated Case Selection System will configure and assign the
case to any Adjudication Officer across the jurisdiction to make an order for tax assessment under section 122, including the imposition of penalty and default surcharge in accordance with sections 182 and 205 of the Ordinance if necessary.