Sharif ud din Khilji

Chief Executive
Khilji & Co. Chartered Accountants

ASSESSMENT, AUDIT &

SK TAX NOTES
RECOVERY

1
Presentation Agenda
• Universal Self Assessment Scheme
• Records & Audit
• Best Judgment Assessment (121)

SK TAX NOTES
• Amendment of Assessment (122)
• Agreed Assessment 122D
• Revision by Commissioner & Chief
Commissioner (122A & 122B)
• Provisional Assessment
2
• Recovery
Universal Self Assessment
• Section 120
• Universal self assessment scheme under section 120 –
return filed is deemed assessment order
• Commissioner has powers to conduct audit under section
177 when a taxpayer is selected by FBR under section
214C. An explanation has been added in section 120 and

SK TAX NOTES
section 214C providing that CIR is empowered to select a
person for audit in addition to powers vested with FBR
• In case of incomplete return, Commissioner may require
the taxpayer to remove deficiencies and if taxpayer does
not do so the return shall be treated as invalid.
• Notice of deficiencies can be issued within 180 days from
the end of the financial year in which return was 3
furnished.
Records & Audit
• Section 214C - FBR has the power to select persons or classes of persons for audit
through computer ballot
• Section 174 – Prescribes records maintenance requirements for a period of six
years after the end of tax year to which they relate and Commissioner has power
to disallow or reduce taxpayer’s claim for a deduction if taxpayer is unable,
without reasonable cause, to provide documentary evidence
• Section 176 – Provides power to Commissioner to call information relevant to any
tax leviable from a person

SK TAX NOTES
• Section 177 – Audit, Provides power to Commissioner to call for records of a
person who has been selected for audit by FBR
• Commissioner may, after recording reasons in writing, call for records or
documents including books of accounts of taxpayer
• Commissioner after examining the case shall issue audit report and thereafter he
can issue amended assessment order under section 122(1) or 122(4)
• Where a person has been selected for audit in a year, such person can again be
selected for audit in the next and following years
• FBR or Commissioner can appoint CA or ICMA firm to carry out audit under 4
section 177
 Best Judgment Assessment (121)
• Order under following circumstances:
• Failure of person to furnish statement required through a notice under
section 115(5) –
• Failure of person to furnish statement required through a notice under
section 114(4) –
• Failure of person to furnish a return under section 143 or 144 (non-
resident ship owner/ aircraft owner)

SK TAX NOTES
• Failure to furnish wealth statement
• Produce records before Commissioner or Chartered Accountant firm
appointed for tax audit under section 177. Note that best judgment
assessment cannot be made where a person has furnished return
under section 114 unless the person is selected for audit under
section 177 and fails to provide records required to be maintained
under section 174.
• Notice under this section can only be issued within 5 years of the end 5
of the tax year or the income year to which it relates
Amendment of Assessment - 122
• Tax return is original assessment order.
• Revised return by tax payer is deemed amended assessment order.
• An assessment order can be amended as many times as the
Commissioner wants but within the later of the following:
• Five years from the end of the financial year in which the
Commissioner has issued or is treated as issued original

SK TAX NOTES
assessment order
• One year from the end of the financial year in which the
Commissioner has issued or is treated as issued amended
assessment order

6
Amendment of Assessment - 122
• Time Line
• For example TY 2015 July 01, 2014 to June 30, 2015.
• Return is submitted on December 31, 2015. The financial year after
submission of return (original assessment order) ends at June 30,
2016.
• Five years from June 30, 2016 – June 30, 2021.
• Or

SK TAX NOTES
• Say CIR issued first amended order on May 31 ,2019.
• Financial year end in which amended assessment order is issued ]
June 30. 2019. One year after that = June 30, 2020.
• Say CIR issued second amended order on April 30, 2021.
• Financial year end in which second amended order is issued= June
30, 2021 – one year after that = June 30, 2022
• Say CIR issued third amended order on June 15, 2022. 7
• Financial year in which 3rd amended order is issued – June 30,
2022. one year after that = June 30, 2023
Definite Information – 122(5)
• Section 122(5) - Where the commissioner on basis of “definite
information” acquired from an audit or otherwise, is satisfied:
• Any income chargeable to tax has escaped assessment; or
• Total income has been under assessed, or assessed at too
low a rate, or has been the subject of excessive relief or
refund; or

SK TAX NOTES
• Any amount under a head of income has been
misclassified
• Note: Definite information is defined to include information on
sales or purchases of any goods made by the taxpayer, receipts
of taxpayer from services rendered or any other receipts that
may chargeable to tax under this Ordinance and on the
acquisition, possession or disposal of any money, asset, valuable
8
article or investment made or expenditure incurred by the
taxpayer.
Erroneous & Prejudicial to Interest of Revenue – 122(5A)

• Section 122(5A) – where the Commissioner

considers that the assessment order is
erroneous in so far it is prejudicial to the
interest of revenue.
• Note: As per section 210, Commissioner has

SK TAX NOTES
power to delegate authority to any officer of
inland revenue subordinate to the
Commissioner however authority of
amendment under section 122(5A) cannot
be delegated to an officer below rank of 9

Additional Commissioner.
Show cause under 122(9)
• Section 122(9)
• Provided that order under this section shall be made within one
120, hundred and twenty days, of issuance of show cause notice
or within such extended period as the Commissioner may, for
reasons to be recorded in writing, so however, such extended

SK TAX NOTES
period shall in no case exceed ninety days. This proviso shall be
applicable to a show cause notice issued on or after the first day
of July, 2021.
• Provided further that any period during which the proceedings
are adjourned on account of a stay order or Alternative Dispute
Resolution proceedings or agreed assessment proceedings under
section 122D or the time taken through adjournment by the
taxpayer not exceeding sixty days shall be excluded from the
10
computation of the period specified in the first proviso.
Revision by CIR & Ch. Comm.
• Section 122A Commissioner has suo moto powers under
this section to revise an assessment order however:
• the order shall not be prejudicial to the person to
whom the order relates
• Revised order cannot be passed if an appeal lies

SK TAX NOTES
before Commissioner (Appeals) or Tribunal and the
time within which such appeal may be made has not
expired or an appeal is pending before commissioner
(Appeals) or Tribunal
• Section 122B Chief Commissioner may on his own
motion or on application by taxpayer revise an order of
Commissioner in respect of exemption or lower rate 11
certificate.