ASSESSMENT, RECORDS AND AUDIT

CONTENTS
• Assessments
• Records
• Audit
ASSESSMENT
Assessment is to assess / evaluate the return of income of a person
120: Assessments
121: Best judgment assessment
122: Amendment of assessments
122A: Revision by the Commissioner
122B: Revision by the Chief Commissioner
123: Provisional assessment in certain cases
124: Assessment giving effect to an order
124A: Powers of tax authorities to modify orders, etc.
125: Assessment in relation to disputed property
126: Evidence of assessment
ASSESSMENT YEAR
Sec 2(5A)

“Assessment” includes provisional assessment, re-assessment and amended

assessment and the cognate expressions shall be construed accordingly.
ASSESSMENTS
Sec 120
Commissioner’s Order
• Where a taxpayer has furnished a complete return of income (other than
revised return) –
i. Commissioner shall be taken to have made as assessment of taxable income
and tax due
ii. Return shall be taken to be an assessment order issued by the Commissioner
to the taxpayer on the day the return was furnished
• However, the Commissioner may conduct audit of income tax affairs us 177
Complete return of income:
• A return of income is taken to be complete if in accordance with section
114 (2)
ASSESSMENTS
Sec 120
Return processed through Automated System:
A return of income furnished us 114(2) shall be
processed through automated system
to arrive at correct amounts of total income, taxable income and tax payable
by making adjustments for—
(i) any arithmetical error in the return;
(ii) any incorrect claim, if such incorrect claim is apparent from any information in
the return;
(iii) disallowance of any loss, deductible allowance or tax credit; and
(iv) disallowance of carry forward of any loss:
ASSESSMENTS
Sec 120
Provided that no such adjustments shall be made unless a system generated
notice is given to the taxpayer specifying the adjustments intended to be made:
Provided further that the response received from the taxpayer, if any, shall be
considered before making any adjustment, and in a case where no response is
received within thirty days of the issue of such notice, adjustments shall be
made.
Provided also that where no such adjustments have been made within six
month of filing of return, the amounts specified in the return as declared by
the taxpayer shall be deemed to have been taken as adjusted amounts on the
day the return was filed and the taxpayer shall be intimated automatically
through Iris
Provided also that the provisions of automated system shall apply from the
date notified by the Board
ASSESSMENTS
Sec 120
“Arithmetical error” includes any wrong or incorrect calculation of tax
payable including any minimum or final tax payable.
"An incorrect claim apparent from any information in the return" shall mean a
claim, on the basis of an entry, in the return,—
(i) of an item, which is inconsistent with another entry of the same or some
other item in such return;
(ii) regarding any tax payment which is not verified from the collection
system; or
(iii) in respect of a deduction, where such deduction exceeds specified
statutory limit.
ASSESSMENTS
Sec 120
Incomplete return of income:
• Where incomplete,
i. The Commissioner shall issue notice
ii. informing deficiencies
iii. directing him to provide such information, particulars, statement or
documents
iv. by such date as specified
➢ Where taxpayer fails to fully comply, return furnished treated as invalid as
if it had not been furnished
➢ Where taxpayer fully complied on due date, return furnished treated to be
complete on the day is was furnished
➢ No noti ce for incomplete return shall be issued aft er expiry of 180 days of
financial year in which return was furnished.
"QUESTION"
AUTUMN 2022 – Q 5(a)(i)(iii)
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder:
i. briefly discuss the terms ‘Normal assessment’ and ‘Best judgement assessment’. (03)
iii. list the additional records which are required to be kept by a sole proprietor whose
business income exceeds Rs. 500,000 as compared to a sole proprietor whose business
income is upto Rs. 500,000. (02)
"ANSWER"
AUTUMN 2022 – Q 5(a)(i)(iii)
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder:
i. Normal assessment:
If a taxpayer has furnished a complete return of income other than a revised return, the
Commissioner shall be treated to have assessed the income and tax due thereon.
Best judgment assessment:
• This type of judgment is made where a person fails to:
- furnish return of income in response to notice of a Commissioner; or
- furnish a return as required to be filed by air carrier or shipping companies; or
- furnish the wealth statement; or
- produce before the commissioner, or a special audit panel or any person employed by a firm of
chartered accountants or a firm of cost and management accountants, accounts, documents and
records required to be maintained or any other relevant document or evidence that may be required
by him for the purpose of making assessment of income and determination of tax due thereon.
• Under any of the above cases, the Commissioner may, based on any available information or
material and to the best of his judgment, make an assessment of the taxable income of the person
and the tax due thereon.
"ANSWER"
AUTUMN 2022 – Q 5(a)(i)(iii)
iii. Following additional records are required to be kept by sole proprietor whose business income
exceeding Rs. 500,000 as compared to a sole proprietor whose business income is upto Rs.
500,000.
• In case of a wholesaler, distributor, dealer and commission agent, where a single transaction
exceeds Rs. 10,000, the name and address of the customer;
• Cash book and/or bank book;
• General ledger or annual summary of receipts, sales, payments, purchases and expenses under
distinctive heads;
• Where a single transaction exceeds Rs. 10,000 with the name and address of the payee; and
• Where the taxpayer deals in purchase and sale of goods, quarterly
• inventory of stock-in-trade showing description, quantity and value.
BEST JUDGMENT ASSESSMENT
Sec 121
• Where a person fails to –
i. Furnish return of income in response to Commissioner’s notice for filing return us
114 (3) or 114 (4)
ii. Furnish return of income as required us 143 or 144 (return to be filed by air
carrier or shipping companies)
iii. Furnish wealth statement as required us 116
iv. produce before the Commissioner, special audit panel appointed us 177 (11),
person employed by a firm of CA or CMA us 177, accounts, documents and records
required to be maintained under section 174, or any other relevant document or
evidence that may be required by him for the purpose of making assessment of
income and determination of tax due thereon
• Commissioner may be based on available information or material and to the best
of his judgment
• Make assessment of taxable income and tax due
• Assessment treated to have been made on return or revised return shall be of no
effect
BEST JUDGMENT ASSESSMENT
Sec 121
Assessment Order:
After making assessment, Commissioner shall issue assessment order to the taxpayer
stating –
i. Taxable income
ii. Amount of tax due
iii. Amount of tax paid
iv. Time, place and manner of appealing the assessment order
Time:
➢ Assessment order shall be issued within 6 years after the end of the tax year to
which it relates
➢ Provided where noti ce is issued us 114 (4) for one or more last completed tax
years under provision to s 114(5) an assessment order shall only be issued within 2
years from the end of tax year in which such notice is issued
"QUESTION"
SPRING 2015 – Q 2 (c)
a) Specify the circumstances under which the Commissioner has powers to issue notice
demanding a return of income from certain person(s) for less than one year. (covered in
chapter 14) (03)
b) State the powers of the Commissioner if a taxpayer fails to furnish return as required
under part (b) above, within the specified time. (04)
"ANSWER"
SPRING 2015 – Q 2 (c)
a) In the following circumstances, the Commissioner may require a person or person’s
representative to furnish a return of income for a period of less than twelve months:
(i) the person who has died;
(ii) the person who has become bankrupt or gone into liquidation;
(iii) the person who is about to leave Pakistan permanently;
(iv) the Commissioner otherwise considers it appropriate to require such a return to be
furnished.
b) The Commissioner may, if a taxpayer fails to furnish return of income as required, based
on any available information or material and to the best of his judgment, make a provisional
assessment of the taxable income and issue a provisional assessment order specifying the
taxable income and the tax due thereon.
The provisional assessment order is treated to be as the final assessment order after the
expiry of forty five days from the date of service of order of provisional assessment;
"QUESTION"
SPRING 2017 – Q 5 (b) (ii)
In the light of the provisions of the Income Tax Ordinance, 2001:
i. Identify the circumstances under which the Commissioner of Income Tax may require
a person to furnish a return of income for a period of less than twelve months. (covered
in chapter 14) (03)
ii. State the consequences if a person fails to furnish the return as required in (i) above.
(03)
"ANSWER"
SPRING 2017 – Q 5 (b) (ii)
a) In the following circumstances, the Commissioner may require a person or person’s
representative to furnish a return of income for a period of less than twelve months:
(i) the person who has died;
(ii) the person who has become bankrupt or gone into liquidation;
(iii) the person who is about to leave Pakistan permanently;
(iv) the Commissioner otherwise considers it appropriate to require such a return to be
furnished.
b) The Commissioner may, if a taxpayer fails to furnish return of income as required,
based on any available information or material and to the best of his judgment, make a
provisional assessment of the taxable income and issue a provisional assessment order
specifying the taxable income and the tax due thereon.
The provisional assessment order is treated to be as the final assessment order after the
expiry of forty five days from the date of service of order of provisional assessment;
"QUESTION"
AUTUMN 2018 – Q 4 (b)
Specify the circumstances under which the Commissioner of Income Tax has powers to
issue notice demanding a return of income from certain person(s) for a period of less
than twelve months. Also state the powers of the Commissioner if such person fails to
furnish the return as required, within the specified time. (03)
"ANSWER"
AUTUMN 2018 – Q 4 (b)
The Commissioner may, by notice in writing, require the following persons or their
representatives to furnish a return of income for a period of less than twelve months:
• a person who has died;
• a person who has become bankrupt or gone into liquidation;
• a person who is about to leave Pakistan permanently;
• where the Commissioner otherwise considers it appropriate to require such a return
to be furnished.
If a person fails to furnish the return, the Commissioner may, based on any available
information or material and to the best of his judgment, make an assessment of the
taxable income of the person and the tax due thereon. Under such a case, the
assessment, if any, treated to have been made on the basis of return or revised return
filed by the taxpayer shall be of no legal effect.
PROVISIONAL ASSESSMENT IN
CERTAIN CASES
Sec 123
• Where a concealed asset of any person
- impounded by any department or agency of the FG or PG
- the Commissioner may issue provisional assessment order or provisional amended
assessment order
- at any time before assessment order us 121 or 122
- for the last completed tax year taking into account concealed asset
• Where an offshore asset of any person [The Finance Supplementary (Second
Amendment) Act, 2019]
- not declared earlier
- discovered by the Commissioner or any department or agency of the FG or PG
- the Commissioner may issue provisional assessment order or provisional amended
assessment order
- at any time before assessment order us 121 or 122
- for the last completed tax year taking into account the offshore asset discovered
PROVISIONAL ASSESSMENT IN
CERTAIN CASES
Sec 123
• The Commissioner shall finalize as soon as practicable
• “Concealed asset”
- any property or asset
- which in the opinion of the Commissioner
- acquired from any income subject to tax under this ordinance but could not be charged to tax
"QUESTION"
SPRING 2018 – Q 3 (a)(b) & (d)
Under the provisions of the Income Tax Ordinance, 2001 briefly discuss the following:
i. The term ‘Concealed assets’. (02)
ii. The powers of Commissioner relating to the concealed assets of any person when
these are impounded by the Federal Government. (03)
"ANSWER"
SPRING 2018 – Q 3 (a)(b) & (d)
(i) Under the Income Tax Ordinance, 2001 if in the opinion of the Commissioner, an
asset is acquired from any income chargeable to tax but could not be charged to tax,
it is considered to be a concealed asset.
(ii) Where a concealed asset of any person is impounded by any department or
agency of the Federal Government, the Commissioner may at any time, before
making a best judgement or any amended assessment order, issue to the person a
provisional assessment order or provisional amended assessment order, as the case
may be, for the last completed tax year during which the concealed asset was
accounted for.
"QUESTION"
SPRING 2020 – Q 3 (c)
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder,
discuss:
c) the concept of ‘Concealed asset’ and state the powers of the Commissioner relating to
concealed asset of any person when it is impounded by the Federal Government. (05)
"ANSWER"
SPRING 2020 – Q 3 (c)
Under the Income Tax Ordinance, 2001 if in the opinion of the Commissioner, an
asset is acquired from any income chargeable to tax but could not be charged to tax,
it is considered to be a concealed asset.
The Commissioner may at any time before issuing any assessment order under
section 121 (best assessment order) or 122 (amended assessment order) issue to the
person a provisional assessment order or provisional amended assessment order as
the case may be.
While issuing the assessment order the Commissioner, shall take into account the
computation of taxable income and tax payable for the last completed tax year of the
person during which the concealed asset was accounted for.
The Commissioner shall finalize the provisional order or provisional amended
assessment order as soon as possible.
ASSESSMENT IN RELATION TO DISPUTED
PROPERTY
Sec 123
• Where ownership of any property the income of which is
chargeable to income tax
- is in dispute in any Civil Court in Pakistan
- an assessment order or amended assessment order in respect of such
income
- issued at any time within 1 year after the end of the financial year in
which the decision of the Court is made
AMENDMENT OF ASSESSMENT
Sec 122
Amendment of assessments
• The Commissioner may amend following assessment order by making
alterations or additions
i. Us 120 (deemed assessment)
ii. Us 121 (best judgment assessment)
• Where a taxpayer furnished a revised return
i. The Commissioner shall be treated as having made amended assessment of taxable
income and tax payable
ii. Revised return treated as amended assessment order on the day when revised
return filed
AMENDMENT OF ASSESSMENT
Sec 122
Time Limitation:
• Amendment be made within 5 years from the end of the financial year in which
the assessment order issued or deemed issued
• Where original assessment order has been amended, the Commissioner may
further amend within later of –
a. 5 years from the end of the financial year in which the original assessment order
issued or deemed issued
b. 1 year from the end of the financial year in which the amended assessment order
issued
AMENDMENT OF ASSESSMENT
Sec 122
Conditions/ circumstances / situations for amendment:
• An assessment or amended assessment order shall be amended or further
amended
- where on the basis of audit or on the basis of definite information
- the Commissioner is satisfied –
i. Any income chargeable to tax has escaped assessment
ii. Total income has been under-assessed, or assessed at too low rate or subject to
excessive relief or refund
iii. Any amount under a head of income has been mis-classified
AMENDMENT OF ASSESSMENT
Sec 122
• “Definite information”
includes information on sales or purchases of any goods made by the taxpayer,
receipts of the taxpayer from services rendered or
any other receipts that may be chargeable to tax under this Ordinance,
and on the acquisition, possession or disposal of any money, asset, valuable article or
investment made or expenditure incurred by the taxpayer
• The Commissioner may amend or further amend as assessment order
- If he considers that assessment order is erroneous in so far it is prejudicial to the interest
of revenue
• The Commissioner shall amend or further amend in respect of any subject matter not
in dispute in an appeal
AMENDMENT OF ASSESSMENT
Sec 122
Amended assessment order:
• Asap after making an amended assessment,
- The Commissioner shall issue amended assessment order stating –
i. The amended taxable income of the taxpayer
ii. The amended amount of tax due
iii. The amount of tax paid, if any
iv. The time, place and manner of appealing the amended assessment
AMENDMENT OF ASSESSMENT
Sec 122
• No amendment / further amendment unless the taxpayer has been provided with an
opportunity of being heard
Provided order shall be made within 180 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 period shall in no case exceed 90 days.
Provided further that any period during which the proceedings are adjourned on
account of a (i) stay order or (ii) ADR proceedings or (iii) agreed assessment
proceedings us 122D or (iv) the time taken through adjournment by the taxpayer not
exceeding 60 days shall be excluded from the computation of the period specified in
the first provision.
"QUESTION"
AUTUMN 2016 – Q 2
Maroof filed his return of income for tax year 2015 on 30 September 2015. On 15
August 2016 he received a show cause notice from the Commissioner Inland Revenue
u/s 122 for amendment of the assessment order issued on self-assessment basis.
Required:
Under the provisions of the Income Tax Ordinance, 2001 briefly describe:
a) the circumstances under which an assessment order treated as issued on self-
assessment basis may be amended by the Commissioner. (04)
b) the situations in which the Commissioner may be barred from amending the original
assessment order. (04)
"ANSWER"
AUTUMN 2016 – Q 2
a) Revision of assessment by the Commissioner
An assessment order shall only be amended by the Commissioner where, on the basis
of definite information acquired from an audit or otherwise, the Commissioner is
satisfied that:-
i. any income chargeable to tax has escaped assessment; or
ii. total income has been under-assessed, or assessed at too low a rate, or has been
the subject of excessive relief or refund; or
iii. any amount under a head of income had been mis-classified.
The Commissioner may also amend the assessment if after making necessary
enquiries he considers that the assessment order is erroneous in so far it is
prejudicial to the interest of revenue.
"ANSWER"
AUTUMN 2016 – Q 2
b) Situations in which the Commissioner may be barred from revising the assessment
order.
The Commissioner shall not revise any assessment order:-
i. after the expiry of five years from the end of the financial year in which the order
was issued or treated as issued.
ii. if an appeal against the order lies to the Commissioner (Appeals) or to the
Appellate Tribunal and the time within which such appeal may be made has not
expired; or
iii. The order is pending in appeal before the Commissioner (Appeals) or has been
made the subject of an appeal to the Appellate Tribunal.
Further an assessment shall not be amended unless the taxpayer has been provided
with an opportunity of being heard.
"QUESTION"
AUTUMN 2017 – Q 4 (b)

List the situations under which an original assessment can be amended or

an amended assessment can be further amended by the Commissioner of
Income Tax. Also state the time period within which the original or the
previously amended assessment order can further be amended. (07)
"ANSWER"
AUTUMN 2017 – Q 4 (b)
When the Commissioner has definite information acquired from an audit or
otherwise, the Commissioner is satisfied that:
• Any taxable income has escaped assessment;
• Total income has been under assessed or assessed at too low tax rate or has been
subject of excessive relief or refund; or
• Any amount under a head of income has been misclassified.
The Commissioner considers that the assessment order is erroneous in so far as it
is prejudicial to the interest of revenue.
Time period within which assessment can be amended:
The Commissioner is empowered to amend the assessment order within the later
of:
• Five years from the end of the financial year in which the original assessment
order is issued or treated as issued by the Commissioner; or
• One year from the end of the financial year in which the amended assessment
order is issued or treated as issued.
"QUESTION"
SPRING 2018 – Q 3 (a)(b) & (d)
b) Anwar had filed his return of income for the tax year 2013 on 31
August 2013. Discuss the following in the light of provisions of the
Income Tax Ordinance, 2001:
i. By which date the Commissioner of Income Tax could make the first
amendment of the assessment, if required.
ii. By which date any further amendment can be made if the first
amendment was made on 15 February 2017.
"ANSWER"
SPRING 2018 – Q 3 (a)(b) & (d)
(i) The Commissioner of income tax is empowered to amend the assessment of the
taxpayer within five years from the end of the financial year in which the
Commissioner has issued or treated to have issued the assessment order to the
taxpayer Accordingly, in this case amendment can be made by 30 June 2019.
(ii) Where the Commissioner has issued the amended assessment order to the
taxpayer, the limitation period should be later of:
• five years from the end of the financial year in which the original assessment
order is issued or treated as issued by the Commissioner; or
• one year from the end of the financial year in which the amended assessment
order is issued or is treated as issued to the tax payer.
The time limitation for the next assessment will therefore to be by 30 June 2019.
"QUESTION"
SPRING 2021 – Q 5
Star Garments Limited (SGL) had filed its tax return for the tax year 2015 on 30 September
2015.
On 25 February 2021, the Commissioner of Income Tax, on the basis of definite information,
issued a notice u/s 122 (5) to SGL for the audit of books of account for the tax year 2015.
The accountant informed the chief executive officer that tax audit for the tax year 2015 had
already been conducted in 2019 and an amended assessment order u/s 122(5A) was issued by
the Commissioner on 24 February 2020.
Required:
Under the provisions of the Income Tax Ordinance, 2001:
(a) explain the term ‘Definite information’. (02)
(b) discuss whether the Commissioner is empowered to make further amendment in the
assessment order issued on 24 February 2020. (07)
"ANSWER"
SPRING 2021 – Q 5
(a) Definite information includes information on sales or purchases of any goods
made by the taxpayer, receipts of the taxpayer from services rendered or other
receipts chargeable to tax under the Ordinance on the acquisition / possession /
disposal of any money / asset / valuable article, or investment made or
expenditure incurred by the taxpayer.
(b) (i) Commissioner is empowered to amend further the original assessment order
as many times as may be necessary on the basis of audit or definite information
that:
- any taxable income has escaped assessment;
- total income has been under assessed or assessed at too low tax rate or has been
the subject of excessive relief or refund; or
- any amount under a head of income has been misclassified.
The Commissioner may also amend the original assessment order if he considers
that the assessment order is erroneous in so far as it is prejudicial to the interest
of revenue.
"ANSWER"
SPRING 2021 – Q 5
However, the Commissioner can make amendment in the original assessment order
within the later of:
- five years from the end of the financial year in which the original assessment order
is issued or treated as issued by the Commissioner; or
- one year from the end of the financial year in which the amended assessment order
is issued or is treated as issued.
(ii) Considering the above provisions of law, SGL’s position is as follows:
- Five year period will be completed on 30-06-2021 as the original assessment order
was filed on 30-09-2015 (financial year 30-06-2016)
- One year would be completed on 30-06-2021 as the amended assessment order was
issued on 24 February 2020 (financial year 30-06-2020).
Therefore, the Commissioner still have time to further amend the assessment order.
However, no further amendment can be made by the Commissioner unless the SGL
has been provided with an opportunity of being heard.
"QUESTION"
SPRING 2022 – Q 4 (b)(ii)
(i) Riaasat Limited (RL) is a manufacturing company. With effect from 1 July 2022, RL is
considering to change its tax year from the normal to the special tax year ending on 31
December.
Required:
Identify the due/last date of filing of RL’s tax return in respect of the following:
• Filing of tax return for the year ended 30 June 2022.
• Filing of tax return for the transitional period.
• Filing of first tax return for the special tax year.
(ii) Assume that RL has changed its tax year from normal to special and filed its tax returns
for relevant tax years, as discussed in (b)(i) above.
Required:
Identify the due/last date of amendment of assessment related to:
• normal tax year for the year ended 30 June 2022.
• first special tax year. (02)
"ANSWER"
SPRING 2022 – Q 4 (b)(ii)
 REVISION BY THE COMMISSIONER
Sec 122A
• The Commissioner may, suomoto, call for record of any proceeding,
- where order has been passed by any Officer of Inland Revenue
• The Commissioner may, suomoto, makes revision if considers that the order
requires revision,
- after making such inquiries as is necessary
• The revision order not be prejudicial to the person to whom the order relates

REVISION
REVISION BY THE COMMISSIONER
Sec 122A
• The Commissioner shall not revise any order if –
a. an appeal against the order lies to the Commissioner (Appeals) or to the Appellate Tribunal, the
time within which such appeal may be made has not expired ; or
b. the order is pending in appeal before the Commissioner (Appeals) or has been made the subject
of an appeal to the Appellate Tribunal
• If any order is remanded back to any lower authority by the Commissioner
- for modification, alteration, implementation of directions or de novo proceedings,
- the order giving effect to the directions of the Commissioner shall be issued within 120 days
REVISION
REVISION BY THE CHIEF COMMISSIONER
Sec 122B
The Chief Commissioner may
- either of his own motion or on an application made by the taxpayer for revision,
- call for the record of any proceedings
- relating to issuance of an exemption or lower rate certificate with regard to
collection or deduction of tax at source
- in which an order has been passed by any authority subordinate to him
REVISION BY THE CHIEF COMMISSIONER
Sec 122B
Order:
The Chief Commissioner make such order as he may deem fit in the circumstances
of the case
- If he considers that order requires revision
- after making such inquiries as is necessary
- after providing reasonable opportunity of being heard to the taxpayer
AGREED ASSESSMENT IN CERTAIN CASES
Sec 122D
• Where a taxpayer intends to settle his case in response to a notice us 122(9)
- he may file offer of settlement in the prescribed form before the
assessment oversight committee
- in addition to filing reply to the Commissioner

• The Committee after examining the aforesaid offer may call for the record of the case and
- after affording opportunity of being heard to the taxpayer,
- may decide to accept or modify the offer of the taxpayer through
consensus and
- communicate its decision to the taxpayer.
AGREED ASSESSMENT IN CERTAIN CASES
Sec 122D
• Where the taxpayer is satisfied with the decision of the Committee,—
- the taxpayer shall deposit the amount of tax payable, penalty and
default surcharge as per decision of the Committee;
- the Commissioner shall amend assessment in accordance with the
decision of the Committee after tax payable, penalty and default
surcharge has been paid;
- the taxpayer shall waive the right to prefer appeal against such amended
assessment; an
- no further proceedings shall be undertaken in respect of issues decided by the
Committee unless the tax has not been deposited.
AGREED ASSESSMENT IN CERTAIN CASES
Sec 122D
• Where the Committee has not been able to arrive at a consensus or where the
taxpayer is not satisfied with the decision
- the case shall be referred back to the Commissioner for decision
- on the basis of reply of the taxpayer in response to notice us 122(9)

• The Committee shall comprise the following income tax authorities having
jurisdiction over the taxpayer, namely:—
(a) the CCIR;
(b) the CIR; and
(c) the AdCIR
AGREED ASSESSMENT IN CERTAIN CASES
Sec 122D

• This section shall not apply in cases involving

- concealment of income or
- where interpretation of question of law is involved having effect on
other cases

• The Board may make rules regulating the procedure of the Committee
ASSESSMENT GIVING EFFECT TO AN ORDER
Sec 124

Give effect to any finding or direction

• Where in consequence of any finding or direction
- In any order made by the CIR (A), ATIR, HC or SC in respect of an
assessment order
- The Commissioner shall issue within 2 years from the end of financial
year in which the order was served to the Commissioner

ASSESSMENT

ORDER
ASSESSMENT GIVING EFFECT TO AN ORDER
Sec 124
Assessment order set aside wholly or partly
• Where an assessment order is set aside wholly or partly
- By the ATIR, HC or SC
- The Commissioner or CIR(A) is directed to pass a new assessment
order
- Pass the new order within 1 year from the end of the financial year in
which the order was service to the CIR or CIR(A)
- Provided limitation shall not apply if appeal or reference has been
preferred against the order of the ATIR or HC
ASSESSMENT

ORDER
ASSESSMENT GIVING EFFECT TO AN ORDER
Sec 124
Proceedings in case set aside or modified
• Where an assessment order has been set aside or modified
- The proceedings may commence from the next stage
- Reissuance of any notice which had been issued is not required
- Further, refurnishing / refiling of return, statement or particulars which had been furnished or filed is
not required

Direct relief
• Where direct relief is provided in an order by CIR(A) or ATIR
- The Commissioner shall issue appeal effect orders within 2 months when the order was served to the
Commissioner.
ASSESSMENT

ORDER
POWERS OF TAX AUTHORITIES TO MODIFY
ORDERS, ETC
Sec 124A
• Where a question of law has been decided
- By a HC or ATIR in the case of a taxpayer
- The Commissioner may follow the said decision in so far apply to
said
question of law arising in any assessment before him
- Until the decision of the HC or ATIR is reversed of modified
- Notwithstanding appeal has been preferred against the decision of
the HC or reference application against the order of the ATIR
POWERS OF TAX AUTHORITIES TO MODIFY
ORDERS, ETC
Sec 124A
HC / ATIR decision reversed or modified:
• In case the order of the HC or ATIR is reversed or modified,
- The Commissioner may modify the assessment order so that it
conforms to the final decision
- within a period of 1 year from the date of receipt of decision
- notwithstanding the expiry of period of limitation prescribed for
making any assessment or order
EVIDENCE OF ASSESSMENT
Sec 126
• The production of an assessment order or a certified copy of an
assessment order shall be
- conclusive evidence of due making of the assessment that
- the amount and all particulars of the assessment are correct

• An assessment order or other document may not be –

i. Quashed or deemed to be void or voidable for want of form
ii. Affected by reason of any mistake, defect, or omission
- if in substance and effect in conformity with the Ordinance and the
person assessed / affected by the document is designated in it according
to common understanding.
RECORDS
Sec 174 (1)

• Unless otherwise authorized by the Commissioner

- Every taxpayer
- Maintain in Pakistan
- Such accounts, documents and records as may be prescribed
DISALLOWANCE/ REDUCTION OF DEDUCTION
Sec 174 (2) (4)
• The Commissioner
- Disallow or reduce taxpayer’s claim for a deduction
- If taxpayer is unable to provide receipt/ record/ evidence or
circumstances giving rise to the claim for deduction
- Without reasonable cause

• “Deduction” means any amount debited to trading acc., manufacturing acc.,

receipts and expenses acc. or P&L acc.
RECORD KEEPING TIME
Sec 174 (3)
• Maintained for 6 years after the end of the tax year to which they relate
• Provided: in case of proceedings pending before any authority or court, till final
decision of the proceedings
• “Pending proceedings” include proceeding for assessment or amendment of
assessment, appeal, revision, reference, petition or prosecution and any
proceedings before an ADRC
• limitation not apply to the records pertaining to concealed income, assets, expenses
or transactions outside Pakistan
ELECTRONIC TAX REGISTER
Sec 174 (5)
• The Commissioner may require any person to install and use an Electronic Tax
Register of such type and description as may be prescribed for storing and
accessing information regarding any transaction that has a bearing on the tax
liability of such person
PRESCRIBED RECORDS/BOOKS OF ACCOUNTS
Sec 174 (1) Rule 28 to 33
BOOKS OF ACCOUNTS, DOCUMENTS AND RECORDS
TO BE MAINTAINED
Rule 29
Every taxpayer deriving income chargeable under the head “Income from business”

Maintain proper books of accounts, documents and records with respect to

• All sums of money received and expended by the taxpayer
• the matters in respect of which the receipt and expenditure takes place
• All sales and purchases of goods
• All services provided and obtained
• All assets
• All liabilities
• All items of cost relating to utilization of materials, labour and other inputs if
taxpayer engaged in assembly, production, processing, manufacturing, mining or
like activities
BOOKS OF ACCOUNTS, DOCUMENTS AND
RECORDS TO BE MAINTAINED
Rule 29
If taxpayer uses fiscal electronic cash register or computerized
accounting software
It may issue cash-memo invoice / receipt generated by the electronic cash register
or computer
BOOKS OF ACCOUNTS, DOCUMENTS AND RECORDS
TO BE MAINTAINED
Rule 29
Duplicate copies and electronic or computer records of cash memo
invoice receipt patient slip to be issued

Retained by the taxpayer and form part of the records to be maintained

EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Taxpayers with business income up to Rs. 500,000 and new taxpayers deriving
“income from business”
a. Serially numbered and dated cash memo/ invoice/ receipt for each transaction of
sale or receipt containing the following –
i. Taxpayer’s name or name of his business
ii. Address
iii. NTN or CNIC
iv. STRN, if any
v. Description, quantity and value of goods sold or services rendered
- Provided where each transaction does not exceed Rs 100, one or more cash
memos per day for all such transactions may be maintained
b. Daily record of receipts, sales, payments, purchases and expenses: a single entry
in respect of daily receipts, sales, purchases and different heads of expenses will
suffice
c. Vouchers of purchases and expenses
EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Taxpayers with business income exceeding Rs. 500,000 and wholesalers,
distributors, dealers and commission agents
a. Serially numbered and dated cash memo/ invoice/ receipt for each transaction of
sale or receipt containing the following –
i. Taxpayer’s name or name of his business
ii. Address
iii. NTN or CNIC
iv. STRN, if any
v. Description, quantity and value of goods sold or services rendered
vi. In case of wholesaler, distributor, dealer and commission agent,
- where a single transaction exceeds Rs 10,000, the name and address of the
customer
- Provided where each transaction does not exceed Rs 100, one or more cash
memos per day for all such transactions may be maintained
EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Taxpayers with business income exceeding Rs. 500,000 and wholesalers,
distributors, dealers and commission agents
b. Cash book / bank book / daily record of receipts, sales, payments, purchases,
expenses: a single entry in respect of daily receipts, sales, purchases and different
heads of expenses will suffice
c. General ledger or annual summary of receipts, sales, payments, purchases and
expenses under distinctive heads
d. Vouchers of purchases and expenses and where a single transaction exceeds
Rs.10.000 with the name and address of the payee; and
e. Where the taxpayer deals in purchase and sale of goods,
- quarterly inventory of stock-in-trade showing description, quantity and value
EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Professionals (like medical practitioners, legal practitioners, accountants, auditors,
architects, engineers etc.)
a. Serially numbered and dated patient-slip/ invoice/ receipt for each transaction of
sale or receipt containing the following:-
i. taxpayer's name or the name of his business or profession
ii. Address
iii. NTN or CNIC
iv. STRN, if any
v. Description, quantity and value of medicines supplied details of treatment /case/
services rendered (confidential details are not required) and amount charged
vi. name and address of the patient/client
- Provided that the condition of recording address of the patient on the patient slip
under this clause shall not apply to general medical practitioners;
EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Professionals (like medical practitioners, legal practitioners, accountants, auditors,
architects, engineers etc.)
b. Daily appointment and engagement diary in respect of clients and patients
- Provided that this clause-shall not apply to general medical practitioners
c. Daily record of receipts, sales, payments, purchases and expenses; a single entry
in respect of daily receipts, sales, purchases and different heads of expenses will
suffice
d. Vouchers of purchases and expenses
EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Manufacturers (with turnover exceeding Rs.2.5 million)
i. Serially numbered and dated cash-memo/ invoice/ receipt for each transaction of
sale or receipt containing the following:-
i. taxpayer's name or the name of his business
ii. Address
iii. NTN or CNIC
iv. STRN, if any
v. Description, quantity and, value of goods sold
vi. where a single transaction exceeds Rs.10,000, name and address of the
customer;
EVERY TAXPAYER, OTHER THAN COMPANY, DERIVING INCOME
CHARGEABLE UNDER THE HEAD “INCOME FROM BUSINESS”
RULE 30
Manufacturers (with turnover exceeding Rs.2.5 million)
ii. Cash book and/or bankbook
iii. Sales day book and sales ledger (where applicable)
iv. Purchases day book and purchase ledger (where applicable)
v. General ledger
vi. Vouchers of purchases and expenses and where a single transaction exceeds
Rs.10,000, name and address of the payee
vii. Stock register of stock-in-trade (major raw materials and finished goods)
supported by gate in-ward and outward records and quarterly inventory of all items
of stock-in-trade including work-in-process showing description, quantity and
value.
"QUESTION"
AUTUMN 2019 – Q 4 (a)
Under the provisions of the Income Tax Ordinance, 2001 and Rules made
thereunder, briefly explain the requirement of books of account to be
maintained by a taxpayer who has business income upto Rs. 500,000.
(04)
"ANSWER"
AUTUMN 2019 – Q 4 (a)
The books of accounts required to be maintained by a taxpayer who has business
income (only) up to Rs. 500,000 are as follows:
• Serially numbered and dated cash-memo / invoice / receipt for each transaction of
sale or receipt containing the following:
- taxpayer’s name or the name of his business, address, national tax number or CNIC
and sales tax registration number, if any
- the description, quantity and value of goods sold or services rendered;
• Where each transaction does not exceed Rs. 100, one or more cash-memos per day
for all such transactions may be maintained
• Daily record of receipts, sales, payments, purchases and expenses a single entry in
respect of daily receipts, sales, purchases and different heads of expenses will
suffice; and
• Vouchers of purchases and expenses.
"QUESTION"
SPRING 2021 – Q 4 (b)(ii)
Briefly explain the provisions of the Income Tax Ordinance, 2001 and
Rules made thereunder relating to:
- requirement of books of account to be maintained by a manufacturer
having turnover exceeding Rs. 2.5 million. (04)
"ANSWER"
SPRING 2021 – Q 4 (b)(ii)
The following books of account are required to be maintained by a manufacturer having
turnover exceeding Rs. 2.5 million:
• Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or
receipt containing the following:
- taxpayer’s name or the name of his business address, national tax number or CNIC and sales
tax registration number, if any
- the description, quantity and, value of goods sold
- where a single transaction exceeds Rs. 10,000 with the name and address of the customer
• Cash book and/or bank book
• Sales day book and sales ledger (where applicable)
• Purchases day book and purchase ledger (where applicable)
• General ledger
• Vouchers of purchases and expenses and where a single transaction exceeds Rs. 10,000 with
the name and address of the payee;
• Stock register of stock-in-trade (major raw materials and finished goods) supported by gate
in-ward and outward records and quarterly inventory of all items of stock-in-trade including
work-in-process showing description, quantity and value.
"EVERY TAXPAYER DERIVING INCOME CHARGEABLE UNDER THE
HEAD INCOME FROM SALARY, PROPERTY, CAPITAL GAINS OR OTHER
SOURCES SHALL ISSUE AND MAINTAIN THE FOLLOWING MINIMUM
DOCUMENTS AND RECORDS"
RULE 31
Taxpayers deriving income from Salary
• Salary certificate indicating the amount of salary and tax deducted there from
"EVERY TAXPAYER DERIVING INCOME CHARGEABLE UNDER THE
HEAD INCOME FROM SALARY, PROPERTY, CAPITAL GAINS OR OTHER
SOURCES SHALL ISSUE AND MAINTAIN THE FOLLOWING MINIMUM
DOCUMENTS AND RECORDS"
RULE 31
Taxpayers deriving income from property
• Tenancy agreement. if executed
• Tenancy termination agreement, if executed
• Receipt for amount of rent received and
• Evidence of deductions claimed in respect of premium paid to insure the
building, local rate, tax, charge or cess, ground rent, profit/interest or share in
rent on money borrowed, expenditure on collecting the rent, legal services and
unpaid rent.
"EVERY TAXPAYER DERIVING INCOME CHARGEABLE UNDER THE
HEAD INCOME FROM SALARY, PROPERTY, CAPITAL GAINS OR OTHER
SOURCES SHALL ISSUE AND MAINTAIN THE FOLLOWING MINIMUM
DOCUMENTS AND RECORDS"
RULE 31
Taxpayers deriving income from capital gains
• Evidence of cost of acquiring the capital asset;
• Evidence of deduction for any other costs claimed; and
• Evidence of consideration received on disposal of the capital asset
"EVERY TAXPAYER DERIVING INCOME CHARGEABLE UNDER THE
HEAD INCOME FROM SALARY, PROPERTY, CAPITAL GAINS OR OTHER
SOURCES SHALL ISSUE AND MAINTAIN THE FOLLOWING MINIMUM
DOCUMENTS AND RECORDS"
RULE 31
Taxpayers deriving income from other sources
• Dividends: Dividend warrants
• Royalty: Royalty agreement
• Profit on debt:
i. Evidence and detail of profit yielding debt;
ii. Evidence of profit on debt and tax deducted thereon, like certificate in the
prescribed form or bank account statement; and
iii. Evidence of Zakat deducted, if any.
• Ground rent: rent from the sub-lease of land or building, income from the lease of
any building together with plant or machinery and consideration for vacating the
possession of a building or part thereof
i. Lease agreement; and
ii. Lease termination agreement
"EVERY TAXPAYER DERIVING INCOME CHARGEABLE UNDER THE
HEAD INCOME FROM SALARY, PROPERTY, CAPITAL GAINS OR OTHER
SOURCES SHALL ISSUE AND MAINTAIN THE FOLLOWING MINIMUM
DOCUMENTS AND RECORDS"
RULE 31
Taxpayers deriving income from other sources
• Annuity or Pension: Evidence of amount received
• Prize money on bond, winning from a raffle, lottery or cross word puzzle:
Evidence of income and tax deducted thereon, like certificate in the prescribed form
• Provision use or exploitation of property: Agreement.
• Loan, advance, deposit or gift: Evidence of mode of receipt of a loan, advance, deposit or gift
i.e., by a crossed cheque or through a banking channel
• General: Evidence of deduction for any other expenditure claimed.
"QUESTION"
AUTUMN 2015 – Q 3 (a)(iv)
Mr. Baqir was working in Pakistan Embassy in United Kingdom for the past ten
years. He returned back to Pakistan five months back and is now working with a
British conglomerate in Islamabad. He is in the process of filing his return of
income for tax year 20X5 and has sought your advice on the following matters:
For the purpose of disclosure of securities in wealth statement, what would be
regarded as supportive evidence in respect of securities I acquired after my return to
Pakistan under the
Income Tax Rules, 2002?
"ANSWER"
AUTUMN 2015 – Q 3 (a)(iv)
Following shall be the supportive evidence of acquisition of securities:
In case of securities other than units of an open mutual fund:
• broker’s bill for the purchase,
• brokers generated computerized ledger statement of the investor’s brokerage account,
• CDC statement of the investor’s CDC sub account; and
• payment of cost of acquisition through cheques
In case of units of an open end mutual fund:
certified statement of investor’s account provided by the asset management company.
"QUESTION"
SPRING 2018 – Q 3 (a)(b) & (d)

c) Under the provisions of the Income Tax Rules, 2002 list the records to
be kept by a taxpayer in respect of his income from:
i. Salary (01)
ii. Property (1.5)
iii. Capital gain (1.5)
"ANSWER"
SPRING 2018 – Q 3 (a)(b) & (d)
Under the provisions of the Income Tax Rules 2002, following are the records to be kept
by a tax payer in respect of his income from:
(i) Salary
• Salary certificate indicating the amount of salary and tax deducted therefrom.
(ii) Property
• Tenancy agreement, if executed
• Tenancy termination agreement, if executed
• Receipt for amount of rent received
• Evidence of deductions claimed in respect of premium paid to insure the building, local
rate, tax, charge or cess, ground rent, profit/interest or share in rent on money borrowed,
expenditure on collecting the rent, legal services and unpaid rent.
(iii) Capital gain
• Evidence of cost of acquiring the capital asset
• Evidence of deduction for any other costs claimed
• Evidence in respect of consideration received on disposal of the capital asset.
"GENERAL FORM OF BOOKS OF ACCOUNTS,
DOCUMENTS AND RECORDS"
RULE 32
• Maintained by a taxpayer may be kept on electronic media
- provided sufficient steps have been taken to ensure the sanctity and safe
keeping of such accounts, documents and records
• Maintained by a company shall be in accordance with IASs and under the
CO, 1984.
"BOOKS OF ACCOUNT DOCUMENTS AND
RECORDS TO BE KEPT AT THE SPECIFIED PLACE"
RULE 33
• Maintained by a taxpayer shall be kept at the place where the taxpayer is
carrying on the business or,
• where the business is carried on in more places than one, at the principal
place of business or at each of such places if separate books of accounts
are maintained in respect of each place
• Where a person derives income from sources other than from business,
- shall be kept at the person's place of residence or such other place as may
be so declared by such person
• The place or places where the books of accounts, documents and records
are kept
- shall be clearly stated on the tax return form in the column requiring the
details of the records maintained
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
Call for records
• The Commissioner may
- Call for any record or documents including books of accounts maintained under
this Ordinance
• Where record or documents in electronic data, the person shall allow access of
machine and software for audit purpose and
- The CIR / OIR may have access to required information and data and duly
attested hard copies
• Provided the Commissioner may call records or documents, after recording
reasons in writing
• Provided the reasons shall be communicated to the taxpayer while calling
records and documents
• Provide that the Commissioner shall not call for record or documents after
expiry of 6 years of related tax year
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
After obtaining records
• After obtaining record or where necessary record is not maintained
- The Commissioner shall conduct audit of income tax affairs
- May call for other information and documents as deem appropriate

E-audit proceedings
• the Commissioner may conduct audit proceedings electronically through video
links, or any other facility as prescribed by the Board.
"QUESTION"
AUTUMN 2019 – Q 4 (c)
Under the provisions of the Income Tax Ordinance, 2001 and Rules made
thereunder, briefly explain the requirement of provisions regarding
Special Audit Panel. (05)
"ANSWER"
AUTUMN 2019 – Q 4 (c)
Provisions regarding Special Audit Panel
The Board may appoint as many special audit panels as may be necessary, to conduct an
audit, including a forensic audit, of the income tax affairs of any person or classes of
persons and the scope of such audit shall be as determined by the Board or the
Commissioner on a case to case basis.
Relevant provisions in this regard are summarized below:
• The panel shall comprise of any two or more members from:
- an officer of Inland Revenue;
- a firm of chartered accountants;
- a firm of cost and management accountants; or
- any other person as directed by the Board.
• The Panel shall be headed by a Chairman who shall be an officer of Inland Revenue;
• Powers for conducting an audit shall only be exercised by officer(s) of Inland Revenue
who are member(s) of the panel, and authorized by the Commissioner;
"ANSWER"
AUTUMN 2019 – Q 4 (c)
• Where a person fails to produce any accounts, documents and records, required to be
maintained or any other relevant document, electronically kept record, electronic machine
or any other evidence that may be required by the Commissioner or the panel for the
purpose of audit or determination of income and tax due thereon, the Commissioner may
proceed to make best judgment assessment and the assessment treated to have been made
on the basis of return or revised return filed by the taxpayer shall be of no legal effect.
• If any member of the panel, not being the Chairman, is absent from conducting an audit,
the proceedings may continue and the audit conducted by the special audit panel shall not
be invalid or be called into question merely on account of such absence;
• Functions performed by the officer or officers of Inland Revenue as members of the
special audit panel to conduct audit, shall be treated as having been performed by the
special audit panel;
• The Board may prescribe the mode and manner of constitution, procedure and working
of the special audit panel.
"QUESTION"
SPRING 2022 – Q 4 (a)
Briefly explain the term ‘Sectoral benchmark ratios’. Also, explain the
circumstances in which a Commissioner shall determine taxable income
on the basis of sectoral benchmark ratios. (03)
"ANSWER"
SPRING 2022 – Q 4 (a)
‘Sectoral benchmark ratios’ means standard business sector ratios notified by the Board on
the basis of comparative cases and includes financial ratios, production ratios, gross profit
ratio, net profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such
sectors as may be prescribed.
Where a taxpayer:
• has not furnished record or documents including books of accounts;
• has furnished incomplete record or books of accounts; or
• is unable to provide sufficient explanation regarding the defects in records, documents or
books of accounts,
it shall be construed that taxable income has not been correctly declared and the
Commissioner shall determine taxable income on the basis of sectoral benchmark ratios
prescribed by the Board.
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
Circumstances where taxable income is determined on Sectoral benchmark ratios
Where a taxpayer—
a) has not furnished record or documents including books of accounts;
b) has furnished incomplete record or books of accounts; or
c) is unable provide sufficient explanation regarding the defects in records,
documents or books of accounts,
it shall be construed that taxable income has not been correctly declared and the
Commissioner shall determine taxable income on the basis of sectoral benchmark
ratios prescribed by the Board.
Explanation.—The expression “sectoral benchmark ratios” means standard
business sector ratios notified by the Board on the basis of comparative cases and
includes financial ratios, production ratios, gross profit ratio, not profit ratio,
recovery ratio, wastage ratio and such other ratios in respect of such sectors as
may be prescribed.
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
After Completion of audit
• The Commissioner shall issue an audit report containing audit observations
and findings
- after obtaining taxpayer’s explanation on all issues raised in the audit
After issuing the audit report
• the Commissioner, if considers necessary, may amend the assessment us 122
- after providing an opportunity of being heard to the taxpayer
Audit Limitation
• A person audited in a year
- shall not preclude the person from being audited again in the next and
following years
- where there are reasonable grounds for such audits
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
Exemption under 2nd Sch, PIV, Cl (105A)
• The provisions of section 177 shall not apply to a person
- whose income tax affairs have been audited in any of the preceding four tax years
- except with approval of the Board
Appointment of firms
• The Board may appoint
- A firm of CAs as defined under CA Ordinance, 1961
- A firm of CMAs as defined under CMA Act, 1966
- To conduct an audit of income tax affairs
- And scope of such audit shall be determined by the Board or the Commissioner
• The person employed by a firm
- May be authorized by the Commissioner
- In writing
- To exercise the powers for conducting audit
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
Failure to produce accounts/ documents / records
• Where a person fails to produce
Any accounts, documents and records –
i. Required us 174 or any other relevant document
ii. Electronically kept record,
iii. Electronic machine
iv. Any other evidence required for audit or determination of income and tax due
- Before the Commissioner or firm of CAs or CMAs or special audit panel
- The Commissioner may proceed to make best judgment assessment us 121 and
- Assessment on the basis of return or revised return shall be of no effect
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
• Powers of Commissioner us 177 are independent of the powers of the Board us
214C
• Further, nothing contained in 214C restricts the powers of the Commissioner to
call for records and documents
Special Audit Panel
• The Board may appoint
- As many special audit panels as may be necessary
- Comprising two or more members from the following –
i. Officer or Officers of Inland Revenue
ii. A firm of CA as defined under CA Ordinance, 1961
iii. A firm of CMA as defined under CMA Act, 1966
iv. Any other person including a foreign expert or specialist as directed by the Board
v. A tax audit
"AUDIT"
Sec 177 2nd Sch, PIV, Cl (105A)
• Special audit panel shall be headed by a chairman
- Who shall be an Officer of Inland Revenue
• for audit, Officer or Officers of Inland Revenue
- who are member or members of the special audit panel
- authorized by the Commissioner
- shall exercise the powers
i. us 175 (Power to enter and search premises)
ii. us 176 (Notice to obtain information or evidence)
• If any member of the special audit panel other than chairman
- Is absent from conducting audit
- The audit proceedings may continue
- Further, audit conducted shall not be invalid or call in question
• Functions performed by the OIR/ OIRs as members shall be treated to have been
performed by the special audit panel
• The Board may prescribe the mode and manner of constitution, procedure and
working of special audit panel