Records, information collection and audit

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Records, information collection and audit

  1. 1. RECORDS, INFORMATION COLLECTION AND AUDIT
  2. 2. RECORDS, INFORMATION COLLECTION AND AUDIT Records. — (1) Unless otherwise authorised by the Commissioner, every taxpayer shall maintain in Pakistan such accounts, documents and records as may be prescribed. (2) The Commissioner may disallow or reduce a taxpayer‘s claim for a deduction if the taxpayer is unable, without reasonable cause, to provide a receipt, or other record or evidence of the transaction or circumstances giving rise to the claim for the deduction. (3) The accounts and documents required to be maintained under this section shall be maintained for six years after the end of the tax year to which they relate [Provided that where any proceeding is pending before any authority or court the taxpayer shall maintain the record till final decision of the proceedings.] [Explanation.— Pending proceedings include proceedings for assessment or amendment of assessment, appeal, revision, reference, petition or prosecution and any proceedings before an Alternative Dispute Resolution Committee.
  3. 3. RECORDS, INFORMATION COLLECTION AND AUDIT Records. — (4) For the purpose of this section, the expression “deduction” means any amount debited to trading account, manufacturing account, receipts and expenses account or profit and loss account. (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 the purpose of storing and accessing information regarding any transaction that has a bearing on the tax liability of such person.
  4. 4. RECORDS, INFORMATION COLLECTION AND AUDIT Power to enter and search premises. (1) In order to enforce any provision of this Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorised in writing by the Commissioner for the purposes of this section – (a) shall, at all times and without prior notice, have full and free access to any premises, place, accounts, documents or computer; (b) may stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained under clause (a); (c) may impound any accounts or documents and retain them for so long as may be necessary for examination or for the purposes of prosecution; (d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required; and (e) may make an inventory of any articles found in any premises or place to which access is obtained under clause (a
  5. 5. RECORDS, INFORMATION COLLECTION AND AUDIT Power to enter and search premises. (2) The Commissioner may authorize any valuer or expert to enter any premises and perform any task assigned to him by the Commissioner.] (3) The occupier of any premises or place to which access is sought under subsection (1) shall provide all reasonable facilities and assistance for the effective exercise of the right of access. (4) Any accounts, documents or computer impounded and retained under subsection (1) shall be signed for by the Commissioner or an authorised officer. (5) A person whose accounts, documents or computer have been impounded and retained under sub-section (1) may examine them and make extracts or copies from them during regular office hours under such supervision as the Commissioner may determine. (6) Where any accounts, documents or computer impounded and retained under sub-section (1) are lost or destroyed while in the possession the Commissioner, the Commissioner shall make reasonable compensation to the owner of the accounts, documents or computer for the loss or destruction. (7) This section shall have effect notwithstanding any rule of law relating to privilege or the public interest in relation to access to premises or places, or the production of accounts, documents or computer-stored information. (8) In this section, “occupier” in relation to any premises or place, means the owner, manager or any other responsible person on the premises or place
  6. 6. RECORDS, INFORMATION COLLECTION AND AUDIT Notice to obtain information or evidence. (1) The Commissioner may, by notice in writing, require any person, whether or not liable for tax under this Ordinance – (a) to furnish to the Commissioner or an authorised officer, any information relevant to any tax 1[leviable] under this Ordinance as specified in the notice; or (b) to attend at the time and place designated in the notice for the purpose of being examined on oath by the Commissioner or an authorised officer concerning the tax affairs of that person or any other person and, for that purpose, the Commissioner or authorised officer may require the person examined to produce any accounts, documents, or computer-stored information in the control of the person or (c) the firm of chartered accountants, as appointed by the [Board or the Commissioner], to conduct audit under section 177, for any tax year, may with the prior approval of the Commissioner concerned, enter the business premises of a taxpayer, selected for audit, to obtain any information, require production of any record, on which the required information is stored and examine it within such premises; and such firm may if specifically delegated by the Commissioner, also exercise the powers as provided in sub-section (4).]
  7. 7. RECORDS, INFORMATION COLLECTION AND AUDIT Notice to obtain information or evidence. (2) The Commissioner may impound any accounts or documents produced under sub-section (1) and retain them for so long as may be necessary for examination or for the purposes of prosecution (3) The person from whom information is required, may at his option, furnish the same electronically in any computer readable media.] Where a hard copy or computer disk of information stored on a computer is not made available as required under sub-section (1), the Commissioner may require production of the computer on which the information is stored, and impound and retain the computer for as long as is necessary to copy the information required.
  8. 8. RECORDS, INFORMATION COLLECTION AND AUDIT Notice to obtain information or evidence. (4) For the purposes of this section, the Commissioner shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (Act V of 1908), in respect of the following matters, namely: (a) enforcing the attendance of any person and examining the person on oath or affirmation; (b) compelling the production of any accounts, records, computer-stored information, or computer; (c) receiving evidence on affidavit; or (d) issuing commissions for the examination of witnesses. (5) This section shall have effect notwithstanding any law or rules relating to privilege or the public interest in relation to the production of accounts, documents, or computer-stored information or the giving of information
  9. 9. RECORDS, INFORMATION COLLECTION AND AUDIT Audit. (1) The Commissioner may call for any record or documents including books of accounts maintained under this Ordinance or any other law for the time being in force for conducting audit of the income tax affairs of the person and where such record or documents have been kept on electronic data, the person shall allow access to the Commissioner or the officer authorized by the Commissioner for use of machine and software on which such data is kept and the Commissioner or the officer may have access to the required information and data and duly attested hard copies of such information or data for the purpose of investigation and proceedings under this Ordinance in respect of such person or any other person: Provided that— (a) the Commissioner may, after recording reasons in writing call for record or documents including books of accounts of the taxpayer; and (b) the reasons shall be communicated to the taxpayer while calling record or documents including books of accounts of the taxpayer: Provided further that the Commissioner shall not call for record or documents of the taxpayer after expiry of six years from the end of the tax year to which they relate
  10. 10. RECORDS, INFORMATION COLLECTION AND AUDIT Audit. (2) After obtaining the record of a person under sub-section (1) or where necessary record is not maintained, the Commissioner shall conduct an audit of the income tax affairs (including examination of accounts and records, enquiry into expenditure, assets and liabilities) of that person or any other person and may call for such other information and documents as he may deem appropriate. (3) After completion of the audit, the Commissioner may, if considered necessary, after obtaining taxpayer‘s explanation on all the issues raised in the audit, amend the assessment under sub-section (1) or sub-section (4) of section 122, as the case may be
  11. 11. RECORDS, INFORMATION COLLECTION AND AUDIT Audit. (4) The fact that a person has been 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. (5) The [Board] may appoint a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961) or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966)], or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) to conduct an 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. (6) Any person employed by a firm referred to in sub-section (8) may be authorized by the Commissioner, in writing, to exercise the powers in sections 175 and 176 for the purposes of conducting an audit under that sub-section.
  12. 12. RECORDS, INFORMATION COLLECTION AND AUDIT Audit. (7) Notwithstanding anything contained in sub-sections (2) and (6) where a person fails to produce before the Commissioner or a firm of Chartered Accountants or a firm of Cost and Management Accountants appointed by the Board or the Commissioner under sub-section (8) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the firm of Chartered Accountants or the firm of Cost and Management Accountants for the purpose of audit or determination of income and tax due thereon, the Commissioner may proceed to make best judgment assessment under section 121 of this Ordinance 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.
  13. 13. RECORDS, INFORMATION COLLECTION AND AUDIT Assistance to Commissioner.- Every Officer of Customs, Federal Excise, Sales Tax, Provincial Excise and Taxation, District Coordination Officer, District Officers including District Officer – Revenue, the Police and the Civil Armed Forces is empowered and required to assist the Commissioner in the discharge of the Commissioner‘s functions under this Ordinance.
  14. 14. RECORDS, INFORMATION COLLECTION AND AUDIT Assistance to Commissioner.- Every Officer of Customs, Federal Excise, Sales Tax, Provincial Excise and Taxation, District Coordination Officer, District Officers including District Officer – Revenue, the Police and the Civil Armed Forces is empowered and required to assist the Commissioner in the discharge of the Commissioner‘s functions under this Ordinance.
  15. 15. RECORDS, INFORMATION COLLECTION AND AUDIT Accounts, documents, records and computerstored information not in Urdu or English language. Where any account, document, record or computerstored information referred to in section 174, 175 or 176 is not in the Urdu or English language, the Commissioner may, by notice in writing, require the person keeping the account, document, record or computer-stored information to provide, at the person's expense, a translation into the Urdu or English language by a translator approved by the Commissioner for this purpose
  16. 16. RECORDS, INFORMATION COLLECTION AND AUDIT Power to collect information regarding exempt income.— The Board may, by notification in the official Gazette, authorise any department or agency of the Government to collect and compile any data in respect of incomes from industrial and commercial undertakings exempt from tax under this Ordinance.

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