KARACHI - A large number of tax payers of Karachi district have received audit notices from RTO Karachi demanding all previous and current records under section 176 and 177 of the Income Tax Ordinance 2001 that will be based on manual selection by Officers of Inland Revenue.
Responding to the aforesaid notices, President Karachi Chamber of Commerce and Industry Haroon Agar written letters to higher authorities of the federal finance department, including  Dr. Abdul Hafeez Shaikh, Federal Minister for Finance and Ali Arshad Hakeem, Chairman, Federal Board of Revenue, demanding explanation about the current step, which has created confusion among the tax payers.
The letter said, the audit notices issued under the order C.No.1 (150)TPA II (Ballot 2011)/2012/6784-R is in violation of the selection criteria laid down under section 214 (C) of the Income Tax Ordinance 2001, while the section 177(1) which is relied upon by the RTO for issuance of notices is in conflict with provisions of section 25, 10A, 18 and 23 of the constitution.
The manual selection itself has proved to be a tool for harassment and corruption and was therefore replaced by parametric selection of cases for audit after due consultation with representatives of trade and industry.
Hence the order dated 17.1.2013 rakes up the settled issues and is also in violation of the judgment of the Lahore High Court Case No. W.P.No.393/2012 heard on 10.05.2012 vide which Section 171(I) of the ordinance is struck down as illegal for being inconsistent with the provisions of the constitution, the letter added.  Therefore the audit notices being issued in compliance of the letter dated 17.1.2013 are illegal and will unnecessarily lead to litigation and protests by the business community.
Furthermore, the directives issued by Chief Commissioner RTO vide letter No.207/2012/CC-IR /RTO dated 20.12.2012 are aggravating the problems faced by Karachi based tax-payers who have an excellent track record of compliance. As brought to your kind notice earlier by this Chamber, the field officers have already started issuing notices to the Karachi based tax payers at their whims and discretion causing resentment and negative reaction within the trade and industry in Karachi.  The KCCI is under pressure from its members to take up the above matters to the highest level and utilise all means to relieve the members from the harassment and fear created by the above directives.
We, therefore, request you to rescind the orders and withdraw all audit notices issued so far under these directives which are illegal and counterproductive to business environment in the country.
We, as the premier chamber of Pakistan, have time and again given our suggestions and proposals for broadening of tax base to enhance the revenue collection. Many sectors which are generating vast sums of income are hitherto untaxed and FBR must take effective measures to tax these sectors instead of burdening the same tax-payers who are already crippled under a number of taxes and other costs.