Section 46: Audit

46. 3[***] Audit.— (1) The 4[officer of Inland Revenue] authorized by the Board 5[or the Commissioner] by designation may, once in a year, after giving advance notice in writing, conduct audit of the records and documents of any person registered under this Act. (2) In case the 6[Commissioner] has information or sufficient evidence showing that such registered person is involved in fraud or evasion of duty, he may authorize a Federal Excise Officer, not below the rank of 1[Assistant Commissioner], to conduct audit at any time in a year. 2[(2A) After completion of the audit under this section or any other provision of law, the officer of Inland Revenue may, after obtaining the registered person’s explanation on all the issues raised in the audit shall pass an order under section 14, imposing the amount of duty as per law, charging default surcharge, imposing penalty and recovery of any amount erroneously refunded.] (3) Notwithstanding the penalties prescribed in section 19, if a registered person wishes to deposit the amount of duty not paid, short paid or the amount of duty evaded along with default surcharge voluntarily, whenever it comes to his notice, before commencement of audit, no penalty shall be recovered from him: Provided that if a registered person wishes to deposit the amount of duty not paid, short paid or amount of duty evaded along with default surcharge during or after the audit but before the 3[determination of liability under sub-section (2A)] conclusion of original adjudication proceedings, he may deposit such amount along with twenty five percent of the amount of penalty prescribed under this Act or the rules made there under and in such case, further proceedings in the case shall abate. 4[(4) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following – (a) an officer or officers of Inland Revenue; (b) a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961); (c) a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or (d) any other person as directed by the Board, to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.] 1[(5) Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue; (6) If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence. (7) The Board may prescribe rules in respect of constitution, procedure and working of special audit panel. (8) Every member of the special audit panel shall have the powers of officers of Inland Revenue under sections 23 and 45 and sub- sections (1) to (3) of section 46.] 2[9] The audit of the registered person shall generally be a composite audit covering all duties and taxes to which his business or activity is liable under the laws administered by the Board. 3[***]

Effective date: 2005-07-01

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