Islamabad, Feb 20: The Federal Board of Revenue (FBR) has instructed all Inland Revenue assessing officers to strictly adhere to the legal and procedural framework set by the Appellate Tribunal Inland Revenue (ATIR) when issuing assessment orders against withholding agents. These directives have been communicated to the Chief Commissioners of Inland Revenue to ensure compliance and prevent unnecessary litigation.
According to the latest FBR directive, a copy of the ATIR Order (ITA No. 1889/113/2024) has been circulated, which highlights critical lapses in the assessment process under Section 161/205 of the Income Tax Ordinance, 2001. The ATIR ruling underscores that assessing officers have, in some cases, overlooked the procedural requirements prescribed by law.
Read More:
Pakistani Rupee is Overvalued, Warns Economic Advisory Council
This has led to violations of due diligence, non-compliance with legal procedures, and potential risks to revenue security, ultimately resulting in avoidable legal disputes.
The ATIR has laid out a structured step-by-step approach for assessing officers handling withholding tax matters to enhance transparency and procedural accuracy. The key steps outlined include:
- Verification of return filing status under Section 114.
- Examination of statements submitted under Section 165.
- Identification of non-compliance cases.
- Cross-checking the taxpayer’s compliance records.
- Initiation of reconciliation proceedings under Rule 44.
- Finalization of reconciliation proceedings as per Rule 44.
- Issuance of a show-cause notice under Section 161(1) or 161(1A).
- Evaluation of the taxpayer’s response and decision-making process.
- Issuance of a reasoned order under Section 161.
- Levy of default surcharge under Section 205.
- Informing taxpayers about their right to appeal before the ATIR or High Court.
- Initiation of recovery proceedings, if necessary.
The ATIR has referred to multiple case laws, including CIR vs. Islam Steel Mills (2015 PTD 2335), M/s Nishat (Chunian) vs. FBR (2015 PTD 1385), Pepsi Cola International (PTCL 2023 CL 71), and Marwal Enterprises (2023 PTD 732), reinforcing the principle that proceedings under the Income Tax Ordinance are deemed judicial in nature under Section 224.
In light of these directives, the FBR has mandated that all assessing officers under the administrative jurisdiction of Chief Commissioners must comply with the prescribed legal framework. This measure aims to reduce frivolous litigation and ensure that assessment orders meet judicial scrutiny. Chief Commissioners have been tasked with ensuring the implementation of these guidelines to uphold the integrity and efficiency of tax administration.
