On 6th May 2024, the Parliament amended Tax Laws under the Income Tax Ordinance, 2001, Sales Tax Act, 1990 and The Federal Excise Act, 2005. The article below will discuss all relevant changes to the Income Tax Ordinance, 2001.
INCOME TAX ORDINANCE, 2001
Three types of amendments were undertaken in Income Tax Ordinance, 2001;
a) Introduction of a new Section
b) Insertions within existing Sections
c) Substitute Sections
A. NEW SECTION
“126A. Pecuniary jurisdiction in appeals. -
(1) Subject to other provisions of this Act, - (a) an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed twenty million rupees; or (b) an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds twenty million rupees.
(2) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section - 133.
(3) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in cases under clause (b) of sub-section (1) may file a reference before the High Court in accordance with section 133.
(4) The cases pending before the Commissioner (Appeals) having the value of assessment of tax or, as the case may be, refund of tax exceeding twenty million rupees shall on and from the 16th day of June, 2024 stand transferred to the Appellate Tribunal Inland Revenue.
(5) All cases transferred from the Commissioner (Appeals) to the Appellate Tribunal under sub-section (4) shall be decided by the Appellate Tribunal within the period provided for under section 132 which period shall commence from the 16th day of June, 2024.
B. INSERTIONS WITHIN SECTIONS
122A. Revision by the Commissioner. — (1) The Commissioner may [Suo moto] call for the record of any proceeding under this Ordinance or under the repealed Ordinance in which an order has been passed by any [Officer of Inland Revenue] other than the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees.
124. Assessment giving effect to an order. — (1) Except where sub-section (2) applies, where, in consequence of, or to give effect to, any finding or direction in any order made under Part III of this Chapter by the Commissioner (Appeals), Appellate Tribunal, High Court, or Supreme Court an assessment order or amended assessment order is to be issued to any person, the Commissioner shall issue the order within two years from the end of the financial year in which the order of the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, Appellate Tribunal, High Court or Supreme Court, as the case may be, was served on the Commissioner.
(2) Where, by an order made under Part III of this Chapter by the Appellate Tribunal, High Court, or Supreme Court, an assessment order is set aside wholly or partly, and the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, is directed to pass a new assessment order, the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, shall [pass] the new order within [one year from the end of the financial year in which] the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, is served with the order,
(6) Nothing in this Part shall prevent the issuing of an assessment order or an amended assessment order to give effect to an order made under Part III of this Chapter by the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, Appellate Tribunal, High Court, or Supreme Court.
C. SUBSTITUTED SECTIONS
SECTION | ORIGINAL SECTION | SUBSTITUTED SECTION |
S. 130
| 130. Appellate Tribunal. - (1) There shall be established an Appellate Tribunal to be called the Appellate Tribunal Inland Revenue to exercise the powers and perform the functions conferred on the Appellate Tribunal Inland Revenue by this Act.
(2) The Appellate Tribunal Inland Revenue shall consist of a chairman and such other judicial and accountant members who shall be appoints in such numbers and in such manner as the Prime Minister may prescribe by rules, which may be made and shall take effect notwithstanding anything contained in section 237 or any other law or rules for the time being in force.
(3) No person shall be appointed as judicial member of an Appellate Tribunal Inland Revenue unless he - (a) has been a Judge of a High Court; (b) is or has been a District Judge; or (c) is an advocate of a High Court with a standing of not less than ten years; or (d) possesses such other qualification as may be prescribed under sub-section (2) of this section.
(4) No person shall be appointed as an accountant member of a Appellate Tribunal Inland Revenue unless he – (a) is an officer of the Inland Revenue Service equivalent in rank to that of 1 [Chief Commissioner Inland Revenue]; (b) is a Commissioner Inland Revenue or Commissioner Inland Revenue (Appeals) having not less than three years experience as Commissioner 2 [ ]; (c) has for a period of not less than ten years practiced professionally as a chartered accountant within the meaning of the Chartered Accountants’ Ordinance, 1961 (X of 1961); or (d) has for a period of not less than ten years practiced professionally as a cost and management accountant within the meaning of the Cost and Management Accountant’ Act, 1966 (XIV of 1966).
(5) The constitution, functioning of benches and procedure of the Appellate Tribunal Inland Revenue shall be regulated by rules which the Prime Minister may prescribe.
(6) The rules in respect of the matters covered under this section made prior to commencement of the Tax Laws (Second Amendment) Ordinance, 2019 shall continue in force unless amended or repealed.] | S130. Appellate Tribunal.- (1) There shall be established an Appellate Tribunal Inland Revenue hereinafter called as the Appellate Tribunal to exercise jurisdiction, conferred on it under this Ordinance: Provided that the existing members including Chairman of the Appellate Tribunal shall continue to hold office, on the same terms and conditions as applicable to them prior to• the commencement of the Tax Laws (Amendment) Act, 2024 ( of 2024), till the completion of their term of office unless resigned or removed earlier on the grounds provided in the proviso to sub-section (5).
(2) The Appellate Tribunal shall consist of members who shall be appointed by the Federal Government in such numbers, in accordance with such procedure and on such terms and conditions as the Federal Government may prescribe by rules, which shall be made and take effect notwithstanding anything contained in section 237 of this Ordinance or the Federal Public Service Commission Ordinance, 1977 (XLV of 1977) or any other law or rules, for the time being in force.
(3) A person shall be eligible to be appointed as a member of the Appellate Tribunal, .if he : (a) is an advocate of a High Court for not less than fifteen years and possesses such other qualifications as may be prescribed by rules under this section; (b) has for a period of not less than ten years practiced professionally as a chartered accountant within the meaning of the Chartered Accountants' Ordinance, 1961 (X of 1961); (c) has for a period of not less than ten years practiced professionally as a cost and management accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966); (d) Is an officer of the Inland Revenue in BS-21 or above; or (e) Is an officer of the Inland Revenue in BS-20, having served in such grade for three years or more.
(4) The Federal Government shall appoint any member possessing qualifications provided in clauses (a), (b)- and (o) of sub-section (3) as Chairman of the Appellate Tribunal. The Chairman shall hold office for a period of three years provided that the Federal Government may reappoint the Chairman for such further term or terms as it may deem appropriate.
(5) The members including the Chairman shall cease to hold office on attaining the age of sixty-two years provided that the members falling under clauses (c) and • (d) of sub-section (3) shall cease to hold office on attaining the age of superannuation, under the law regulating their service:
Provided that a member including the Chairman may resign or may be removed by the Federal Government, on the recommendation of performance review committee, to be constituted by the rules made under sub-section (2), at any time before the expiry of his term or attaining the age of superannuation, as the case may be, on grounds, inter alia, of inefficiency or misconduct, as prescribed by the rules made under sub-section (2).
(6) The procedure of the Appellate Tribunal Inland Revenue including constitution of benches, case management system, distribution of cases and other matters ancillary or incidental thereto shall be regulated by the rules made under sub-section (2). |
S. 131 | 131. Appeal to the Appellate Tribunal. — (1) Where the taxpayer or Commissioner objects to an order passed by the Commissioner (Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal against such order.
(2) An appeal under sub-section (1) shall be–— (a) in the prescribed form; (b) verified in the prescribed manner; (c) accompanied, except in case of an appeal preferred by the Commissioner, by the prescribed fee specified in sub-section (3); and (d) preferred to the Appellate Tribunal within sixty days of the date of service of order of the Commissioner (Appeals) on the taxpayer or the Commissioner, as the case may be.
(3) The prescribed fee shall be five thousand rupees in case of a company and two thousand rupees in case other than a company. (4) The Appellate Tribunal may, upon application in writing, admit an appeal after the expiration of the period specified in clause (d) of sub-section (2) if it is satisfied that the person appealing was prevented by sufficient cause from filing the appeal within that period.
(5) Notwithstanding that an appeal has been filed under this section, tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case:
Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate Provided further that where recovery of tax has been stayed under this section, such stay order shall cease to have effect on expiration of the said period of one hundred and eighty days following the date on which the stay order was made and the Commissioner shall proceed to recover the said tax
Provided further that in computing the aforesaid period of one hundred and eighty days, the period, if any, for which the recovery of tax was stayed by a High Court, shall be excluded. | 131. Appeal to the Appellate Tribunal. — (1) Subject to section 126A, any person, other than an SOE, aggrieved by any order passed by an officer of Inland Revenue or Commissioner or Chief Commissioner or the Board or Commissioner (Appeals) under this Ordinance or the rules made thereunder may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal or, as the case may be, a reference to the High Court:
Provided that where sub-section (11) of section 134A apply, an SOE may prefer an appeal under this sub-section.
(2) An appeal under sub-section (1) shall be a) in the prescribed form; b) verified in the prescribed manner; c) accompanied, by the prescribed fee specified in sub-section (3); and d) preferred to the Appellate Tribunal within thirty days of the date of service of order on the taxpayer.
(3) The prescribed fee shall be twenty thousand rupees in case of a company and five thousand rupees in case other than a company.
(4) The Appellate Tribunal, may, upon application in writing, admit an appeal after the expiration of the period specified in clause (d) of sub- section (2) if, it is satisfied that the person preferring appeal was prevented by sufficient cause from filing the appeal within that period.
(5) Notwithstanding that an appeal has been filed under this section, tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case:
Provided that on filing of application in a particular case, the Appellate Tribunal may after affording an opportunity of being heard to the Commissioner having jurisdiction, for reasons to be recorded, stay the recovery of tax for ninety days:
Provided further that the stay order shall cease to have effect, and the Commissioner shall be entitled to recover tax, if the taxpayer does not adhere to the hearing schedule for the appeal, as determined by the Appellate Tribunal in accordance with the rules made under sub-section (2) of section 130:
Provided also that where an appeal is not decided within the statutory period by the Appellate Tribunal, the stay order under the second proviso shall not cease to have effect till finalization of the appeal by the Appellate Tribunal. |
S. 132 | 132. Disposal of appeals by the Appellate Tribunal. — (1) The Appellate Tribunal may, before disposing of an appeal, call for such particulars as it may require in respect of the matters arising on the appeal or cause further enquiry to be made by the Commissioner.
(2) The Appellate Tribunal shall afford an opportunity of being heard to the parties to the appeal and, in case of default by any of the party on the date of hearing, the Tribunal may proceed ex parte to decide the appeal on the basis of the available record. (2A) The Appellate Tribunal shall decide the appeal within six months of its filing;
(3) Where the appeal relates to an assessment order, the Appellate Tribunal may, without prejudice to the powers specified in sub-section (2), make an order to —
(a) affirm, modify or annul the assessment order; or
(c) remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.
(4) The Appellate Tribunal shall not increase the amount of any assessment 3 [or penalty] or decrease the amount of any refund unless the taxpayer has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.
(5) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorise the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub-section (2) of section 122 shall not apply to the making of such amended assessment.
(6) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require.
(7) The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner. | 132. Decision of appeals by the Appellate Tribunal. - (1) The Appellate Tribunal shall decide the appeal within ninety days of its filing:
Provided that appeals pending before the Appellate Tribunal on the date of commencement of the Tax Laws (Amendment) Act, 2024 (of 2024), shall be decided within one hundred and eighty days:
Provided further that where an appeal is not decided within the aforesaid period, the Appellate Tribunal shall seek condonation from the Minister of Law and Justice and such condonation shall not extend beyond ninety days.
(2) At the first hearing of appeal, the’ ‘Appellate Tribunal shall
a) bring to the notice of the taxpayer, the provisions relating to alternative dispute resolution under section 134A of this Ordinance; and b) if the taxpayer declines the option of alternative dispute resolution and wishes to continue with the appeal, fix date or dates for hearing and decision of the appeal in consultation with the taxpayer and Commissioner and in accordance with the rules.
(3) The Appellate Tribunal shall ensure strict adherence by the taxpayer and the Commissioner, to the hearing schedule as prescribed, and shall hear and decide the appeal on the date or dates fixed, and no adjournment shall be granted, except-
a) where there are compelling reasons for adjournment, to be recorded by the Appellate Tribunal; and b) on mandatory payment of such cost as the Appellate Tribunal may deem fit, which shall not be less than fifty thousand rupees.
(4) Where the appeal relates to an assessment order, the Appellate Tribunal may, without prejudice to the powers specified in sub-section (3), make an order to—
a) affirm, modify or annul the assessment order; b) remand the case to the Commissioner for making such enquiry or taking such action as the Tribunal may direct; or c) make such order as the Appellate Tribunal may deem fit.
(5) The Appellate Tribunal shall not increase the amount of any assessment or penalty or decrease the amount of any refund unless the taxpayer has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.
(6) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorize the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub-section (2) of section 122 shall not apply to the making of such amended assessment.
(7) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require.
(8) The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner
(9) Save as provided in section 133, the decision of the Appellate Tribunal on an appeal shall be final. |
S. 133 | 133. Reference to High Court. — (1) Within ninety days of the communication of the order of the Appellate Tribunal under sub-section (7) of section 132, the aggrieved person or the Commissioner may prefer an application, in the prescribed form along with a statement of the case, to the High Court, stating any question of law arising out of such order.
(2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law which arises out of its order.
(3) Where, on an application made under sub-section (1), the High Court is satisfied that a question of law arises out of the order referred to in sub-section (1), it may proceed to hear the case.
(4) A reference to the High Court under this section shall be heard by a Bench of not less than two judges of the High Court and, in respect of the reference, the provisions of section 98 of the Code of Civil Procedure, 1908 (Act V of 1908), shall apply, so far as may be, notwithstanding anything contained in any other law for the time being in force.
(5) The High Court upon hearing a reference under this section shall decide the question of law raised by the reference and pass judgment thereon specifying the grounds on which such judgment is based and the Tribunal’s order shall stand modified accordingly. The Court shall send a copy of the judgment under the seal of the Court to the Appellate Tribunal.
(6) Notwithstanding that a reference has been made to the High Court, the tax shall be payable in accordance with the order of the Appellate Tribunal:
Provided that, if the amount of tax is reduced as a result of the judgment in the reference by the High Court and the amount of tax found refundable, the High Court may, on application by the Commissioner within thirty days of the receipt of the judgment of the High Court that he wants to prefer petition for leave to appeal to the Supreme Court, make an order authorizing the Commissioner to postpone the refund until the disposal of the appeal by the Supreme Court.
(7) Where recovery of tax has been stayed by the High Court by an order, such order shall cease to have effect on the expiration of a period of six months following the day on which it was made unless the appeal is decided or such order is withdrawn by the High Court earlier.
(8) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application made to the High Court under sub-section (1).
(9) An application under sub-section (1) by a person other than the Commissioner shall be accompanied by a fee of one hundred rupees.
| 133. Reference to High Court.— (1) Within thirty days of the communication of the order of the Appellate Tribunal or, as the case may be, the Commissioner (Appeals), the aggrieved person or the Commissioner may file a reference, in the prescribed form along with a statement of the case, before the High Court, stating any question of law, or a mixed ' question of law and facts arising out of such order:
Provided that the applicant shall also file complete record of the Appellate Tribunal within fifteen days of preferring an application under this section
(2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law or a mixed question of law and facts 'which arises out of its order.
(3) Where, on an application made under sub-section (I), the High Court is satisfied that a question of law or a mixed question of law and facts arises out of such order referred to in sub-section (1), it may proceed to hear the case.
(4) A reference to the High Court under this section shall be heard by Special Bench or the Special Benches, as the case may be, to be constituted by the Chief Justice, as deemed necessary for hearing cases under this section, comprising of not less than two judges of the High Court and, in respect of the reference, the provisions of section 98 of the Code of Civil Procedure, 1908 (Act V of 1908), shall apply, so far as may be, notwithstanding anything contained in any other law for the time being in force.
(5) The Special Bench shall decide a reference within six months from the date of its filing.
(6) The High Court shall establish a case management system to ensure that sufficient number of Special Benches are constituted, so as to ensure that a reference filed under this section is decided within the stipulated six months.
(7) The High Court upon hearing a reference under this section shall decide the question of law or a mixed question of law and facts raised by the reference and pass judgment thereon specifying the grounds on which such judgment is based and the Appellate Tribunal's order shall stand modified accordingly.
(8) The High Court shall send a copy of the judgment under the seal of the High Court to the Appellate Tribunal or, as the case maybe, the Commissioner (Appeals).
(9) Notwithstanding that a reference has been made to the High Court, the tax shall be payable in accordance with the order of the Appellate Tribunal or, as the case may be, the Commissioner (Appeals):
Provided that the tax recovery shall not be made by the Commissioner for thirty days from the date of communication of the order of the Appellate Tribunal or, as the case may be, the Commissioner (Appeals):
Provided further that, if the amount of tax is reduced as a result of the judgment in the reference by the High Court and some amount of tax is found to be refundable, the High Court may, on application by the Commissioner within thirty days of the receipt of the judgment of the High Court that he wants to prefer petition for leave to appeal to the Supreme Court, make an order authorizing the Commissioner to postpone the refund until the disposal of the appeal by the Supreme Court.
(10) On an application filed in a particular reference and after affording an opportunity of being heard to the Commissioner, the High Court may stay recovery of tax, subject to deposit with the assessing authority of not less than thirty percent of the tax determined by the Appellate Tribunal. Where recovery of tax has been stayed by the High Court by an order, such order shall cease to have effect on the expiration of a period of six, months following the day on which it was made unless the reference is decided or such order is withdrawn by the High Court earlier.
(11) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application made to the High Court under sub-section (1).
(12) An application under sub-section (1) shall be accompanied by a fee of fifty thousand rupees.
(13) No application filed by the Commissioner under sub-section (1) shall be entertained unless it is accompanied by a written authorization by the relevant Chief Commissioner."; |
S. 134A (1), (2) and (13) | 134A. Alternative Dispute Resolution. (1) Notwithstanding any other provision of this Ordinance, or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to –
(a) the liability of tax of one hundred million rupees or above against the aggrieved person or admissibility of refund, as the case may be;
(b) the extent of waiver of default surcharge and penalty; or
(c) any other specific relief required to resolve the dispute, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, which is under litigation in any court of law or an appellate authority, except where criminal proceedings have been initiated.
(2) The application for dispute resolution under sub-section (1) shall be accompanied by an initial proposition for resolution of the dispute, including an offer of tax payment.
(3) The Board may, after examination of the application of an aggrieved person, appoint a committee, within fifteen days of receipt of such application in the Board, comprising, –
(i) a retired judge not below the rank of a judge of a High Court, who shall also be the Chairperson of the Committee, to be nominated by the Board from a panel notified by the Law and Justice Division for such purpose; (ii) the Chief Commissioner Inland Revenue having jurisdiction over the case; and (iii) (iii) a person to be nominated by the taxpayer from a panel notified by the Board comprising –
(a) chartered accountants, cost and management accountants and advocates having a minimum of ten years’ experience in the field of taxation; (b) officers of the Inland Revenue Service who stood retired in BS 21 or above; or (c) reputable businessmen as nominated by the Chambers of Commerce and Industry: Provided that the taxpayer shall not nominate a chartered accountant or an advocate if the said chartered accountant or the advocate is or has been an auditor or an authorized representative of the taxpayer.
(4) The Board shall communicate the order of appointment of Committee to the aggrieved person, court of law or the appellate authority where the dispute is pending and to the concerned Commissioner. (5) The Committee appointed under sub-section (3) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within forty-five days of its appointment extendable by another fifteen days for the reasons to be recorded in writing.
(6) The decision by the Committee under sub-section (5) shall not be cited or taken as a precedent in any other case or in the same case for a different tax year.
(7) The recovery of tax payable by a taxpayer in connection with any dispute for which a Committee has been appointed under sub-section (3) shall be deemed to have been stayed on the constitution of Committee till the final decision or dissolution of the Committee, whichever is earlier.
(8) The decision of the Committee under sub-section (5) shall be binding on the Commissioner when the aggrieved person, being satisfied with the decision, has withdrawn the appeal pending before the court of law or any appellate authority in respect of dispute as mentioned in sub-section (1) and has communicated the order of withdrawal to the Commissioner:
Provided that if the order of withdrawal is not communicated to the Commissioner within sixty days of the service of decision of the Committee upon the aggrieved person, the decision of the Committee shall not be binding on the Commissioner
(9) Subject to sub-section (10), the Commissioner shall also withdraw the appeal, if any, pending before any court of law or an appellate authority in respect of dispute as mentioned in sub-section (1) within thirty days of the communication of the order of withdrawal by the aggrieved person to the Commissioner. (10) The aggrieved person shall make the payment of income tax and other taxes and within such time as decided by the Committee under sub-section (5) and all decisions and orders made or passed shall stand modified to that extent.
(11) If the Committee fails to decide within the period of sixty days under sub-section (5), the Board shall dissolve the Committee by an order in writing and the matter shall be decided by the court of law or the appellate authority where the dispute is pending under litigation.
(12) The Board shall communicate the order of dissolution to the aggrieved person, court of law or the appellate authority and to the Commissioner.
(13) On receipt of the order of dissolution, the court of law or the appellate authority shall decide the appeal within six months of the communication of the said order.
(14) The Board may prescribe the amount to be paid as remuneration for the services of the members of the Committee, other than the member appointed under clause (ii) of sub-section (3).
(15) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
| 134A- Alternative Dispute Resolution A. Notwithstanding any other provision of this Ordinance, or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to
a) the liability of tax of fifty million rupees or above against the aggrieved person or admissibility of refund, as the case maybe; b) the extent of waiver of default surcharge and penalty; c) or any other specific relief required to resolve the dispute, may apply, except where criminal proceedings have been initiated, to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application:
Provided that where the aggrieved person is a state-owned enterprise (SOE), the limit of tax liability of fifty million rupees or above mentioned in clause (a) of sub-section (1) shall not apply and it shall be mandatory for such aggrieved SOE to apply to the Board for the appointment of a committee for the resolution of any dispute under this section:
Provided further that no suit, prosecution, or other legal proceedings shall lie against the SOE or the committee in relation to the dispute resolved under this section.
Explanation. - State-owned enterprise shall have the same meaning as assigned thereto in the State-Owned Enterprises (Governance and Operations) Act, 2023 (VII of 2023).
B. The application for dispute resolution Under sub-section (1) shall be accompanied by- a) an initial proposition for resolution of the dispute, including an offer of tax payment; and b) an undertaking that the applicant shall accept the decision of the Committee which shall be binding on him in all, respects, and shall on receipt of the decision immediately withdraw any and all pending litigation or cases of any kind in respect of the dispute mentioning details thereof:
Provided that if, the applicant is an SOE, it shall withdraw any and all such pending litigation and cases immediately and mention the details thereof in the undertaking:
Provided further that the 'SOE may file an appeal to the Appellate Tribunal or a reference to the High Court or a petition for leave to appeal the Supreme Court, as the case may be, where sub-section (11) is applicable."; and
(3) The Board may, after examination of the application of an aggrieved person, appoint a committee, within fifteen days of receipt of such application in the Board, comprising, –
(i) a retired judge not below the rank of a judge of a High Court, who shall also be the Chairperson of the Committee, to be nominated by the Board from a panel notified by the Law and Justice Division for such purpose; (ii) the Chief Commissioner Inland Revenue having jurisdiction over the case; and (iii) a person to be nominated by the taxpayer from a panel notified by the Board comprising –
(a) chartered accountants, cost and management accountants and advocates having a minimum of ten years’ experience in the field of taxation; (b) officers of the Inland Revenue Service who stood retired in BS 21 or above; or (c) reputable businessmen as nominated by the Chambers of Commerce and Industry: Provided that the taxpayer shall not nominate a chartered accountant or an advocate if the said chartered accountant or the advocate is or has been an auditor or an authorized representative of the taxpayer.
(4) The Board shall communicate the order of appointment of Committee to the aggrieved person, court of law or the appellate authority where the dispute is pending and to the concerned Commissioner.
(5) The Committee appointed under sub-section (3) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within forty-five days of its appointment extendable by another fifteen days for the reasons to be recorded in writing.
(6) The decision by the Committee under sub-section (5) shall not be cited or taken as a precedent in any other case or in the same case for a different tax year.
(7) The recovery of tax payable by a taxpayer in connection with any dispute for which a Committee has been appointed under sub-section (3) shall be deemed to have been stayed on the constitution of Committee till the final decision or dissolution of the Committee, whichever is earlier.
(8) The decision of the Committee under sub-section (5) shall be binding on the Commissioner when the aggrieved person, being satisfied with the decision, has withdrawn the appeal pending before the court of law or any appellate authority in respect of dispute as mentioned in sub-section (1) and has communicated the order of withdrawal to the Commissioner:
Provided that if the order of withdrawal is not communicated to the Commissioner within sixty days of the service of decision of the Committee upon the aggrieved person, the decision of the Committee shall not be binding on the Commissioner
(9) Subject to sub-section (10), the Commissioner shall also withdraw the appeal, if any, pending before any court of law or an appellate authority in respect of dispute as mentioned in sub-section (1) within thirty days of the communication of the order of withdrawal by the aggrieved person to the Commissioner.
(10) The aggrieved person shall make the payment of income tax and other taxes and within such time as decided by the Committee under sub-section (5) and all decisions and orders made or passed shall stand modified to that extent.
(11) If the Committee fails to decide within the period of sixty days under sub-section (5), the Board shall dissolve the Committee by an order in writing and the matter shall be decided by the court of law or the appellate authority where the dispute is pending under litigation.
(12) The Board shall communicate the order of dissolution to the aggrieved person, court of law or the appellate authority and to the Commissioner.
(13) On receipt of the order of dissolution, the court of law or the Appellate Tribunal shall decide the appeal within ninety days of the communication of the said order.
(14) The Board may prescribe the amount to be paid as remuneration for the services of the members of the Committee, other than the member appointed under clause (ii) of sub-section (3).
(15) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section. |
SUMMARY OF AMENDMENTS TO THE INCOME TAX ORDINANCE, 2001
A. NEW SECTIONS
Section 126-A (Pecuniary jurisdiction) introduces changes to the pecuniary jurisdiction of appeals under the Income Tax Ordinance. Previously, all tax appeals were filed with the Commissioner of Appeals regardless of the amount. Now, appeals for tax demands of Rs. 20 million or below go to the Commissioner (Appeals), while appeals for amounts exceeding Rs. 20 million go to the Appellate Tribunal Inland Revenue. If an individual is dissatisfied with the Commissioner's order, they can approach the High Court under Section 133, and similarly, appeals against the Appellate Tribunal's orders can also be taken to the High Court under Section 133.
Starting from 16.06.2024, all pending cases before the Commissioner (Appeals) with tax demands exceeding Rs. 20 million will be transferred to the Appellate Tribunal Inland Revenue. These transferred cases must be decided within the time period prescribed under Section 132 of the Income Tax Ordinance, 2001, beginning from 16.06.2024.
B. INSERTIONS WITHIN SECTIONS
Section 124 A (Revision by the commissioner) states that a revision can now only be conducted by the commissioner of an order passed by Officer of Inland Revenue if the refund of tax does not exceed Rs. 20 Million.
Section 124(1), (2) and (6) (Assessment giving effect to an order state that When any findings or directions are given in an order by the Commissioner (Appeals), Appellate Tribunal, High Court, or Supreme Court, the Commissioner must issue an order within two years from the end of the financial year of the order. This applies if the assessment value is a tax refund not exceeding Rs. 20 million. If the Appellate Tribunal, High Court or Supreme Court sets aside an assessment Order and the value of the assessment does not exceed 20 million, then the Commissioner or Commissioner (Appeals) is directed to pass a new assessment order within one financial year when the Commissioner or Commissioner (Appeals) is served with the order. That will prevent the Commissioner (Appeals) to issue an assessment order or an amended assessment order to give effect to an order, if the value of assessment, refund of the tax does not exceed Rs. 20 Million.
C. SUBSTITUTED SECTIONS
Under the Substitution of Section 130 (Appellate Tribunal), the Appellate Tribunal has been restructured and some key changes include:
Tenure of Existing Members: Current members, including the Chairman, will serve until their terms end, unless they resign or are removed based on specified grounds.
Appointment of New Members: New members will be appointed by the Federal Government, not the Prime Minister.
Eligibility Criteria: A member must be:
a) An advocate of the High Court for 15 years with prescribed qualifications.
b) A Chartered Accountant with 10 years of experience.
c) A cost and management accountant with 10 years of experience.
d) An Inland Revenue Officer in BS-21 or above.
e) An Inland Revenue Officer in BS-20 with 3 years of service in that grade.
Appointment of Chairman: The Federal Government can appoint a qualified member as Chairman for a 3-year term, with possible reappointment.
Retirement Age: Members, including the Chairman, retire at 62, except for those under subsections (3)(c) or (d), who retire at their service's superannuation age.
Resignation or Removal: The Chairman may resign or be removed by the Federal Government based on recommendations from a performance review committee for inefficiency or misconduct before their term ends or upon reaching superannuation age.
Operational Procedures: The Tribunal’s procedures, including bench constitution, case management, and related matters, will follow rules under subsection (2).
Under the Substitution of Section 131 (Appeal to the Appellate Tribunal), some key changes include:
Right to Appeal: Any person (excluding SOEs) aggrieved by an order from the Appellate Tribunal, Commissioner, Chief Commissioner, Board, or Commissioner (Appeals) can appeal within 30 days of receiving the order. SOEs can appeal under Section 134A(11).
Appeal Requirements: Appeals must be:
a) In the prescribed form.
b) Verified in the prescribed manner.
c) Accompanied by fees (Rs. 20,000 for companies, Rs. 5,000 for others).
d) Filed before the Appellate Tribunal within 30 days of service.
Late Appeals: The Appellate Tribunal may accept late appeals if justified.
Tax Recovery: Unless stayed by the Appellate Tribunal, tax must be paid as assessed. The Tribunal can stay tax recovery for 90 days after giving the Commissioner a hearing opportunity.
Hearing Schedule Compliance: If the taxpayer misses the hearing schedule, the Commissioner can recover the tax once the stay order ceases.
Extended Stay Orders: If the Tribunal does not decide the appeal within the statutory period, the stay order remains until the appeal is finalized.
Some key changes implemented through the substitution of Section 132 (Decision of appeals by the Appellate Tribunal) include:
Time Frame for Appeal Decisions: Appeals by the Appellate Tribunal must be decided within 90 days of filing, or within 180 days for pending appeals from before the commencement of the Tax Laws (Amendment) Act, 2024. If not decided in time, the Tribunal must seek condonation, not to exceed 90 days.
ADR: During the first hearing, the Tribunal must inform the taxpayer about Alternate Dispute Resolution under Section 134A. If this option is declined, the appeal must continue in consultation with the taxpayer and commissioner.
Hearing Schedule Compliance: The Tribunal must ensure strict adherence by the Commissioner and taxpayer to hearing and deciding the appeal on the scheduled date(s), granting adjournments only for compelling reasons recorded by the Tribunal or upon payment of a cost not less than Rs. 50,000.
Assessment Orders: Regarding assessment orders, the Tribunal may affirm, modify, or annul the assessment, remand the case back to the commissioner for further action, or make any other appropriate order. The Tribunal cannot increase or decrease penalties or assessments without providing the taxpayer a reasonable opportunity to show cause against such changes. In cases of changes to assessments or new assessments, the Tribunal may authorize the Commissioner to amend the assessment, but the usual time limit shall not apply. For appeals not regarding assessment, the Tribunal may affirm, vary, or annul the decision and issue directions. The Tribunal must communicate its order to the taxpayer and commissioner. Except as provided in section 133, the decision of the Appellate Tribunal on appeal is final.
Three sections of Section 133 (Reference to High Court) (1), (2) and (13), key features of which include:
Time Frame for Filing Reference: Commissioner (Appeals) or an aggrieved party has 30 days to file a reference before the High Court, along with questions of law and fact, and must submit the complete record of proceedings before the Appellate Tribunal within 15 days of filing. The statement submitted before the High Court must outline the facts, the Appellate Tribunal's determination, and the questions of law or mixed questions of law and facts. If the High Court is satisfied with the questions of law or mixed questions of law and fact, it may proceed with the case.
Special Bench: The Chief Justice of the High Court will establish a special bench or benches to hear the case, applying the provisions of section 98 of the Code of Civil Procedure, 1908, and must decide the case within 6 months of its filing, using a case management system to ensure timely decisions.
Judgement: The High Court's judgment, based on the questions of law and facts, must specify the grounds upon which it is based, modifying the Appellate Tribunal's order. The High Court must send a copy of the judgment under its seal to the Appellate Tribunal or Commissioner (Appeals).
Payment of Tax: Tax shall be payable as per the Appellate Tribunal's or Commissioner (Appeals)'s order, without prevention of filing a reference to the High Court. Recovery of tax shall not be made by the Commissioner for 30 days from the date of communication of the order. If the High Court's order reduces the tax amount and a refund is due, the Commissioner may file an appeal before the Supreme Court within 30 days, and the High Court may authorize postponing the refund until the Supreme Court's decision. The High Court, after affording the Commissioner (Appeals) an opportunity to be heard, can stay the recovery of tax on a reference made to it, subject to a deposit of not less than 30% of the tax determined by the Tribunal. The stay ceases after 6 months unless withdrawn earlier by the High Court.
Limitation and Fees: Section 5 of the Limitation Act, 1908, applies to references made to the High Court, requiring a fee of Rs. 50,000, and no application filed by the Commissioner will be entertained unless accompanied by written authorization by the relevant Chief Commissioner.
That only Subsections (1), (2) and (13) of Section 134A (Alternate Dispute Resolution), have been substituted, which state:
Eligibility Criteria: Individuals aggrieved by tax liability of Rs. 50 million or more, admissibility of refund, extent of waiver of default surcharge and penalty, or requiring any other relief to resolve a dispute can apply to the Board for appointment of a committee for resolution.
SOE: State Owned Enterprises (SOEs) meeting the same criteria as under subsection(1)(a) must apply to the Board for committee appointment, and no legal proceedings should be proceeding against the SOE or the committee regarding the same dispute.
Application Criteria: An application to the committee must include an initial proposition for dispute resolution, an offer of tax payment, and an undertaking to accept the committee's decision, withdrawing any pending litigation. SOEs must immediately withdraw all pending litigation and cases, with details mentioned in the undertaking. They can still appeal to the Appellate Tribunal, reference the High Court, or petition for leave to appeal to the Supreme Court where applicable.
Dissolution of Committee: Upon the committee's dissolution, the court of law or Appellate Tribunal must decide the matter within 90 days of communication of the committee's order.
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