FBR Directs Revenue Officials to Adhere to Tribunal Rulings in Withholding Tax Matters
The Federal Board of Revenue (FBR) has ordered new guidelines for Inland Revenue officials, asking them to closely adhere to rulings made by the Appellate Tribunal Inland Revenue (ATIR) when issuing assessment orders for withholding tax cases. The move is intended to ensure conformity with legal and procedural requirements to avoid unnecessary litigations and disputes.
In a recent directive, the FBR instructed the Chief Commissioners of Inland Revenue to ensure that all the officers use the proper legal procedure while handling withholding tax cases. The FBR quoted a judgment in a case (ITA No. 1889/113/2024) where the ATIR emphasized the negligence of assessing officers in adhering to procedural requirements under Section 161/205 of the Income Tax Ordinance, 2001. Such negligence has created problems like delays, non-compliance, and unwarranted court conflicts.
The ATIR’s ruling emphasized that the correct procedures should be followed in withholding tax assessments. They are as mentioned below:
Status of Return filed under Section 114
Status of the statement filed under Section 165
Identifying Non-Compliance
Verification of Taxpayer’s Compliance
Initiation of Reconciliation proceedings under Rule 44
Completion of Reconciliation under Rule 44
Issuance of Show Cause Notice under Section 161(1) or 161(1A)
Considering Taxpayer’s Explanation and Making a Decision
Issuing a Speaking Order under Section 161
Imposing Default Surcharge under Section 205
Informing of the Right to Appeal to ATIR or the High Court
Initiating Recovery Proceedings (if necessary)
The ATIR also referred to past case laws (CIR Vs. Islam Steel Mills, M/s Nishai (Chunian) vs. FBR, Pepsi Cola International, and Marwal Enterprises) that justify the significance of judicial procedures. The Tribunal pointed out that all Income Tax Ordinance proceedings are judicial.
The FBR has now instructed all the Inland Revenue officers to complete these meticulous steps to maintain due diligence and legal requirements, minimizing the possibility of appeals and cases before the court. Chief Commissioners must ensure that instructions are properly conveyed to all concerned officers for future cases.
