Tax Laws (Amendment) Act 2024: Dysfunctional ATIR: PTBA urges Law minister to form oversight body

ISLAMABAD: The Pakistan Tax Bar Association (PTBA) has expressed serious concern that Tax Laws (Amendment) Act 2024 has been a total failure and taxpayers have lost confidence in the dysfunctional Appellate Tribunal Inland Revenue (ATIR).

The PTBA has asked Azam Nazeer Tarar, Minister of Law to intervene and form an oversight committee to look into this matter and also request to expedite the new member’s recruitment and appointment process on war footing, any delay in this regard will further deteriorate the Appellate forum and the taxpayer will deprive with their fundamental right of the fair trial and natural justice.

According to a communication of PTBA to Azam Nazeer Tarar, Minister of Law and Justice Islamabad, reference our previous letter regarding the hardships faced by the taxpayers after the passing of the Tax Laws (Amendment) Act 2024.

Pursuant to the same, significant amendments were introduced to revamp the two-tier appeal system whereby pecuniary jurisdiction in appeal was introduced in the entire appeal system falling under Income Tax Ordinance 2001, Sales tax Act 1990 and Federal Excise Act 2005 and Customs Act 1969. Even the well-established system of only questions of law was to be referred to High Courts was disturbed. All this was done with assurance that the same will expedite disposal of tax litigation of estimated Rs 2.7 trillion pending in courts. New members of the Appellate Tribunal Inland Revenue (ATIR) were to be requited to be appointed in a transparent manner and they would be paid a competitive salary package, it said.

Since enactment of Tax Laws (Amendment) Act 2024 six months have been passed and it is time to reflect and do a reality check if the Tax Laws (Amendment) Act 2024 achieved what it was projected to achieve. Some of the questions and the facts would demonstrate that Tax Laws (Amendment) Act 2024 has been a total failure and the tax judicial fora till stage of Appellate Tribunal Inland Revenue have to say the least become dysfunctional.

(1) What is the real total so called stuck tax revenue that was stuck up till May 2024 that has been adjudicated and decided in these past 6 months?, it questioned.

What has been the outcome of the judgements before the Commissioner of Inland Revenue (Appeals) and Appellant Tribunal Inland Revenue:

i) how many cases were adjudicated in favour of the tax payer and tax quantum.

ii) how many cases were adjudicated in favour of the tax authorities and the quantum.

iii) how many cases were remanded back for re-adjudication and quantum.

iv) What is the total number of appeals where judgements have been reserved and orders not passed? And why?

(2) Why has the complete recruitment not been done and completed for new members of Appellate Tribunal Inland Revenue in spite of passage of six months?, it raised question.

At present at Karachi, there are three Accountant members and one judicial member only instead of sanctioned number of Six Accountant Member and Six Judicial members. Similar is situation in other stations eg Lahore, Islamabad, Peshawar.

Our members are suffering as Benches start functioning leisurely at 11 AM and at times, the hearings go on till 3PM. As per Rules, the Appellate Tribunal Inland Revenue were to adopt the times of High Court in respective provinces and in Sindh High Court, the hearings start at 8:30 AM.

And even after conclusion of hearings, judgements are not passed for reasons one can only guess and the reporting of disposal of cases by the benches is misleading as brief orders of extension of stay are also treated as disposal. There are serious complaints about the functioning of the Appellate Tribunal Inland Revenue from our membership.

Things will crystalise once a detail bench/member wise report obtained from Tribunals about cases heard post May 2024 till date and their outcome, the PTBA stated.

The PTBA pointed out that the appeal fees were significantly increased with an assurance that number of Benches will be increased and new members will be recruited in a transparent manner and new members will be very competent with high ethical values. “What has happened in fact is the number of benches have decreased: as an example in Karachi Appellate Tribunal Inland Revenue, instead of six Benches that were normally functioning, now three benches are functioning and there are serious complaints from our members about the benches of the Appellate Tribunal Inland Revenue which were highlighted in our letter quoted supra. These complaints still persist and if anything, things have further slipped. Taxpayers and their councils are losing confidence in the Income Tax Tribunal and this is very disturbing”, it said.

Provisions of proviso to sub-section (2) to Section 132 of the Income Tax Ordinance 2001 mandates that on first date of hearing, the Tribunal will bring to notice of taxpayer the option available for Alternate Dispute Resolution. This is not being done and this fact may be verified from the fact that hardly any case has been referred for Alternate Dispute Resolution.

The bar stated that there are huge number of appeals pending before Commissioner of Inland Revenue (Appeals), unfortunately, they are not being decided and even if decided, the orders are either remanded back or confirmed. In addition, the positions of commissioner Appeals are not fully operational which delays the appellate proceedings at that level.

The Appellate Tribunal Inland Revenue is taking up cases filed in 2024 as a priority and 80% plus cases fixed for hearing are those that have been filed in 2024 with the result the pending cases since 2014 are further pushed back.

The Appellate Tribunal Inland Revenue needs solid leadership and strategy which lights the path to the past glorious days when the institution was respected and tax payers had confidence in it.

A honest assessment and replies to the above questions will clearly show that the objective of the Tax Laws (Amendment) Act 2024 for streamlining the appeal system under tax laws has miserably failed to achieve it’s objectives. Taxpayers continue to suffer. The PTBA members’ complains about ATIR continue to increase. Getting justice has become difficult and expensive. There are serious and significant complaints and reservations about working of Appellate Tribunal Inland Revenue and the

general feeling is that Appellate Tribunal Inland Revenue falls way below it’s glorious past where cases were decided according to law on merit and legal precedents were respected.

The PTBA once again reiterate our serious reservations on the following amendments made through the Tax Laws (Amendment) Act, 2024 which is against the fundamentals of impartial, inexpensive and expeditious justice.

Reference to High Court against the order of CIT Appeals is creating hardship and cost to the taxpayer which need to be revisited to address the hardship. Therefore, it is recommended that the tax filers whose alleged tax demand falls under the threshold of CIT (Appeals) should allow to file appeal before the Tribunal instead of Reference to High Court, the PTBA said.

Withdrawal of the condition of payment of 30%, at the time of filing reference and recommended to keep it on the discretion of the court reference is made to Section 133 (10) of the Income Tax Ordinance, 2001.

(8) Reference fee of Rs 50,000 may be withdrawn or may be keep it on the discretion of the court reference is made to Section 133 (12) of the Income Tax Ordinance, 2001, the PTBA added.

Copyright Business Recorder, 2024