ISLAMABAD: The Federal Board of Revenue (FBR) has decided to give legal cover to electronically-served notices in cases where the person has provided an electronic address.
The FBR has issued an SRO549(I)/2022 to issue a draft amendment to the Income Tax Rules, 2002.
According to the FBR’s proposed amendment, “Where a person has provided an electronic address, the document required to be served on the person shall be considered sufficiently served if sent to that address”, it added.
A tax expert said that the FBR has made an attempt to obtain legal backing to the notices served through the IRS electronic system. But notices have to be served to one of the partners of the AOPs or directors of the companies on the declared addresses. The notices would be served electronically to the partners of the AOPs or directors of the companies to legally cover the notices served through IRS system.
Amer Javed Ahmad, managing partner Rafaqat Babar & Co Chartered Accountants informed Business Recorder that the proper service of order by the tax department is equally important like other provisions of Income Tax Ordinance, 2001. The process of serving order directly affects taxpayer’s right i.e. Right to Appeal against reference order before Appellate Authority. This Service of Order is addressed by section 218 of the Ordinance, however, for companies, is elaborated in Section 218(2).
He was of the view that the Commissioner Income Tax (Appeals) are not entertaining appeals of taxpayers by mentioning the date on the Orders manifested on IRIS portal and declaring appeals as time barred.
In order to get clarity about the fact that whether manifestation of notices or orders on the IRIS portal falls under the ambit of electronic service or not, tax expert has referred to relevant section and rule regulating electronic service.
Under section 218(Service of notices and other documents), any notice, order or requisition required to be served on a resident individual (other than in a representative capacity) for the purposes of this Ordinance shall be treated as properly served on the individual if (a) personally served on the individual or, in the case of an individual under a legal disability or a non-resident individual, the representative of the individual; (b) sent by registered post or courier service to the place specified in clause (b) [of sub-section (2)] or to the individual’s usual or last known address in Pakistan; or (c) served on the individual in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 or (d) served on the individual electronically in the prescribed manner.
It is crystal clear that in case of any taxpayer (Individual, Association of persons, Company) it is written that served on the individual electronically (Principal officer in case of AOP or company) and then substantive law has referred to rules, it means nowhere under the substantive law it is written that manifestation of order on IRIS portal shall be considered as service of notice or other documents.
In order to get further clarity that manifestation of notice or other documents on IRIS portal is not considered as served, tax expert has referred to the respective rules as referred by the Ordinance in section 218, which is rule 74 (Service of documents electronically) of Income Tax Rules, 2002.
By reading the above rule it becomes clear that nowhere under the rule it is mentioned that service of notice or other documents shall be considered as served when it manifests on IRIS portal.
The objection of Commissioner Income Tax (Appeals) that date mentioned on the Order manifested on IRIS portal is the date of service of order seems against the law and rule made thereunder.
Tax expert said that since the issuance of directions under by Revenue Division of Federal Board of Revenue, Inland Revenue, dated January 28, 2021, through No 3(22)S(IR-Operations)/2020, the tax officials of FBR are using such directions as they deem fit, genuinely ignoring the Ordinance i.e. law of land for tax matters.
However, the action of the officers of FBR is not the prospective effect of such directions issued, but previously they were conducting the same acts (i.e. issuing order online but not following Section 218) but at that time, online sending of Orders was not much appreciated and evidence of delivery via post was considered material evidence against any such delivery.
Presently, officers are issuing online orders without verifying that the service of the notice/order is in accordance with Section 218 of Ordinance, Amer Javed Ahmad added.
Currently, the officer issues online orders and upload on IRIS portal and without uploading the notices/orders in accordance with Section 218 of Ordinance. Since the order is not served in accordance with law, after lapse of few months on checking portal the case has been barred by time limitation for filing of appeal.
On approaching the relevant field formation, the taxpayer is forced to pay Rs200/300 for certified true copy and then go for appeal which definitely would face at the first instance condonation of time issue before Appellate Authorities.
The most affected sector is corporate sector (AOPs and companies), the law considers a valid service, when the order/notice is served to principal officer of association of person or company, however uploading to IRIS portal is considered to be sufficient negating true essence of law and depraving the right to appeals, he added.
Copyright Business Recorder, 2022
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