Section 138 of Income Tax Ordinance, 2001: FBR to withdraw tax recovery notices

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to withdraw tax recovery notices issued under Section 138 of the Income Tax Ordinance, 2001, on the basis of orders passed by Appellate Tribunal Inland Revenue, Islamabad that no coercive measures until cases have passed the test of appeal at the level of Commissioner (Appeals).

When contacted, Waheed Shahzad Butt advocate who has represented this case before the FBR and the ATIR told this correspondence that in order to avoid unnecessary litigation, it was directed by the FBR that coercive measures until a case has passed the test of appeal at the level of Commissioner (Appeals) may be avoided.

Instant wise move is a positive step by FBR filed formations towards taxpayer facilitation while precious resources of the national exchequer shall be saved in futile litigation.

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Moving and arguing stay application before CIR-A is not a free gift but a waste of huge resources of the State in the shape of consuming the precious time of the CIR-A forum which may be utilised in a productive manner to reduce the pendency of thousands of appeals.

The ATIR in ITA 1790/IB/2022 in MA No 1511/IB/2022 issued specific directions to the FBR, wherein, two circulars have been issued by the FBR on 05.10.2022 to avoid futile litigation including C.No.7(20)S(IR-Operations)/ 2021/209984R (Undue Recovery Proceedings under Section 138 at 1st Appellate Stage), Waheed added.

Waheed further said the appellant had filed a statutory appeal against the order passed u/s 122 before the forum of learned CIR (Appeals); however, the vigilant department has initiated recovery proceedings in terms of Section 138.

In support of FBR instructions and in the light of the ATIR Islamabad order dated 10.10.2022, it was requested that the department must clarify the following crucial issues in the best interests of Pakistan’s taxation system:

(i) Whether the afore-cited instructions/directions issued by FBR are binding on field formations in terms of Section 206.

(ii) Whether some field formations/tax employees have been excluded from the operations of FBR Circulars dated: 12/10/2021 and Circulars dated 05.10.2022?

(iii) Whether in the presence of unambiguous directions issued in Circulars having binding force u/s 206, a taxpayer is required to seek a stay of demand order from a forum of CIR (Appeals) where appeal against assessment order is pending adjudication?

(iv) Whether the aforementioned order passed by the ATIR dated 10.10.2022 is binding on FBR field formation or not?

It is prayed that directions may kindly be issued to the sub-ordinate tax employees to immediately withdraw the notice/letter in support of a binding order issued by Supreme Court in 2018 SCMR 939, 2022 SCMR 634, (2022)125 TAX 271 = 2022 PTD 831, (2022)125 TAX 354 = 2022 PTCL 463 = 2022 PTD 1169.

Later, the FBR field formations have decided to withdraw the recovery notices issued in terms of Section 138 of the ITO, 2001, Waheed added.

Copyright Business Recorder, 2023