Section 147 of Income Tax Ordinance 2001: Taxpayers must deposit 90pc advance tax: ATIR Multan

ISLAMABAD: The Appellate Tribunal Inland Revenue (ATIR), Multan Bench, in a landmark judgment, has held that taxpayers are under a statutory obligation to deposit 90 percent of tax chargeable under the advance income tax provisions of Section 147 of the Income Tax Ordinance, 2001, into the national exchequer. Any failure, the Tribunal ruled, attracts liability to pay default surcharge to the Government of Pakistan.

It is reliably learnt that ATIR ordered that the appellant had admittedly failed to discharge ninety percent of its advance tax liability, thus squarely attracting the provisions of section 205(1B).

It clarified that the reliance placed by the taxpayer on section 205(1) (a) was “wholly misconceived,” since that clause merely excludes advance tax from subsection (1), leaving its treatment to special provisions, subsections (1A) and (1B).

Wealth tax: technical error in prescribed form

Dismissing the appeals filed by the taxpayer, the ATIR categorically held that the contentions raised were without merit, misconceived in law, and contrary to binding judicial pronouncements.

Legal experts have termed the decision a significant precedent reinforcing the mandatory nature of advance tax obligations under Section 147 and the strict application of default surcharge provisions under Section 205(1B).

Commenting on the recent developments, tax lawyer Waheed Shahzad Butt told Business Recorder that it is “extreme negligence on the part of FBR team that they are unaware of the unambiguous provision of Section 205(1B) of the Ordinance. The FBR had itself remained involved in state-sponsored moves to recover taxes directly from the bank accounts of taxpayers”.

The show cause notice has rightly been issued under section 205(1B), and the computation of default surcharge stands unchallenged,”.

Upholding the orders of the Assessing Officer, the ATIR confirmed the imposition of default surcharge amounting to Rs. 23,995,342 and Rs. 57,034,823, in toto, ATIR ordered.

Copyright Business Recorder, 2025