ISLAMABAD: The Supreme Court held that where the Commissioner Inland Revenue (Appeals-I) remands a matter for re-examination of specific facts, the assessing officer is bound by the directions and cannot go beyond the scope of the appellate order.
A two-member bench comprising Justice Munib Akhtar and Justice Aqeel Ahmed Abbasi dismissed, in limine, an appeal filed by the Commissioner Inland Revenue, Islamabad, against the Islamabad High Court’s (IHC) verdict dated 15.12. 2025.
The bench observed that the legal position relating to scope of Section 124 of the ITO has been rightly interpreted by the Appellate Tribunal Inland Revenue (ATIR) and the High Court through impugned order, and no exception can be drawn. It stated it is settled legal position that the finding of facts as recorded by the ATIR, unless found to be perverse or contrary to the record, cannot be disturbed by the High Court while exercising reference jurisdiction or even by this Court.
The judgment, authored by Justice Aqeel, noted that the assessing officer in the instant matter has misconstrued the provisions of Section 124 of the Income Tax Ordinance (ITO) with the proceedings after remand of a case for de novo proceedings, i.e. under Section 122(5A) of the ITO.
It said; “Once a matter or issue is remanded by the Commissioner (Appeals) for re-examination of certain facts only, the assessing officer is bound by such directions and cannot go beyond the mandate as given in the Appellate Order, particularly, while giving effect to such Order under Section 124 of the ITO, for the reason that Appellate proceedings are continuation of original proceedings, therefore, the original order merges into the Appellate Order, and the assessing officer is bound to give effect to such Appellate Order in its letter and spirit, without creating fresh grounds, other than disclosed in the show-cause notice issued to the taxpayer under original assessment proceedings.
The further said that in view of the facts and circumstances of the case, “We are of the opinion that primarily, the matter relates to finding of facts as recorded by the ATIR in this regard, which has been duly approved by the High Court in the impugned order, therefore, we are not inclined to disagree with such concurrent finding of facts, as the counsel for the petitioner has failed to establish that such finding of facts is either perverse or contrary to the record.
The controversy arose between the parties pursuant to an order dated 30.11.2020 passed by the assessing officer under Section 124/122(5A) of the ITO pursuant to remand by the Commissioner Inland Revenue (Appeals-I) vide order dated 31.08.2018, whereby, an addition of Rs.1,247,002,763/- was made in the income of the respondent (M/s Oracle System Pakistan (Pvt) Limited) towards the amount payable to related parties by the respondent while invoking Section 20(1) of the ITO.
Advocate Sardar Ahmad Jamal Sukhera, representing the respondent, told the bench that the aforesaid amount as on 31.05.2012 being unpaid for more than three years was offered to tax by the respondent under Section 34(5) of the ITO in Tax Year 2016. He further explained that an amount of Rs145,678,885/- “included in the amount payable to related parties” pertains to the sale of imported hardware taxable under the final tax regime which was never claimed as an expense by it in its Return of income.
Copyright Business Recorder, 2026
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