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ISLAMABAD: The Federal Board of Revenue (FBR) has issued instructions to all Pakistan Commissioner Appeals to use powers of inquiry under fiscal laws (Income Tax, Sales Tax and the FED) to avoid unnecessary annulment with directions.

The FBR's circular is related to the powers of inquiry available to the Commissioner Appeals stipulated under section 128 (4) of the Income Tax Ordinance 2001, 45B(3) of the Sales Tax Act 1990, and section 33(3) of the Federal Excise Act 2015.

Waheed Shahzad Butt, a tax expert, explained that the circular issued by the FBR legal wing dated 15.02.2021 is two folds, one is contrary to the right of access to justice, while the other is correcting the mindset of IRS officials working as CIR-Appeals to avoid unnecessary litigation at the cost of the public exchequer to frequently remanding the cases under the umbrella of Annulment.

Tax experts are divided over the powers to be exercised by the Commissioner Appeals available to them under the law.

"I am directed to invite your kind attention towards the express provisions of sub-section (4) of section 128 of Income Tax Ordinance 2001; (3) of section 45B of Sales Tax Act 1990 and (3) of section 33 of the Federal Excise Act 2005 and to state that the power envisaged under section (4) of section 128 of the Income Tax Ordinance 2001, 45B of the Sales Tax Act 1990 and 33 of the Federal Excise Act 2005 may be exercised and unnecessary annulment of orders with directions may be avoided," the FBR secretary appeals (Legal Wing)'s statement in the instructions.

Some tax experts were of the view that the said circular is self explanatory as the administration setting guidelines for judgments of judges is against the law.

Circular would be challenged before high court.

The Pakistan Tax Bar Association has condemned the language of notification, as tax consultants from all over Pakistan are raising voice against this notification.

Waheed added that the Supreme Court in PLD 2012 SC 923, unequivocally, held that "under Articles 9 & 25 right of access to justice included the right to be treated according to law, the right to have a fair and proper trial and a right to have an impartial court or Tribunal".

In mostly sensitive cases, CIR-Appeals have wrongly remanded the cases to the department without appreciating the fact that Finance Act, 2005, brought about amendment in Section 129(1) of the Ordinance and the provisions empowering the First Appellate Authority to set aside the assessment order with the directions to make new assessment order had been deleted.

Besides, the amendment conferred extensive powers to the Commissioner (Appeals) to examine evidence and to undertake further enquiries to decide the case instead of remanding it for de-novo assessment proceedings.

Question of remand back the case to the assessing officer for a new assessment came up for hearing before the Full Bench of the ATIR, in the case reported as 2012 PTD 1032, wherein, it has been held that after the amendment through Finance Act, 2005 in Section 129 of the Ordinance, the Commissioner lacks the power to remand the case to the assessing officer.

Even otherwise, remand order is highly deprecated in law and such order should not be passed in a routine manner to allow a party to improve his case or to fill in the lacuna, 2002 PTD 407 (High Court), 1997 SCMR 524 and 1997 SCMR 1849.

The FBR letter No 1(21)S(Legal-DT)/15 dated 09.02.2015 addressed to all CCIR(s) and All Commissioner-IR (Appeals) of Pakistan is an eye-opener for all public office holders working as Quasi Judicial officers FBR, Waheed added.

Copyright Business Recorder, 2021

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