WHT statements defaults: LHC directs ATIR to issue order on FBR’s penalties

ISLAMABAD: The Lahore High Court (LHC) has passed a landmark order in favour of FBR regarding the deletion of penalties imposed on taxpayers for defaulting on monthly Withholding Tax (WHT) statements under Section 165 of the Income Tax Ordinance, 2001.

In a recent judgment, the court disapproved the decision of the Appellate Tribunal Inland Revenue (ATIR) to delete the penalty and remanded the case back to the tribunal for a fresh decision. The case was argued by Advocate Foziya Bukhsh on behalf of the FBR.

The Advocate contended that the taxpayer had failed to file monthly WHT statements as required under Section 165 of the Income Tax Ordinance, 2001, and therefore, the penalty imposed under Section 182(1)(1A) of the Ordinance was lawful.

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The ATIR had deleted the penalty, citing that the tax had been deposited and no loss had been caused to the exchequer. However, the FBR Advocate pleaded that this was not a sufficient ground to delete the penalty, which is mandatory under Section 182 of the Ordinance.

The court set aside the ATIR’s order to the extent of deleting the penalty and remitted the matter back to the tribunal to decide the question afresh through a reasoned and speaking order. The reference application and question raised were decided accordingly, the LHC order added.

Copyright Business Recorder, 2025