Sec 47AAA introduced in Finance Bill: IR appeals will be vetted by scrutiny committee

ISLAMABAD: In a significant move to streamline tax litigations, the federal government has introduced Section 47AAA through the Finance Bill 2026, requiring mandatory approval from an independent case scrutiny committee before the Inland Revenue can file appeals to the high court or higher judicial forums.

Legal expert Arshad Shehzad explained that in the past, the tax department routinely filed appeals against nearly every order of the Appellate Tribunal before the high court. This practice, he noted, created an unnecessary burden on the judiciary, with cases being filed even when principles of law had already been settled by the apex court, including matters of time limitations, retrospective application of law, and jurisdictional defects.

Under the amendment, now appeals must be vetted by a committee comprising, A retired judge, An advocate with at least 15 years of tax/commercial litigation experience, A senior retired officer of the FBR.

The committee’s recommendations are binding on the Commissioner Inland Revenue. The measure is designed to ensure that only legally strong, merit-based cases reach higher courts.

According to Shehzad, the reform aims to Curb frivolous appeals, reduce the burden on courts, Enhance taxpayer confidence in the fairness of the system.

He further suggested that the government should consider referring pending litigation cases to this committee as well, which would not only ease judicial workload but also strengthen trust between taxpayers and the tax authorities. This amendment is a step toward responsible litigation management, Shehzad concluded.

Copyright Business Recorder, 2026