ISLAMABAD: Appellate Tribunal Inland Revenue (ATIR), Lahore Bench, has dismissed an appeal filed by the Commissioner against a taxpayer, while sharply criticising the tax department for pursuing litigation in a “mechanical manner without application of mind.”
The case originated when the Officer Inland Revenue, acting on third-party information received from the Punjab Revenue Authority, noted a difference of Rs.342,594,271 between sales declared to the PRA (Rs.622,012,066). Treating the entire differential as suppressed receipts, the OIR passed an ex-parte amendment order, making an addition under Section 111 of the Income Tax Ordinance, alleging that the taxpayer had failed to furnish any supporting record.
The Commissioner (Appeals); however, accepted the taxpayer’s appeal and deleted the addition in its entirety after independently verifying the taxpayer’s stance directly from client of the company. The verification confirmed that a large portion of the differential related to fuel/ diesel components embedded in transportation invoices rather than actual undeclared sales, a position the taxpayer had, in fact, already explained to the assessing officer through a detailed reconciliation.
Upholding the appellate order, the Tribunal observed that the assessment order had been passed “in casual, perfunctory and non-speaking manner,” with the OIR arbitrarily brushing aside the taxpayer’s documentary reconciliation and creating what the Tribunal termed a “monstrous tax demand” without affording adequate opportunity of being heard, conduct the Bench described as reflecting “complete lack of application of mind, rather abuse of official authority which is deprecated.”
When contacted, tax practitioner Waheed Shahzad Butt informed it is FBR’s preferred choice to challenge every order where a huge tax demand has been culled down by the appellate forums. He observed that despite the unambiguous factual position on record, the CIR concerned still chose to file the appeal in a mechanical manner, without application of judicial mind and without even going through the appellate order under challenge.
This is nothing but wastage of precious taxpayer money in futile litigation in a zero-sum game, such indiscriminate and mechanical filing of appeals, devoid of any independent application of mind by the sanctioning authority, must be stopped in order to save the already deteriorating taxation system of Pakistan from further erosion of credibility, Waheed added.
Copyright Business Recorder, 2026
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