What is appeal?

Ø An appeal is a statutory remedy arising from the disagreement between the taxpayer
and the tax authorities regarding the quantification of the taxable income and tax
liability. If the tax payer is aggrieved of the assessment order, the law gives the
taxpayer right of appeal before the Commissioner (Appeals) and if the taxpayer or the
tax collectors are not satisfied with the appellate order of the Commissioner
(Appeals), further right of appeal before the Appellate Tribunal.
Ø The taxpayer or the tax collectors may refer the case to the High Court in case a
question of law arises out of the decision of the Appellate Tribunal.
Circumstances giving rise to Appeal:
Ø Circumstances giving rise to appeal to the Commissioner (Appeal) may include:
(i) A best judgment assessment (ex-parte assessment) based on any available
information or material to the best of the Taxation Officer’s / Commissioner’s
judgment.
(ii) An amendment of assessment
(iii) An order holding an individual personally liable to pay the amount of tax, which
was required to be collected or deducted by him/her or having collected or deducted
fails to pay the same as required by the law
(iv) An order declaring or treating a person as a representative of a non-resident
person
(v) An order refusing to rectify the mistake, either in full or in part
(vi) An order having the effect of enhancing the assessment or reducing a refund or
otherwise increasing the tax liability
Forums of appeals:
Ø Following forums of appeal are available to an aggrieved person:
Ø (i) Commissioner (Appeals)
Ø (ii) Appellate Tribunal
Ø (iii) High Court
Ø (iv) Supreme Court of Pakistan (against decision of reference to High Court).
(Although the Ordinance does not provide anything on the subject, but any person can
prefer to SC under the Constitution); and
Ø (v) Alternative Dispute Resolution

Procedure for filing of appeal before CIR (Appeals):

Ø Any person who is aggrieved by an order passed by the Commissioner or a Taxation
Officer can file the appeal before the Commissioner (Appeals).
Ø Every appeal shall be filed in the prescribed form, verified in the prescribed manner,
be accompanied by the prescribed fee and shall precisely state the grounds upon
which the appeal is made.
Ø In case appeal is made against an order of assessment the application shall be
accompanied by fee of Rs.5,000.
Ø In case of any other order, fee of Rs. 5,000 in case of company and Rs. 2,500 in other
cases, shall be payable.
 Ø No appeal shall be filed if the taxpayer has not paid tax due u/s 137(1) (i.e.) tax
payable with return).
Ø The appeal should be filed:
(i) where the appeal relates to an order of assessment or penalty, within 30 days from the
date of service of notice of demand u/s 137(2) in respect of any order of assessment or
penalty; and
(ii) in any other case within 30 days of the service of intimation of order against which
appeal is to be filed.
Ø However, Commissioner (Appeals) may condone the delay in filing of an appeal upon
application in writing by the appellant
Procedures for disposal of appeals:
Ø Section 128 of the Ordinance outlines the procedure for disposal of appeal in the
following manner: The Commissioner (Appeals) shall give notice of the day fixed for
the hearing of the appeal to the appellant and to the Commissioner against whose
order the appeal has been made.
Ø If the Commissioner (Appeal) Is of the opinion that the recovery of tax levied shall
cause undue hardship t the taxpayer, after hearing the commissioner against whom
appeal is made, he may stay the recovery of the tax for a period not exceeding 30
days.
Ø The Commissioner (Appeals), after affording opportunity of being heard to the
Commissioner against whose order appeal has been made, may stay the recovery of
such tax for a further period of thirty days, provided that the order on appeal shall be
pass within the said period of thirty days.
Ø The Commissioner (Appeals) may adjourn the hearing of the appeal from time to
time.
Ø The commissioner may before the hearing of appeal allow the appellant to add a new
ground of appeal not specified in the grounds already filed if he is satisfied that the
omission of the same was not willful or reasonable.
Ø The Commissioner (Appeals) may, before disposing of an appeal, call for such
particulars as he may require respecting the matters arising in the appeal or cause
further enquiry to be made by the Commissioner.
Ø The Commissioner (Appeals) shall not admit any documentary material or evidence
which was not produced before the Commissioner unless he is satisfied that the
appellant was prevented by sufficient cause from producing the same.
Decision in appeal:
Ø In disposing of an appeal, the Commissioner (Appeals) may:
(i) make an order to confirm, modify or annul the assessment order after examining
such evidence causing such further enquires to be made as he deems fit; or
(ii) in any other case, make such order as the Commissioner (Appeals) thinks fit.

Ø The Commissioner (Appeals) shall not increase the amount of any assessment order
or decrease the amount of any refund unless the appellant shows reasonable cause
against such increase or decrease, as the case may be.
 Ø Where, as the result of an appeal, any change is made in the assessment of an
association of persons or a new assessment of an association of persons is ordered to
be made, the Commissioner (Appeals) may authorize the Commissioner to amend
accordingly any assessment order made on a member of the association and the time
limit specified in section 122(2) shall not apply to the making of such amended
assessment.
Ø As soon as practicable after deciding an appeal, the Commissioner (Appeals) shall
specify in the order the amount of tax upheld and serve his order on the appellant and
the Commissioner.
Provided that such order shall be passed not later than one hundred and twenty days from the
date of filing of appeal or within an extended period of sixty days, for reasons to be recorded
in writing by the Commissioner (Appeals):
Provided further that any period during which the hearing of an appeal is adjourned at the
request of the appellant or is postponed due to any appeal or proceedings or stay order, ADR
proceedings or for any other reason, shall be excluded in the computation of the
aforementioned periods.

Income Tax Appellate Tribunal:

Ø This Tribunal is under the administrative control of the Ministry of Law, Justice and
Parliamentary Affairs and therefore enjoys independence from the Board and the
assessment machinery.
Ø The Appellate Tribunal shall consist of a chairperson and such other judicial and
accountant members as are appointed by the Prime Minister having regard to the
needs of the tribunal.
Ø A person may be appointed as a judicial member of the Appellate Tribunal if the
person:
(i) has exercised the powers of a District Judge and is qualified to be a Judge of a
High Court; or
(ii) is or has been an advocate of a High Court and is qualified to be a Judge of
the High Court:
Ø A person may be appointed as an accountant member of an Appellate Tribunal
if,
(i) he is an officer of Inland Revenue Service equivalent to the rank of Regional
Commissioner;
(ii) a Commissioner Inland Revenue or Commissioner Inland Revenue (Appeals) having at
least three years’ experience as Commissioner or Collector.
(iii) a person who has, for a period of not less than ten years, practiced professionally as a
chartered accountant within the meaning of the Chartered Accountants Ordinance, 1961.
(iv) a person Who has, for a period of not less than ten years, practiced professionally as a
cost and management accountant within the meaning of the Cost and Management
Accountants Act, 1966
Ø The Federal Government shall appoint a member of the Appellate Tribunal as
Chairperson of the tribunal.
 Ø The powers and functions of the Appellate Tribunal shall be exercised and discharged
by Benches constituted from members.
Ø A Bench shall consist of not less than two members of the Appellate Tribunal and
shall be constituted so as to contain an equal number of judicial and accountant
members.
Ø The Federal Government may direct that all or any of the powers of the Appellate
Tribunal shall be exercised by:
(i) any one member; or
(ii) More members than one, jointly or severally.
Ø If the members of a Bench differ in opinion on any point, the point shall be decided
according to the opinion of the majority.
Ø If the members of a Bench are equally divided on a point, they shall state the point on
which they differ and the case shall be referred by the Chairperson for hearing on that
point by one or more other members of the Appellate Tribunal, and the point shall be
decided according to the opinion of the majority of the members of the Tribunal who
have heard the case including those who first heard it.
Ø If there are an equal number of members of the Appellate Tribunal, the Federal
Government may appoint an additional member for the purpose of deciding the case
on which there is a difference of opinion.
Ø The Appellate Tribunal shall have the power to regulate its own procedure, and the
procedure of Benches of the Tribunal in all matters arising out of the discharge of its
functions including the places at which the Benches shall hold their sittings.

Appeal to the Appellate Tribunal (S. 131):

The taxpayer or tax department may file appeal before the Income Tax Appellate Tribunal
under section 131 of the Ordinance. This section provides that:
Ø Where the taxpayer or Commissioner objects to an order passed by the Commissioner
(Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal
against such order.
Ø An appeal shall be:
(i) in the prescribed form;
(ii) verified in the prescribed manner;
(iii) accompanied, except in case of an appeal preferred by the Commissioner, by the
prescribed fee and
(iv) The prescribed fee shall be Rs. 5,000 in case of company and Rs. 2,500 in cases other
than company.
(v) Preferred to the Appellate Tribunal within sixty days of the date of service of order of
the Commissioner (Appeals) on the taxpayer or the Commissioner, as the case may
(vi) The Appellate Tribunal may, upon application in writing, admit an appeal after the
expiration of the above said sixty days if it is satisfied that the appellant was
prevented by sufficient cause from filing the appeal within that period.
(vii) Notwithstanding that an appeal has been filed before the Appellate Tribunal, tax shall,
unless recovery thereof has been stayed by the Appellate Tribunal, be payable in
accordance with the assessment made in the case:
Provided that if on filing of application in a particular case, the Appellate Tribunal is of the
opinion that the recovery of tax, shall cause undue hardship to the taxpayer, the Tribunal,
after affording opportunity of being heard to the Commissioner, may stay the recovery of
such tax for a period not exceeding 180 days in aggregate;
Provided further that where recovery of tax has been stayed, such stay order shall cease to
have effect on expiration of the said period of 180 days following the date on which the stay
order was made and the Commissioner shall proceed to recover the said tax:
Provided further that in computing the aforesaid period of 180 days, the period, if any, for
which the recovery of tax was stayed by a High Court, shall be excluded.
Procedure for disposal of appeal by Appellate Tribunal (S. 132):
Ø The Appellate Tribunal may, before disposing of an appeal, call for such particulars
as it may require in respect of the matters arising on the appeal or cause further
enquiry to be made by the Commissioner.
Ø The Appellate Tribunal shall give opportunity of hearing both the parties to the appeal
and, in case of default by any of the party on the date of hearing, the Tribunal may
proceed ex-parte to decide the appeal on the basis of the available record.

Decision of Appeal:
Ø The Appellate Tribunal shall decide the appeal within six months of its filing;
Ø Where the appeal relates to an assessment order, the Appellate Tribunal may make an
order to:
(i) affirm, modify or annul the assessment order; or
(ii) remand the case to the Commissioner or the Commissioner (Appeals) for making such
enquiry or taking such action as the Tribunal may direct.
Ø The Appellate Tribunal shall not increase the amount of any assessment or penalty or
decrease the amount of any refund unless the taxpayer has been given a reasonable
opportunity of showing cause against such increase or decrease, as the case may be.
Ø Where, as the result of an appeal, any change is made in the assessment of an
association of persons or a new assessment of an association of persons is ordered to
be made, the Appellate Tribunal may authorise the Commissioner to amend
accordingly any assessment order made on a member of the association and the time
limit specified in of section 122(2) shall not apply to the making of such amended
assessment.
Ø Where the appeal relates to a decision other than in respect of an assessment, the
Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue
such consequential directions as the case may require.
Ø The Appellate Tribunal shall communicate its order to the taxpayer and the
Commissioner.
Ø Except as provided in section 133, the decision of the Appellate Tribunal on an appeal
shall be final.
Reference Before High Court under Section 133:
After the receipt of appellate order of the Appellate Tribunal, the taxpayer or the tax
department may file a reference application in order to avail the advisory jurisdiction of High
Court on any point of law. Section 133 of the ordinance deals with this issue and the said
section states that:
Ø The taxpayer or the Commissioner who find themselves aggrieved upon the order of
the Appellate Tribunal can make an application in the prescribed form to the High
Court within ninety days of the communication of an order of the Appellate Tribunal.
Ø The application should be with a statement of case to the High Court stating any
question of law arising out of such order.
Ø The statement to the High Court referred to in above para shall set out the facts, the
determination of the Appellate Tribunal and the question of law which arises out of its
order.
Ø Where, on an application the High Court is satisfied that a question of law arises out
of the order of the Appellate Tribunal, it may proceed to hear the case.
Ø A reference to the High Court shall be heard by a Bench of not less than two judges of
the High Court and, in respect of the reference, the provisions of section 98 of the
code of Civil Procedure, 1908, shall apply, so far as may be, notwithstanding anything
contained in any other law for the time being in force.
Ø The High Court upon hearing a reference shall decide the question of law raised by
the reference and pass judgment thereon specifying the grounds on which such
judgment is based and the Tribunal’s order shall stand modified accordingly. The
Court shall send a copy of the judgment under the seal of the Court to the Appellate
Tribunal.
Ø Notwithstanding that a reference has been made to the High court, the amount of tax
shall be payable in accordance with the order of the Appellate Tribunal:
However, if the amount of tax is reduced as a result of the judgment in the reference by the
High Court, and any amount of tax is found refundable, the High Court may, on application
submitted by the Commissioner, within thirty days of the receipt of the judgement of the
High Court, that he wants to prefer petition for leave to appeal to the Supreme Court, make
an order authorizing the Commissioner to postpone the refund until the disposal of the appeal
by the Supreme Court
Ø Where recovery of tax has been stayed by the High Court by an order, such order
shall cease to have effect on the expiration of a period of six months following the day
on which it is made unless the appeal is decided, or such order is withdrawn by the
High Court earlier.
Ø Section 5 of the Limitation Act, 1908, shall apply to an application made to the High
Court.
Ø A Reference application by a person other than the Commissioner shall be
accompanied by a fee of one hundred rupees.

Petition before Supreme Court:

Ø Supreme Court is the final forum for appeal available to the aggrieved parties against
any judgment of the High Court. Article 185 of the Constitution of Pakistan provides
that any aggrieved party to the decision of the High Court can prefer appeal before the
Supreme Court of Pakistan. Accordingly, no provision in this regard is required in the
Income Tax Ordinance, 2001.
 Alternative Dispute Resolution Committee (S. 134A):
Ø An aggrieved person in connection with any dispute pending before a court of law or
an appellate authority pertaining to—
(a) the liability of tax against the aggrieved person, or admissibility of refunds, as the
case may be;
(b) the extent of waiver of default surcharge and penalty; or
(c) any other specific relief required to resolve the dispute,
may apply to the Board for the appointment of a committee for the resolution of any
dispute mentioned in detail in the application, which is under litigation in any court of
law or an appellate authority, except where criminal proceedings have been initiated
or where interpretation of question of law having effect on identical cases.
Ø The Board may, after examination of the application of an aggrieved person, appoint a
committee, within sixty days of receipt of such application in the Board, comprising,
—
(i) Chief Commissioner Inland Revenue having jurisdiction over the case;
(ii) two persons from a panel notified by the Board comprising of chartered
accountants, cost and management accountants, advocates, having minimum of ten
years’ experience in the field of taxation and reputable businessmen.
Ø The Board shall communicate the order of appointment of committee to the court of
law or the appellate authority where the dispute is pending and the Commissioner.
Ø The Committee appointed shall examine the issue and may, if it deemed necessary,
conduct inquiry, seek expert opinion, direct any OIR or any other person to conduct
an audit and shall decide the dispute through consensus, within 120 days of its
appointment.

Burden of Proof: SECTION 136

Not important just remember BOP is always on the taxpayer.
Section 136 of the Ordinance points to one very important aspect of appeal and states that in
any appeal by a taxpayer, the burden shall be on the taxpayer to prove, on the balance of
probabilities:
1) In the case of an assessment order, the extent to which the order does not correctly reflect
the taxpayer’s tax liability for the tax year; or
2) In the case of any other decision, that the decision is erroneous.