Q: What is meant by appeal?

Please discuss the

appellate authorities existing under the Income Tax
Ordinance, 2001.
A: If a taxpayer or income tax authority is not
satisfied with an order passed under the income tax
ordinance, 2001, a procedure to remove the
grievance has been provided in the Law. However, it
should be clearly understood that an appeal can not
be made against each and every order or decision.
Appeal can be made in those cases where the law
has been specifically allowed.
Appealable Orders
Any person not satisfied with any of the
following orders passed by the Commissioner Inland
Revenue or officer of Inland Revenue can file an
appeal to the commissioner Inland Revenue
(appeals) against such orders:
Sr
Orders
.
1 Assessment made where no return was
filed by the person
2 An amendment in assessment has been
made by the Commissioner Inland
Revenue
3 Assessment by non-resident ship owner
or charterer
4 Assessment by non-resident aircraft
owner or charterer
5 Order of Commissioner Inland Revenue
to recover the amount of tax from a
person from whom tax was not collected

Sectio
n
121
122
143
144
162

6
7
8
9
1
0
1
1
1
2

or deducted
Refusal to allow refund
Penalty imposed due to failure in
furnishing a return or statement
Holding a person personally liable to pay
an amount of tax collected or deducted
but not deposited with the government
Treating a person as representative of a
non-resident person
Order to pay additional tax
Refusal to rectify a mistake claimed by a
person
Order regarding enhancing the
assessment, reducing a refund or
increasing the tax liability of a person

170
182
161
172
205
221

Following are the appellate authorities under the

Income Tax Ordinance, 2001:
1. Commissioner Inland Revenue (Appeals)
An appeal against the following orders of the
Commissioner of Income Tax or a taxation officer
mentioned in section 127 lies to Commissioner
(Appeals):
Procedure for filing an appeal:
1. No appeal can be filed unless the taxpayer has
paid the amount of tax due on the basis of return.
2. Appeal should be:
i) in the prescribed manner;
ii) verified in the prescribed manner;
iii) state precisely the grounds upon which the appeal

is made;
iv) be accompanied by prescribed fee; and
v) be lodged with the Commissioner(Appeals) within
the time set out for it.
3. The prescribed fee against an assessment shall be
lesser of one thousand rupees or ten percent of the
tax assess; or
4. In other case:
i. Where the appellant is a company, one thousand
rupees; or
ii. Where the appellant is not a company, two
hundred rupees
Time limit for filing an appeal: The appeal shall be
filed within 30 days of the following dates:
i. Where the appeal relates to any assessment or
penalty, the date of service of the demand notice
relating to the said assessment or penalty order; or
ii. In any other case, the date on which intimation of
the order to be appealed against is served.
Extension of time for filing an appeal: The appellate
authority is empowered to admit an appeal after the
expiry of above mentioned period if he is satisfied
that the appellant was prevented by sufficient cause
from presenting the appeal within that period.
Procedure in appeal:
The Commissioner (Appeals) :
1. shall give notice of the day fixed for hearing of the

appeal to the appellant as well as to the

Commissioner against whose order the appeal has
been made.
2. May adjourn the hearing of appeal from time to
time.
3. May allow the appellant to file new grounds of
appeal (other than those already filed) if he is
satisfied that omission of the ground of appeal was
not willful or unreasonable.
4. Can call for any particulars required for deciding
the issue raised in the appeal and can order the
Commissioner of Income Tax to make further enquiry.
5. Shall not admit any documentary material or
evidence which was not produced before the
assessing officer, unless he is satisfied that the
appellant was prevented by sufficient cause from
producing such material or evidence before the
assessing officer.
Decision in appeal:
While disposing of an appeal lodged under section
127, the Commissioner (Appeals):
A. Incase of an appeal against an assessment order
may:
i. set aside assessment order and direct that a new
assessment order be made; or
ii. Confirm, modify or annual the assessment order;
or

B. in any other case, make such order as he may

think fit.
C. shall not increase the amount of an assessment
order or decrease the amount of any refund unless
the appellant has been given a reasonable
opportunity of showing cause against such increase
or decrease.
D. Where, as a result of appeal, any change is made
in the assessment or new assessment is made in
regard to AOP, he may authorize amendment
accordingly within the time limit.
E. Shall serve his order on the appellant and the
Commissioner as soon as possible.
F. If he does not make an order on an appeal before
expiry of three months from the end of the month in
which the appeal was lodged, (excluding the period
the appeal is adjourned on the request of the
appellant), the relief sought by the appellant in the
appeal shall be treated to have been given. This
provision of shall not apply unless a notice by the
appellant stating that no such order has been made
is personally served by the appellant on the
Commissioner (Appeals) not less than thirty days
before the expiration of the period of three months.
2. Appointment of the Appellate Tribunal
Appointment of the Appellate Tribunal:
The Appellate Tribunal is constituted by the Federal
Govt. and functions under the Ministry of Law and

Justice. It consists of two classes of Members, (i)

Judicial Members, and (ii) Accountant Members. It is
headed by a chairperson.
Qualifications of members:
A Judicial member shall be a person who:
a. has exercised the powers of a District Judge and is
qualified to be a Judge of a High Court; or
b. is or has been an advocate of a High Court and is
qualified to be Judge of the High Court.
An Accountant Member may be a person who is an
officer of the Income Tax Group equivalent in rank to
that of a Regional Commissioner.
Federal Govt. appoints a member of the Appellate
Tribunal as Chairperson of the Tribunal and, except in
special circumstances, the person appointed should
be a judicial member.
The Appellate Tribunal is empowered to regulate its
own procedure and the procedure of its Benches in
all matters arising out of the discharge of its
functions including the places at which these
Benches shall hold their sittings. A Bench shall
consist of at least two members. If Benches differ on
any point, the same will be decided according to the
opinion of the majority. In case the members are
equally divided on a point, it shall be referred to the
Chairperson.
Appeal to the Appellate Tribunal:

Procedure for filing an appeal : Where the tax payer

or the Commissioner objects to an order passed by
the Commissioner (Appeals), they can file an appeal
against the order of the Appellate Tribunal. An appeal
shall be:
(a) in the prescribed form;
(b) verified in the prescribed manner;
(c) accompanied by the prescribed fee (except in
case of Commissioner); and
(d) filed within 60 days from the date of the
communication of impugned order to the party
concerned.
Fee payable for filing an appeal: The appeal should
be accompanied by a fee of Rs. 2500 in the case of
companies and Rs. 500 in other cases. The
Commissioner is not required to pay any appeal fee.
Extension of time limit for filing an appeal: The
Appellate Tribunal is empowered to admit an appeal
after the specified time if it is satisfied that the
appellant was prevented by sufficient cause from
presenting the appeal within that period.
Income Tax payable unless stayed: Unless the
recovery of income tax has been stayed by the
Appellate Tribunal, it shall be payable in accordance
with the assessment made in the case. Where the
recovery has been stayed by the order of Appellate
Tribunal it shall cease to have effect on the expiry of
three months following date on which it is made,
unless the appeal is decided or such order is
withdrawn.

Disposal of appeals by the Appellate Tribunal:

Call for Particulars: The Appellate Tribunal, before
disposing an appeal, may call for required particulars
in respect of matters in appeal or cause further
enquiry to be made by the Commissioner.
Dismissal of appeal in default: Opportunity of being
heard will be provided to the parties and in case any
party does not appear on the date of hearing, the
appeal may be dismissed or the Appellate Tribunal
may precede ex-parte.
In an appeal relating to an assessment order, the
Appellate Tribunal may:
(a) affirm modify or annul the assessment order; or
(b) set it aside and issue direction for making a new
assessment;
(c) remand the case to the
Commissioner/Commissioner (Appeals) for making
enquiry or taking such action as it may direct.
Parties to be heard 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.
Where, as a result of appeal, any change is made in
the assessment or new assessment is made in regard
to AOP, the Appellate Tribunal may authorize
amendments accordingly within the specified time
limit.

Finality of order: The order of the Appellate Tribunal

shall be communicated to the taxpayer and the
Commissioner and except as provided in section 133,
its decision in an appeal shall be final.
3. Reference to the High Court
Procedure in Appellate Tribunal: If the tax payer or
the Commissioner is aggrieved by the order of the
Appellate Tribunal, they can require the Appellate
Tribunal, through an application in the prescribed
form and accompanied by the prescribed documents,
to refer any question of law arising out of such order
to High Court.
Application has to be made within 90 days of the
service of the Appellate Tribunals order. If the
Appellate Tribunal is satisfied that a question of law
arises out of its order, it shall within 90 days of
receipt of application, draw up a statement of the
case and refer it to the High Court.
Procedure in High Court: If the Appellate Tribunal
refuses to state the case, the aggrieved party may,
within 120 days of service of notice of refusal, apply
to the High Court and it may frame a question of law
for its consideration. However, in case the High Court
is unable to determine the question of law raised, it
can refer the case back to the Appellate Tribunal for
modification.
The reference to the High Court shall be heard by a
Bench of not less than two Judges of the High Court
and provisions of section 98 CPC shall , so far as may
be, apply in the case. The High Court shall decide the
questions of law raised and deliver judgment thereon

containing the grounds on which such decision is

based. A copy of such Judgment shall be sent under
the seal of the Court and the signatures of the
Registrar to the Appellate Tribunal who shall pass
orders to dispose of the case according to such
judgment.
Where a reference relates to an assessment, the tax
due under the assessment shall be payable in
accordance with the assessment, unless recovery of
the tax has been stayed by the High Court.
Costs: The costs of a reference to the High Court
shall be at the discretion of the Court.
Limitation: Section 5 of the Limitation Act, 1908 shall
apply to application under sub-section (1).
Fee payable: An application under sub-section (1) by
a person other than the Commissioner shall be
accompanied by a fee of Rs. 100.
4. Appeal to Supreme Court
(1) An appeal lies to the Supreme Court from any
judgment of the High Court delivered on a reference
made on question of law framed under section 133 in
any case which the High Court certifies to be a fit
case for appeal to the Supreme Court.
(2) The provisions of CPC relating to appeals to
Supreme Court shall apply as if it were an appeal
from the decree of High Court.
(3) If the judgment of the High Court is varied or
reversed in appeal, effect shall be given to the order
of the Supreme Court.

Alternate Dispute Resolution - A parallel Appellate

System:
This new section has been introduced in the
Ordinance through the Finance Act 2004. This section
provides an appellate system parallel to conventional
system. The mechanism of alternate dispute
resolution (ADR as it is commonly called) has been
provided for the first time in the income tax law.
Simply put, any aggrieved person in connection with
any matter of income tax pertaining to liability of
income tax, admissibility of refund, waiver or fixation
of penalty or fine, realization of any time period or
procedural and technical condition may apply to
Central Board of Revenue (FBR) for the appointment
of a committee for the resolution of any hardship or
dispute mentioned in detail in the application.
The FBR will then form a committee (consisting of
Income Tax Officers, Chartered or Cost Accountants,
Advocates and Income Tax Practitioners or reputable
tax payers) which will examine the issue raised and
the FBR may, on the recommendation of this
committee, pass appropriate orders. Upon payment
of income tax etc. as determined by FBR, all
decisions, orders and judgments shall stand modified
and all proceedings shall abate.
In case the aggrieved person is not satisfied with the
orders of the FBR, he may file an appeal or reference
with the appropriate forum, tribunal or court under
the relevant provision of this Ordinance within a
period of 60 days of communication of order to him.

Burden of proof:
In any appeal by a taxpayer under this Part, the
burden shall be on the taxpayer to prove, on the
balance of probabilities:
(a) In the case of an assessment order, the extent to
which the order does not correctly reflect the
taxpayers tax liability for the tax year; or
(b) In the case of any other decision, that the
decision is erroneous.