Law: Income Tax Ordinance, 2001

Section: 122(4), 122(1), 111, 111(1)(b), 122(1)(5), 122(9), 116(3)

APPELLATE TRIBUNAL INLAND REVENUE OF PAKISTAN DIVISION BENCH, MULTAN   ORDER Case Overview The taxpayer (a government contractor) filed an appeal before the Appellate Tribunal against the order of the Commissioner Inland Revenue (Appeals) [CIR(A)]. The CIR(A) had dismissed the taxpayer’s appeal due to: Non-appearance Non-pursuance Non-production of evidence Background Facts Tax authorities discovered undeclared property in Tax Year 2017. Initial assessment created a tax demand. First appeal: Assessment was annulled with directions for fresh proceedings. Second assessment (after re-proceedings): Property treated as unexplained investment (Rs. 1,828,500) Taxable income increased Taxpayer again appealed, but CIR(A) dismissed it without deciding on merits. Key Arguments Taxpayer’s Arguments No proper service of notices (only via IRIS system). No fair opportunity of hearing (violation of natural justice). Appeal wrongly dismissed ex-parte. CIR(A) cannot dismiss appeal for non-prosecution—must decide on merits. Department’s Arguments Notices were issued via IRIS (valid mode). Taxpayer failed to appear despite opportunities. CIR(A) acted correctly due to non-compliance. Tribunal’s Findings Service of notice was defective: Only IRIS notices issued. No proof of proper/legal service under Section 218. Violation of natural justice: Taxpayer may not have been aware of hearing dates. CIR(A) acted unlawfully: Has no power to dismiss appeal for non-prosecution. Must decide appeals on merits with a reasoned order. Order was: Mechanical Non-speaking Passed without proper analysis Also noted: Order passed on a date not fixed for hearing. Final Decision Tribunal set aside the CIR(A)’s order. Case remanded back to CIR(A) with directions: Decide appeal on merits Ensure proper service of notices (not just IRIS) Provide fair opportunity of hearing Issue a speaking (reasoned) order Timeline: Preferably within 60 days. Bottom Line The Tribunal ruled that: Appeals cannot be dismissed just because the taxpayer didn’t appear—they must be decided fairly on merits after proper notice and hea KHURRAM SHAHBAZ BUTT (MEMBER): The titled…