APPEALSINTRODUCTION

Sometimes a taxpayer is not satisfied with the orders of any income tax I authority or even any income tax authority does not agree with the orders passed by any appellate authority. In such cases Income Tax Ordinance, 2001 gives the right of appeal to the aggrieved party. A detailed procedure is also given in the law. It should be remembered that appeal cannot be made against every order. I Appeal can only be made in those cases which are allowed under the Ordinance. DEFINITIONThe Oxford Dictionary defines the appeal as:

“Apply to higher court for revision of lower‘s court orders”. In other words we can say that appeal is a request by aggrieved party to the higher appellate authority for a formal change to an official decision.Revision

Revision means the reconsideration of the case by the same, or higher authority by his own consent or on an application made by the aggrieved party. Appellate AuthoritiesThere are four income tax authorities under Income Tax Ordinance, 2001 namely:

1. Commissioner Inland Revenue (Appeals)2. Appellate Tribunal Inland Revenue3. High Court4. Supreme Court

APPEALABLE ORDERS [Section 127(1)]Income Tax Ordinance, 2001 allows a person to file an appeal against the following orders passed by a Commissioner or an Officer Inland Revenue. These orders are known as “appealable orders”.

1. Assessment of a person who has not furnished a return [Section 121]2. Amendment in assessment made by the Commissioner Inland Revenue M [Section 122]3. Assessment of non-resident ship owner or charterer [Section 143]4. Assessment of non-resident aircraft owner or charterer [Section 144] ill5. Holding a person who is required to deduct or collect tax and deposit it with the Government but fails

to do so [Section 161(1)]6. Recovery of tax from the person from whom tax was not collected or deducted at source [Section 162]7. Refusal by Commissioner to allow refunds [Section 170]8. Declaring a person as representative of a non-resident person [Section 172]9. Penalty imposed due to failure to furnish return or other statements [Section 182]10. Orders to pay default surcharge for failure to pay tax or penalty [Section 205]11. Refusal by Commissioner to rectify mistakes pointed out by taxpayer [Section 221]

APPEAL TO COMMISSIONER OF INLAND REVENUE (APPEALS)(Section 127 to 129) [First Court of Appeal]

The main features of the appeal before Commissioner Inland Revenue (Appeals) are as follows:1. Against the Orders of Commissioner:An appeal can be filed by a taxpayer to the CIR (Appeals) against the appealable orders of a Commissioner or an Officer of Inland Revenue.2. Right of Appeal:The appeal to CIR (Appeals) can only be made by taxpayer. If the tax department is not satisfied with the orders of Commissioner, an appeal cannot be made.3. Payment of Tax u/s 137(1):No appeal shall be made by a taxpayer against an order of assessment unless taxpayer has paid the amount of tax due under section 137(1).4. Time of Appeal:The appeal must be filed within 30 days of receipt of orders. Commissioner (Appeals) can extend this period if there is a genuine reason for delay.5. Fee of Appeal:

i. In case of appeal against assessment, the amount of fee will be Rs. 1,000.ii. If the appeal is regarding another issue, fee will be Rs. 1,000 for companies and Rs. 200 for other

persons.

6. Documents Submitted:An appeal shall be submitted with:

i. Prescribed form of appeal;ii. Copy of the order passed by Commissioner;

iii. Reasons on which the appeal is made;iv. Challan of appeal fee.

7. Hearing of Appeal:.The C1R (Appeals) fixes a date for hearing the appeal and sends notice to taxpayer and concerned CIR (under whose order, appeal has been made). He can call for any document and can ask to CIR to make further inquiry.8. Disposing of Appeal:Following are the decisions of CIR (Appeals) in disposing of an appeal.

i. In case of an “order of assessment”:a) Confirm the assessment order passed by the Commissioner;b) Modify (increase or decrease) the assessment order;c) Annul (cancel) the assessment order.

ii. In case of penalty, can increase or decrease the penalty;iii. In case of refund, can increase or decrease the refund amount;iv. Any other order as he may thinks fit.

9. Time for Decision of Appeal:CIR (Appeals) should pass the decision of appeal within 120 days from the date of filing an appeal. The Commissioner (Appeals) may extend this period up to further (50 days. The extension must be in writing and contain the reasons for extension in spite of such notice, the decision is not made within 6 months of the appeal made the decision will be deemed in the favor of taxpayer.10. Communication of Decision:On decision of an appeal, Commissioner (Appeals) should communicate the orders to the following persons:

a) The taxpayer; andb) Concerned Commissioner of Inland Revenue (CIR).

APPEAL TO THE APPELLATE TRIBUNAL INLAND REVENUE (Section 131 and 1321 [Second Court of Appeal]

Main features of appeal to the Appellate Tribunal Inland Revenue are as follows:1. Against the Orders of Commissioner (Appeals):If a tax payer or Commissioner is not satisfied with the decision of Commissioner (Appeals), they can make second appeal to the Appellate Tribunal.2. Right of appeal:The tax payer and tax department both have the right to make an appeal to the Appellate Tribunal Inland Revenue.3. Time of Appeal:Appeal should be filed within 60 days from the date on which the orders were received from the CIR (Appeals).4. Fee of Appeal:If the taxpayer is filing the appeal, the prescribed fee is Rs. 2,000. Fee is not payable, if appeal is made by Commissioner.5. Documents Submitted:An appeal shall be submitted with:

i. Prescribed form of appeal;ii. Copy of the order passed by Commissioner;

iii. Reasons on which the appeal is made;iv. Challan of appeal fee.

6. Hearing of Appeal:Appellate Tribunal offers, both parties, an opportunity of being heard before the decision of appeal. The Appellate Tribunal fixes a date for hearing the appeal and sends notice to the concerned parties.7. Disposing of Appeal:Following are the decisions of Appellate Tribunal at disposing of an appeal:

i. In case of an “order of assessment”:a) Confirm the assessment order passed by the Commissioner (Appeals);b) Modify (increase or decrease) the assessment order;c) Annul (cancel) the assessment order.

ii. In case of penalty, can increase or decrease the penalty;

iii. In case of refund can increase or decrease the refund amount;iv. In case of default by any of the party on the date of hearing, the Appellate Tribunal may proceed

ex parte to decide the appeal on the basis of the available record;v. Return the case to Commissioner (Appeals) for making further inquiry on directions given.

8. Time for Decision of Appeal:It is necessary that the decision of all appeals filed, should be disposed off within six months of its filing.9. Communication of Decision:On decision of an appeal, Appellate Tribunal should communicate the orders to following persons:

a) The taxpayer; andb) Concerned Commissioner of Inland Revenue (CIR).

10. Final Fact Finding Authority:The decision of the Tribunal on the point of fact is final and no appeal can be made against such a decision. However, if the decision involves a point of law, the case may refer to High Court.

REFERENCE TO THE HIGH COURT(Section 133) [Third Court of Appeal]

Main features of appeal to the High Court are as follows: 1. Against the Orders of Appellate Tribunal:If a tax payer or CIR is not satisfied with the decision of Appellate Tribunal, they can make third appeal to the High Court on point of law.2. Right of appeal:The tax payer and tax department both have the right to make an appeal to the High Court.3. Time of Appeal:Appeal should be filed within 90 days from the date on which orders were received from the Appellate Tribunal.4. Fee of Appeal:If the taxpayer is filing the appeal, the prescribed fee is Rs. 100. Fee is not I payable, if appeal is made by CIR.5. Documents Submitted: -An appeal shall be submitted with:

i. Prescribed form of appeal;ii. Copy of the order passed by Appellate Tribunal;

iii. Statement of case stating any question of law arising from the J orders of Tribunal;iv. Challan of appeal fee.

If the High Court is satisfied that a question of law arises, it may proceeds to hear the case.6. Hearing and Decision of Appeal:The case shall be heard by a bench consisting of a minimum of two judges of the High Court. The High Court will decide the question of law raised by the reference. The bench will also specify the reasons on which the judgment is based. The Court will send a copy of the judgment to the Appellate Tribunal under the seal of Court. The Tribunal’s orders shall stand modified accordingly.7. Recovery of Tax:The reference to High Court will not affect the recovery of tax and the taxpayer has to pay the amount of tax decided by the Appellate Tribunal in its order. However, if the recovery of the tax has been stayed by the High Court, by an order, such a recovery will not be made.

APPEAL TO THE SUPREME COURT(Section 134 ) [Forth Court of Appeal]

If a tax payer or CIR is not satisfied with the decision of High Court on point of law, they can make forth appeal to the Supreme Court. Main features of appeal to the Supreme Court are as follows:

1. Certificate by High Court:If an appeal is made to the Supreme Court, the certificate by the High Court is necessary which states that the case involves a question of law and is fit one for the appeal to Supreme Court.

2. Constitution of Pakistan (Article 185):Article 185 of the Constitution of Pakistan also provides the right of filing an appeal by the person to the Supreme Court against the judgment of High Court. This section was the duplication in the law. Therefore, Section 134 has been omitted with effect from July 1, 2005. The decision of the Supreme Court is final and conclusive in all the cases.

ALTERNATIVE DISPUTE RESOLUTION (ADR) [SECTION 134A]Introduction:This section was added through Finance Act, 2004. This section has introduced the mechanism for resolution of any dispute or hardship being faced by the taxpayer. The main features of alternative dispute resolution are as follows. 1. Application by aggrieved party:The aggrieved party may apply to the Board for the appointment of committee for the resolution of any hardship or dispute mentioned in detail in the application. No application should be made where prosecution proceedings have been initiated or where interpretation of question of law having effect on identical other cases.2. Appointment of Committee:The Board after the examination of the application shall appoint a committee within the sixty days of the receipt of the application. The committee shall be consisting of an officer of Inland Revenue and two persons from a panel of Chartered or Cost Accountants, Advocate, Income Tax Practitioners or reputable taxpayers for the resolution of hardship or dispute.3. Proceedings and Disposal of appeal:The committee shall examine the issue and if it feels necessary conduct inquiry, seek expert opinion, direct any officer of Inland Revenue or any other person to conduct an audit. The committee shall make its recommendations within 90 days of its constitution. If the committee fails to make its recommendations within 90 days the Board shall dissolve the committee and constitute a new committee which shall decide the matter within a further period of 90 days. If after the expiry of that period the dispute is not resolved, the matter shall be taken up for appropriate forum for decision.4. Orders passed by the Board:The Board may, on the recommendations of the committee, pass such order, as it may deem appropriate, within forty five days of the receipt of the recommendations of the Committee. The Chairman Federal Board of Revenue may, on the application of an aggrieved person, pass such order as may be deemed just and equitable if it is satisfied that there is ah error in the order or decision. Such an order shall be in writing and contains the reasons for making the order.5. Effect of Order of the Board:An order passed by the Board in the light of the recommendations of the committee shall be submitted before the relevant authority, tribunal or court where the case is sub-judice it shall consider the Board’s order and pass appropriate orders.If the taxpayer is not satisfied with the said order, he may continue to persue his remedy before the relevant authority, tribunal or court as if no such order has been passed by the Board.BURDEN OF PROOF [SECTION 136|In any appeal made by the tax payer under Income Tax Ordinance, 2001 the burden of proof shall be on the tax payer to prove that;

a. In case of an order of assessment the order does not correctly reflect the taxpayer’s liability for the tax year; or

b. In case of any other decision, the decision is incorrect.