Lacuna: appeal against CCIR’s order
Dr. Ikramul Haq & Syed Muhammad Ijaz
Introduction
Section [1]131 of the Income Tax Ordinance, 2001 (hereinafter referred to as the “Ordinance 2001”) was substituted through the Finance Act, 2024 (“FACT 2024”), introducing a significant procedural change. With effect from May 6, 2024, any order issued by the Chief Commissioner Inland Revenue (“CCIR”) is now appealable before the Appellate Tribunal Inland Revenue (“Tribunal”), subject to pecuniary limits prescribed under Section 126A of the Ordinance 2001.
Section 126A of the Ordinance provides that appeal involving revenue or refund exceeding Rs. 20 million is to be filed directly with the Appellate Tribunal Inland Revenue (ATIR), and below that with the Commissioner of Appeals. However, in the case of order by CCIR under section 122B, for any amount below PKR 20 million no right to appeal is provided under section 127 of the Ordinance, which being a legal lacuna, must be taken care of.
Previously, in cases of revision under Section 122B by CCIR, no right of appeal was available in the Ordinance. Taxpayers had to invoke the jurisdiction of the High Courts under Article 199 of the Constitution. This resulted in heavy cost to taxpayers and a procedural bottleneck, leading to prolonged litigation. This position still persists in the case of an order under section 122B by CCIR having revenue implication up to Rs. 20 million.
Judicial Precedent on Writ Jurisdiction
Ordinarily, high courts tend to remand such cases for reconsideration by the CCIR. However, a recent judgment by the High Court of Sindh in Messer Telenor Microfinance Bank Limited v. FOP & Others (CPD No. 6813 of 2020, order dated March 4, 2025) has clarified that once a legal remedy is exhausted, a writ petition under Article 199 is not maintainable. The operative part of the judgment states:
“Article 199 of the Constitution contemplates the discretionary writ jurisdiction of this Court, and the said discretion may be exercised in the absence of an adequate remedy. In the present matter, admittedly there existed an adequate remedy, however, the same was duly availed/exhausted, and no case has been set forth before us for de novo agitation of the matter.
In view hereof, we are constrained to observe that no case has been set forth for the invocation of the discretionary writ jurisdiction of this Court. Hence, this petition is hereby dismissed.”
Impact of FACT 2024 and Procedural Ramifications
Although this writ pertained to the pre-FACT 2024 legal framework, during the pendency of the petition, the law changed. Ideally, the petitioner should have sought permission to withdraw and file an appeal before the ATIR. However, given the dismissal of the petition, the option to file an appeal before the Tribunal remains open, provided the petitioner submits an application for condonation of delay.
A supporting precedent for such condonation is found in Laser Praxis Depilex Clinic Lahore v. Custom, Central Excise & Sales Tax Appellate Tribunal, Lahore Bench (2002 PTD 549), where the Lahore High Court held:
“The power to condone the delay conferred upon the Tribunal under the relevant provisions of law is wider than the one contained in Section 5 of the Limitation Act, 1908. The notion of accrual of a valuable right to an adversary after the lapse of limitation in civil matters is not generally applicable to revenue cases. The interest of immediate recovery cannot be described as the accrual of a valuable right. Even otherwise, the kind of right that arises from the default of a party in approaching a forum within a specified time is not absolute and does not frustrate the exercise of judicial discretion where condonation is permitted by statute.”
This position was later affirmed by the Supreme Court of Pakistan in Faqir Muhammad v. Khurshid Bibi (2024 SCMR 107).
Legal Anomaly: Orders Below PKR 20 million
A significant issue remains unaddressed in the new framework: orders of the CCIR below the pecuniary limit of PKR 20 million. While FACT 2024 allows appeals before the Tribunal for cases exceeding this threshold, it does not provide any remedy for orders below PKR 20 million.
A logical concern arises: Can a lower authority, such as the Commissioner Appeals, hear an appeal against an order passed by a higher authority, i.e., the CCIR? This could result in a procedural contradiction, leading to legal discrimination, a principle consistently rejected by courts in policy-related decisions.
The Supreme Court of Pakistan in, Pakistan through Chairman FBR and others v Hazrat Hussain and others [(2018) 118 Tax 260 (S.C. Pak)] has held that discrimination should not be made even in policies:
“32…..Policies concerning exemptions must be applied uniformly and non-discriminatorily. While the power to grant exemptions is discretionary, such discretion cannot be exercised arbitrarily. Exemptions should be regulated through consistent policies for sound reasons, ensuring that no unjustified or arbitrary decision-making occurs.”
Leaving issues below PKR 20M appeal less, fails the test of intelligible differentia as highlighted by Supreme Court of Pakistan in Lucky Cement through General Manager Peshawar v. Khyber Pakhtunkhwa through Secretary Local Government and Rural Development (2022 SCMR 1994).
Additionally, placing barriers on the right to appeal violates Article 10A of the Constitution, which guarantees the right to a fair trial.
Conclusion
The substitution of Section 131 through FACT 2024 has significantly altered the legal landscape regarding appeals against CCIR orders. While the introduction of a statutory right of appeal before the Tribunal is a positive development, the absence of an appellate remedy for orders below PKR 20 million creates a legal vacuum that requires urgent legislative attention.
The current framework raises concerns of procedural discrimination and fair trial rights, potentially violating constitutional safeguards. Given the Supreme Court’s stance on non-discriminatory policy application, the matter may require judicial intervention or legislative amendment to ensure that all taxpayers, irrespective of the pecuniary value of their disputes, have access to an appellate forum against the order of Chief Commissioner Inland Revenue. Until this anomaly is resolved, taxpayers facing orders below PKR 20 million may need to explore alternate legal avenues, including seeking judicial review under constitutional jurisdiction or raising the matter before the legislative bodies and/or Federal Board of Revenue for appropriate amendment.
Dr. Ikramul Haq, LLB, MA, LLD and Syed Muhammad Ijaz, FCA (ICAP), ACA (ICAEW), LL.B., are partners of Huzaima & Ikram
[1] Sec. 131(1) Income Tax Ordinance, 2001
1[131. Appeal to the Appellate Tribunal.– (1) Subject to section 126A, any person, other than an SOE, aggrieved by any order passed by an officer of Inland Revenue or Commissioner or Chief Commissioner or the Board 2[ ] under this Ordinance or the rules made thereunder may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal or, as the case may be, a reference to the High Court:
Provided that where sub-section (11) of section 134A apply, an SOE may prefer an appeal under this sub-section.
(2) An appeal under sub-section (1) shall be–
(a) in the prescribed form;
(b) verified in the prescribed manner;
(c) accompanied, by the prescribed fee specified in sub-section (3); and
(d) *preferred to the Appellate Tribunal within thirty days of the date of service of order on the taxpayer.
(3) The prescribed fee shall be twenty thousand rupees in case of a company and five thousand rupees in case other than a company.
(4) The Appellate Tribunal may, upon application in writing, admit an appeal after the expiration of the period specified in clause (d) of sub-section (2) if it is satisfied that the person preferring appeal was prevented by sufficient cause from filing the appeal within that period.
1 Section 131 substituted by Tax Laws (Amendment) Act, 2024 with effect from May 6, 2024.
2 Words “or Commissioner (Appeals)” omitted by Finance Act, 2024.