APPEALS

Q.18.Write down the procedure of making an appeal to Commissioner Appeal and

Appeal to Appellate tribunal.
Appeal to Commissioner Inland Revenue (Appeals) {Section 128 and 129}

An appeal may be filed by a person against the appealable orders of Commissioner Inland
Revenue or a taxation officer with the Commissioner Inland Revenue (Appeals).If the income tax
department is not satisfied with the orders of Commissioner Inland Revenue and appeal cannot be
made. The main features of the appeal before Commissioner Inland Revenue (Appeals) are as
follows:

1. No of days

The appeal must be filed within 30 days of the receipt of appealable orders. The
Commissioner Inland Revenue (Appeals), however, can extend this period.

2. fee

The Appeal must accompany a fee calculated in the following manner:

(a) In case of appeal against assessment the amount of fee will be one thousand rupees.

(b) In the appeal is regarding another issue fee of one thousand rupees in case of
companies and two hundred rupees in case of others shall be paid.

3. Tax liability admitted

Before making an appeal the person must pay the amount of tax liability admitted by him in
his return of income.

4. Fixes a date for hearing

The Commissioner Inland Revenue (Appeals) fixes a date for hearing the appeal and sends
intimation to the taxpayer and the Commissioner Inland Revenue under whose order the
appeal has been made.

5. Disposing of an appeal

The Commissioner Inland Revenue (Appeals) in disposing of an appeal can:

(a) In case of an order of assessment:

1. Declare the assessment as correct,

2. Reduce the assessment;

3. Increase the assessment;

(b) In case of an order imposing penalty, confirm, set aside or cancel such orders.
 (c) Can increase or decrease the refund amount.

Decision of the appeal

It is necessary that the decision of the appeal should be made within fours months of the
presentation of an appeal. If the case is not decided, the Commissioner should mention the reason
in writing and decide the case within an extended period of sixty days. If decision is not made within
six months the appeal will be deemed to be in the favour of taxpayer.

Appeal to the Appellate Tribunal {Section 131 and 132}

If a person is not satisfied with the decision of Commissioner Inland Revenue (Appeals), he can
make a second appeal to the Appellate Tribunal. The Commissioner Inland Revenue also, if not
satisfied with the decision of the Commissioner Inland Revenue (Appeals), can appeal to the
Appellate Tribunal. The following are the main features of appeal to the Appellate Tribunal:

1. No of days

The appeal by the person or the department should be filed within 60 days from the date on
which the order are communicated to the taxpayer or the Commissioner Inland Revenue.
The Appellate Tribunal is empowered to extend this period.

2. Prescribed form

The appeal should be filed on the prescribed form and the documents required should be
attached.

3. fee

If the taxpayer is filing the appeal, it should submit a fee of Rs.2, 000.

This fee is not payable, if the appeal is being made by the Commissioner Inland Revenue.

4. Fixes a date for hearing

The Appellate Tribunal gives both parties to the appeal an opportunity of being heard, either
in person or through an authorized representative. In case any of the parties (taxpayer or
Commissioner) does not appear before the Tribunal, the Appellate Tribunal may proceed ex
parte to decide the appeal or the basis of available record.

5. Decision of the appeal

It is necessary that decision of all appeal filed on or after July 1, 2005, should be disposed of
within six months.

6. Disposing of an appeal

The Appellate Tribunal in disposing of an appeal may:

 (a) Reduce or annul the assessment.
(b) Increase the assessment.
(c) Reject the appeal.
(d) Cancel or change the order and issues directions.
(e) Increase or reduce the penalty.
(f) Return the case to Commissioner Inland Revenue or Commissioner Inland Revenue
(Appeals) for making such enquiry or taking such action as the Tribunal may direct.
Final fact authority
The decision of the Appellate Tribunal on a point of fact is final and no appeal can be made
against such a decision. If either the taxpayer or the Commissioner Inland Revenue is not satisfied
with the orders of the Tribunal on a question involving a point of law, he may refer the case to the
High Court.

Reference to High Court {Section 133}

If either the taxpayer or the Commissioner Inland Revenue is not satisfied with the decision of
the Appellate Tribunal, he may prefer an application to the High Court. The application should be in
the prescribed form and should include the statement of case stating any question of Law arising out
of the orders of Appellate Tribunal. This application should be filed within 90 days of the
communication of orders of the Appellate Tribunal.
Appeal to the Supreme Court {Section 134}
Section 134 of the Income Tax Ordinance, 2001, provided right of appeal to the Supreme Court
both for the taxpayer and the department against any judgment of the High Court delivered on a
reference on a question of law under section 133. This right was subject to the certification by High
Court that the case is fit one for appeal to Supreme Court.
Penalties
Q.19.Penalty for Failure to Furnish Return Statements etc.
Where any person fails to furnish a return of income , a statement in lieu of return of income ,
wealth statement , wealth reconciliation statement or statement under section 165 within the due
date. The Commissioner can impose a penalty upon the person.
AMOUNT OF PENALITY
The penalty shall be 0.1% of the tax payable for each day of default subject of a minimum penalty of
Rs.5, 000 and a maximum of 25% of the tax payable in respect of the tax year.
Penalty for Failure to issue Receipt
Any person who fails to issue cash memo invoice or receipt when required under the law shall pay a
penalty of Rs. 5000 or 3 % of the amount of tax involved whichever is higher.
Penalty for failure to apply for Registration
It is necessary for certain person to get themselves registered under section 181 of the income tax
ordinance 2001.If such a person does not apply for such registration, he shall pay a penalty of
Rs.5000
Failure notify a change of Material Nature
A person who fails to notify any change of material nature in the particulars of above-mentioned
registration can also be imposed a penalty of Rs. 5000 by the Commissioner.
Failure to Deposit the Additional Tax
Any person who fails to deposit the additional tax due or any part therefore within time prescribed
under the law shall be liable to pay penalty as per following.
a) For the 1st time, five percent of the amount of tax in default.
b) For the 2nd default, an additional penalty of 25% of the amount of the tax default.
 c) For the 3rd and subsequence default an additional penalty of 50% of the amount of tax
default.
Repeated mistakes in the return
Where a person repeated wrong calculation in his return for more than one year resulting in lesser
than actual tax payable under the income Tax Law, he shall pay a penalty of Rs.5000 or 3% of tax
involved whichever is higher.

Failure to maintain records under section 174

Section 174 of income Tax Ordinance requires every taxpayer to maintain
required record under the ordinance or rule formed by FBR.
Failure to maintain the prescribed record will render the taxpayer liable to pay
penalty of Rs.10,000 or 5% of the amount of tax of income.
Failure to produce the document etc. Required for Audit under section 177
Where the person fails to produce the document required under the above-mentioned section of
receipt of 1st notice, he will be liable to a penalty of Rs.5, 000.
If he fails after the 2nd notice also, the amount of penalty Rs.10, 000.
Failure to produce the record on the 3 rd notice, will result in a penalty of Rs.50, 000
Failure to Furnish Information under Section 176
The non-furnishing of any information or other term of notice issued by the Commissioner or an
authorized officer in the matters of Tax affair will also result in a penalty. The amount of penalty will
be Rs. 5000 for the 1st default and Rs.10, 000 for each subsequent default.
Penalty for Making a False Statement etc.
If a person in his income tax affair makes a false statement, furnishes false or misleading information
or omits a material fact from his statement, he shall pay a penalty of Rs.25, 000 or 100% of the
amount of resulting tax shortfall whichever is higher.
Provided that in cause of return which has been accepted as assessment the taxpayer can prove that
intention was not to defraud the authorities the penalty may be reduced or decreased.
Penalty for Obstructing Access to premises etc.
Any person who denies or obstructs the access of the Commissioner or any other official authorized
by the commissioner to the premises, place, accounts. Documents, computer or stock shall pay a
penalty. The amount of the penalty shall be Rs.25, 000 or 100% of the amount of Tax involved
whichever is higher.
Penalty for Concealment
(1) If a person has concealed or wrongly mentioned his income, reduced his income or Claimed
a wrong expenditure before any income tax authority or appellate, such person Shall be liable to a
penalty of Rs.25,000 or an amount equal to the tax which person sough to evade whichever is
higher. However, if a person proves that he made claim of exemption or expenditure unknowingly
the penalty will not be imposed.
Penalty for Obstruction in Performance of Duties
Any person who obstructs any income tax authority in the performance of these official duties shall
pay a penalty of Rs.25000.
General
If a person contravenes any of the provision of income Tax Ordinance, 2001, for which no penalty
has, specifically been provided he shall pay a penalty of Rs. 5,000 or three percent if the amount of
tax involved, whichever is higher.
 Failure to Collect Tax
Where a person fails to collect or deduct tax as required under the Income Tax Ordinance of fails to
pay the tax collected to the Commissioner as required under Section 160, he shall render himself
liable to a penalty of Rs.25,000 or 10% of the amount of tax whichever is higher.