10pc tax payment mandatory for filing appeal before tribunal

10pc tax payment mandatory for filing appeal before tribunal

KARACHI: Taxpayers shall require to pay 10 percent of tax demand while filing an appeal before Appellate Tribunal challenging the order of commissioner appeals.

Deloitte Yousuf Adil, Chartered Accountants, said that a new requirement is proposed in the Finance Bill 2020 for filing of appeal before the Appellate Tribunal for challenging the order of Commissioner Appeals.

Proof of payment by the taxpayer of ten percent of the amount of tax upheld by the Commissioner Appeals is required to be submitted along with the appeal documents.

The chartered accountants said that currently, no such payment requirement exists for filing of appeal before the appellate tribunal. No appeal shall be admitted unless 10 percent of amount upheld by the Commissioner Appeals is deposited.

The proposed amendment is against the principle of natural justice and would create cash flow problems for the tax payers considering the illegal tax demands that are generally created through assessment proceedings and are mostly upheld at Commissioner Appeal’s level.

The business community also criticized the proposed change. Overseas Investors Chamber of Commerce and Industry (OICCI) said that the Finance Bill 2020-2021 proposes payment of 10 percent of the tax demand before filing an appeal before the Tribunal.

Currently the provisions of the ITO 2001 allows an appeal to be filed with the Appellate Tribunal Inland Revenue (ATIR) without payment of demand created by the tax officer(s) even if the same is confirmed by Commissioner of Income Tax – Appeals (CIR-A).

This inherent right of appeal is now proposed to be subjected to a mandatory payment of 10 percent of tax demand upheld by the CIR-A.

The proposed amendment will create hardship and cash flow problems for the taxpayer, as in case of exorbitant tax demands 10 percent thereof could be a very significant amount and may impede the exercise of right to appeal by the taxpayer which is a principle of natural justice and fundamental right.

It will also lead to unnecessary litigation since the appellant will approach the Courts by bypassing the forum of ATIR for the stay of recovery, after the CIR-A order confirming the amount of demand.

The proposal is also against decisions of superior courts which have held that recovery of tax demand cannot be forced until the order has been scrutinized by at least one independent forum i.e. ATIR.

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