Commissioner must issue assessment, amended assessment and appeal-effect orders within prescribed time limits following decisions by appellate authorities.
The Federal Board of Revenue (FBR) has clarified the framework for giving effect to appellate decisions under Section 124 of the Income Tax Ordinance, 2001, applicable to Tax Year 2027.
The provision requires the Commissioner to issue an assessment or amended assessment order where such action is necessary to give effect to a finding or direction contained in an order passed by the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court.
Under Section 124(1), the Commissioner must issue the consequential order within two years from the end of the financial year in which the relevant appellate order is served on the Commissioner.
Where an Appellate Tribunal, High Court or Supreme Court sets aside an assessment wholly or partly and directs the Commissioner or Commissioner (Appeals) to pass a fresh assessment, the new order must generally be issued within one year from the end of the financial year in which the appellate order is served.
However, this one-year limitation does not apply where an appeal or reference has been filed against the order of the Appellate Tribunal or High Court.
The law also allows proceedings to resume from the stage immediately preceding the point at which an assessment was set aside or modified. Previously issued notices and previously furnished returns, statements or particulars do not have to be reissued or resubmitted.
Two-month deadline for direct relief
Section 124 also establishes a shorter timeline where direct relief is granted under Sections 129 or 132. In such cases, the Commissioner must issue the appeal-effect order within two months of being served with the relevant order.
No appeal-effect order is required where the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court confirms the tax payable as determined in the original order. The Commissioner can instead proceed directly with recovery.
Where an appellate authority partly sets aside an order but confirms or modifies other issues, the Commissioner must determine the resulting tax liability through the prescribed appeal-effect order. Tax relating to matters confirmed or modified remains payable or recoverable under the Ordinance, while matters set aside or remanded are excluded.
Section 124 further covers situations where income is shifted between tax years or between taxpayers as a result of an appellate finding or direction. The resulting assessment or amended assessment is treated as having been made to give effect to that appellate order.
The provision also applies to orders issued by a High Court or the Supreme Court while exercising original or appellate jurisdiction, ensuring that consequential tax assessments are implemented within the statutory framework.