Tax notice placement on IRIS is not valid service: FTO

Tax notice placement on IRIS is not valid service: FTO

In a case, the Federal Tax Ombudsman (FTO) has observed that mere placement of notice on the IRIS does not constitute a valid service.

In a complaint filed by a taxpayer against the Federal Board of Revenue (FBR) alleging illegal assessment order date June 30, 2022 for tax year 2016 and consequent issuance of recovery notices.

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According to details of the case, the complainant, an individual file income tax return for tax year 2016. The tax officer of Regional Tax Office (RTO) Karachi observed discrepancy in closing balance of net assets for tax year 2015.

The tax officer considered the discrepancy as definite information and issued a show cause notice under various sections of the Income Tax Ordinance, 2001 including the section related to concealment of assets.

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After more than one year when the case was going to be time barred, an assessment order was passed on June 30, 2022 without giving any opportunity of being heard and creating tax liability.

The complainant came to know about the assessment when notice for recovery was issued on September 05, 2022.

The FTO observed that service of notice under Section 122(9) read with Section 122(5) and Section 111(1)(b) of the Income Tax Ordinance, 2001 dated March 30, 2021 was not ensured and it is assumed that uploading on IRIS was valid service.

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“Complainant’s duly updated profile is available on record with mobile number and email address. Complainant denied receipt of any SMS or email through which he can be alerted about the placement of any notice or order.”

[Reading the relevant clauses] the FBR observed that it is thus clear that mere placement of notice on the IRIS does not constitute valid service within the meaning of Section 218(1)(d) read with Rule 74 of Income Tax Rules, 2002.

“Even otherwise the department of IT system is expected to ensure that the taxpayers are informed about any event through an SMS or email rather than expecting every taxpayer to keep checking his IRIS profile on daily basis, which is against the principal of natural justice and fair play.”

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The FTO in it is findings made remarks that passing of adverse order without providing fair opportunity for compliance and proper service of notice for hearing, brazenly violating the instructions of FBR; causing administrative excesses is tantamount to maladministration.

The Ombudsman advised the FBR to direct the Commissioner Inland Revenue, Zone-II, RTO-I Karachi to revisit the impugned order for tax year 2016, after affording proper opportunity of hearing to the complainant.