The Appellate Tribunal Inland Revenue (ATIR) Islamabad has recently issued a landmark ruling declaring that serving tax notices to taxpayers solely through the Federal Board of Revenue’s (FBR) IRIS system is illegal.
The decision came from a two-member bench of the tribunal, which clarified that reliance on the IRIS portal alone does not satisfy the legal requirements for proper service of tax notices under existing law. This ruling represents a significant development for taxpayers and reinforces the importance of adhering to formal procedures in tax administration.
The case in question involved an individual taxpayer who had filed a return of income, which was considered an assessment order under section 120(1)(b) of the Income Tax Ordinance, 2001. Subsequent proceedings were initiated based on information regarding the taxpayer’s purchase of immovable property during Tax Year 2022.
Following this, the Assessing Officer issued an ex-parte order, which the taxpayer challenged before the tribunal. Upon review, the tribunal observed that the FBR had issued the order exclusively through the IRIS portal, without following any of the prescribed modes of service outlined under section 218 of the Income Tax Ordinance.
The tribunal emphasized that the FBR’s repeated claims that service via IRIS constitutes lawful service are unsupported by both primary legislation and delegated legislation. IRIS is designed as a web-based system for internal management of Inland Revenue operations and does not have legal recognition as a medium for serving notices, orders, or requisitions.
The law currently recognizes only two electronic modes of service: facsimile and email. Consequently, until rules are formally amended to explicitly recognize IRIS as a valid platform for serving notices, any notices issued solely via IRIS cannot be considered legally effective.
The tribunal further clarified that defective service affects the computation of limitation periods. Under section 131, the limitation period begins from the date a taxpayer gains actual knowledge or receives the order, such as when a certified copy is obtained following recovery actions.
Any recovery action initiated prior to lawful service is therefore vulnerable to challenge, as due process requirements have not been satisfied. In conclusion, the tribunal’s ruling reinforces the principle that compliance with procedural requirements is mandatory for the FBR, and reliance on IRIS alone is insufficient to trigger legal consequences or appeal limitations.
This judgment marks a critical point in tax administration, ensuring that taxpayer rights are protected and reinforcing that legal procedures must be strictly followed.
