FBR Urged to Utilize All Channels for Serving Tax Notices to Prevent Ex-Parte Assessments

Pakistan's tax landscape faces a potential hurdle as the deadline for tax year 2018 assessments approaches. Tax advisors are urging the Federal Board of Revenue (FBR) to implement stricter protocols for serving notices to taxpayers, aiming to minimize ex-parte assessments.

The Issue: Improper Notice Service and Ex-Parte Assessments

Javed Iqbal Qazi, a prominent tax advisor and Supreme Court advocate, has highlighted concerns regarding the current notice service practices within the FBR. He argues that the FBR primarily relies on the IRIS system, a digital platform, for serving notices. While this method is valid, Section 218 of the Income Tax Ordinance, 2001, outlines a broader range of acceptable service methods.

Section 218: A Multi-Pronged Approach to Notice Service

The Ordinance offers several options for serving notices on taxpayers:

• Personal Service: Direct delivery to the taxpayer or their legal representative.
• Registered Mail/Courier: Sending notices to the taxpayer's registered address or last known address within Pakistan.
• Civil Procedure Code Service: Employing the service procedures outlined in the Code of Civil Procedure, 1908.
• Electronic Service: Delivering notices electronically through a prescribed, secure method.

Qazi's Arguments and Requests:

Qazi emphasizes that the IRIS system is just one option among several, not the sole method for notice service. He emphasizes the importance of adhering to Section 218 to ensure proper notification reaches taxpayers.

With the June 30, 2024 deadline for tax year 2018 assessments approaching, Qazi has made specific requests to the FBR:

• Utilize All Service Modes: Instruct field offices to employ all available service methods outlined in Section 218. This comprehensive approach ensures taxpayers receive notices, allowing them to participate in the assessment process.
• Minimize Ex-Parte Orders: By guaranteeing proper notice service, the FBR can significantly reduce the number of ex-parte assessments. Ex-parte assessments occur when a taxpayer fails to respond to a notice, leading to an assessment made without their input. These assessments can be disadvantageous for taxpayers who may have legitimate reasons for not responding to a notice they never received.
• Fair and Meritorious Assessments: Qazi urges Inland Revenue Officers to prioritize fair and legally sound assessments. Assessments shouldn't be based on assumptions or speculation, but on a thorough review of the taxpayer's situation.
• Improved Tax Collection: Implementing these recommendations can lead to a more transparent and just assessment process. This, in turn, could foster trust between taxpayers and the FBR, potentially leading to better tax compliance and increased revenue collection.

Potential Benefits of FBR Action:

• Reduced Ex-Parte Orders: Following a multi-pronged approach to notice service will minimize situations where taxpayers miss crucial notices due to improper delivery methods.
• Fairer Assessments: By ensuring taxpayers are aware of assessments, they can participate in the process and provide necessary information. This leads to more accurate and fair assessments.
• Improved Taxpayer Relations: A transparent and just assessment process fosters trust and cooperation between taxpayers and the FBR.
• Enhanced Tax Collection: Increased trust and a fairer system can incentivize better tax compliance, potentially boosting tax revenue collection for the government.

Looking Ahead:

The FBR's response to these concerns will significantly impact the upcoming tax year 2018 assessments. By adopting a more comprehensive approach to notice service and prioritizing fair assessments, the FBR can ensure a smoother and more equitable process for all taxpayers.

This article was published at FBR Urged to Improve Notice Service Procedures for Taxpayers