Business Recorder
ISLAMABAD: The Appellate Tribunal Inland Revenue (ATIR), in a significant ruling, has held that an order passed by the Commissioner under Section 111 of the Income Tax Ordinance, 2001, does not constitute an independently appealable order. The tribunal further ruled that a taxpayer cannot bypass the Commissioner, Inland Revenue (Appeals), to file a direct appeal before the Tribunal under Section 131 unless the impugned order is otherwise appealable under Section 127 of the Ordinance. A landmark judgment was announced on May 20, 2026. The appeal had been filed under Section 131 against an order dated February 28, 2026, of the DCIR passed under Section 111, even though no consequential assessment order under Section 122 had yet been framed. ATIR order states “At the outset of the hearing, the learned AR was confronted with the maintainability of the appeal and was unable to furnish any cogent explanation in support of its competence. The Bench formulated the central question as whether an order under Section 111 constitutes an independently appealable order under Section 127, and whether a taxpayer could validly invoke Section 131 by directly approaching the Tribunal while surrendering the remedy before the Commissioner (Appeals). The ATIR reaffirmed the settled principle that the right of appeal is neither inherent nor equitable but a substantive statutory right which must emanate strictly from express legislative conferment. Relying on the judgments of the Supreme Court in Mughal Surgical (Pvt.) Ltd. v. Presiding Officer (2006 SCMR 590), Muzaffar Ali v. Muhammad Shafi (PLD 1981 SC 94), and Malik Umar Aslam v. Mrs. Sumaira Aslam (2014 SCMR 45), the Bench observed that appellate remedies cannot be inferred by implication, assumption, convenience, or intendment where the statute itself remains silent. Examining the statutory scheme, the Tribunal noted that Section 127 exhaustively enumerates the categories of orders against which an appeal lies before the Commissioner (Appeals), and expressly refers to orders under Sections 120(2A), 121, 122, 143, 144, 161, 162, 170, 182, and 205 of the Ordinance, but makes no mention of Section 111. The deliberate omission, the Bench held, is legally significant and cannot be treated as accidental. Had the legislature intended Section 111 proceedings to independently attract appellate jurisdiction, it could easily have included them within Section 127. The conscious legislative abstinence necessarily leads to the conclusion that Section 111 was never intended to constitute a standalone appealable order. The Tribunal clarified that the proviso to Section 127(1) merely confers an election of forum, to either approach the Commissioner (Appeals) or directly invoke the Tribunal under Section 131, but does not create an independent or original right of appeal. The availability of Section 131 is conditional upon the prior existence of an appealable order under Section 127. The surrender contemplated by the statute is a surrender of the forum alone and not a mechanism for the creation of appellate rights where none statutorily exist. The Tribunal held that the legally competent course available to an aggrieved taxpayer is to challenge the consequential amended assessment order under Section 122 before the appropriate appellate forum, where every jurisdictional, procedural, and factual aspect of the Section 111 proceedings, including assumption of jurisdiction, validity of notices, sufficiency of evidence, nexus, quantum, and procedural compliance, may comprehensively be agitated. No prejudice, therefore, is caused to the taxpayer, the ATIR ruled. Copyright Business Recorder, 2026
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