Appellate Tribunal Inland Revenue (ATIR) Islamabad has issued a significant ruling for overseas Pakistanis, advising that their appeals against FBR will be dismissed at the initial stage if they submit a Power of Attorney (POA) or affidavit containing electronically scanned signatures.
The ruling, issued by the two-member bench of ATIR Division Bench-I, came in response to a case involving a non-resident individual. The bench found that the POA attached to the appeal, signed with a scanned signature, failed to explicitly authorize the chartered accountancy firm to file the appeal on behalf of the taxpayer. According to the tribunal, the procedure mandates that the appeal must be filed personally by the appellant, with a handwritten signature and verification. The absence of these formalities renders the appeal improperly filed and, consequently, subject to dismissal.
In this particular case, the taxpayer, who resides abroad and has been providing services outside Pakistan for several years, had filed an electronic return of income for the tax year in question, declaring an income of Rs. 9,285,590. This return was deemed an original assessment under Section 120(1) of the Income Tax Ordinance. However, the FBR, exercising its authority under Section 214C of the Ordinance, selected the taxpayer’s case for audit and notified the individual through the IRIS system.
In response to the audit notice, the taxpayer submitted an online reply on March 15, 2024, along with supporting documents. The reply was deemed unsatisfactory by the FBR, leading to the issuance of an order under Section 122(1) of the Ordinance on May 20, 2024. Dissatisfied with the decision, the appellant approached the ATIR, challenging the order on several grounds.
However, complications arose when the Authorized Representative (AR) for the appellant submitted the appeal, including miscellaneous applications, with electronically scanned signatures of the appellant. This was in direct contradiction to the legal requirements outlined by the ATIR. Although the POA authorized the chartered accountancy firm to represent the appellant, engage in proceedings, present arguments, and collect the appellate order, it did not explicitly grant the firm permission to file the appeal on behalf of the taxpayer. The tribunal emphasized that filing an appeal is a distinct legal action, requiring explicit authorization in the POA.
Further complicating the matter was the fact that the appeal was filed after the prescribed time limit. The appellant filed a separate application for condonation of delay, accompanied by an affidavit, both of which contained scanned signatures. While the POA had been attested by a Notary Public in Islamabad and signed by two witnesses, the lack of handwritten signatures on the application and affidavit raised concerns regarding procedural compliance.
In its ruling, the ATIR emphasized the importance of strict adherence to legal procedures in tax matters, stating that while courts typically consider the Doctrine of Substantial Compliance in procedural issues, in this case, the failure to comply with the law left the tribunal with no alternative but to dismiss the appeal. The tribunal’s conclusion highlights the critical importance of following the correct legal procedures, particularly when it comes to the submission of appeals and the proper authorization of representatives.
This ruling serves as a cautionary tale for non-resident Pakistanis and their authorized representatives, urging them to ensure that all documents submitted in relation to appeals or legal proceedings meet the necessary legal standards. The ATIR’s decision underscores the significance of ensuring that all signatures are genuine, all authorizations are explicit, and that procedural deadlines are met in order to avoid the dismissal of appeals.
