Aslam Khan Vs Commissioner Inland Revenue, RTO, Islamabad

 APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-I,

ISLAMABAD 

MA(Cond) No.143/IB/2025

In

ITA No.271/IB/2025

 (Tax Year 2022) 

******

Aslam Khan Shop No.1, Mughal Market, Shar Shah Suri Road, Jhangi Syedan, Islamabad. Reg No. 6110167377727		Applicant
	Vs
Commissioner Inland Revenue, RTO, Islamabad		Respondent
Appellant By:		Mr. Asif Raza, FCA
Respondent By:		Mr. Zulfiqar Khosa, DR
Date of Hearing:		19.08.2025
Date of Order:		25.08.2025

ORDER

M. M. AKRAM (Judicial Member): The present appeal, accompanied by a miscellaneous application seeking condonation of delay in filing, has been preferred by the applicant-taxpayer to challenge the impugned ex-parte order dated May 20, 2024. The said order was passed by the Inland Revenue Officer, Unit-III, Zone-North, Range-1, Regional Tax Office (RTO), Islamabad, in respect of Tax Year 2022. The appeal is supported by a detailed memorandum of grounds and allied applications setting out the basis for assailing the impugned order.

Facts of the case:

2.      The facts emerging from the record reflect that the appellant, being an individual, duly filed his return of income, which was accordingly deemed to be an assessment order under section 120(1)(b) of the Income Tax Ordinance, 2001 (“the Ordinance”). Subsequently, proceedings were initiated on the basis of definite information concerning the purchase of immovable properties during Tax Year 2022. In this regard, proceedings under section 122(9) of the Ordinance were initiated, requiring the taxpayer to explain the sources of investment, as the declared income did not correspond with the quantum of investment made. Despite affording several opportunities, the taxpayer failed to furnish a satisfactory explanation. Consequently, the Assessing Officer proceeded to pass the ex-parte order under section 122(1) of the Ordinance, thereby making an addition of Rs. 69,800,000 under section 111(1)(b) of the Ordinance. Aggrieved by the said order, the applicant-taxpayer filed the instant appeal before this Tribunal, challenging the legality of the impugned order along with a miscellaneous application for condonation of delay.

Submissions of the parties:

3.      The matter was fixed for hearing on August 19, 2025, whereupon it was mutually agreed by the parties that the application for condonation of delay should be taken up and decided as a preliminary issue. The learned Authorized Representative (AR) for the appellant submitted that the impugned order was served exclusively through the IRIS portal, which is inconsistent with the requirements of section 218(1)(d) of the Income Tax Ordinance, 2001 (“the Ordinance”). It was contended that the appellant first became aware of the impugned order on May 5, 2025, when, upon attempting to withdraw cash from his bank account, he discovered that the Revenue Department had already affected recovery from his account. The appellant immediately approached the Department to inquire into the matter, whereupon he came to know of the impugned order. He then promptly applied for a certified copy of the order, and upon receipt thereof, preferred the instant appeal within the statutory period of thirty days prescribed under section 131 of the Ordinance. The AR further argued that the Assessing Officer relied solely on a single mode of service, namely, uploading the order on the IRIS portal, without resorting to any of the other prescribed modes of service envisaged under section 218 of the Ordinance. He emphasized that there exists a clear legal distinction between service through IRIS and service through “electronic means” as contemplated under Rule 74 of the Income Tax Rules, 2002 (“the Rules”). Thus, mere uploading of the impugned order on the IRIS portal does not constitute valid service within the meaning of section 218 of the Ordinance, read with Rule 74 of the Rules. In support of the application for condonation of delay, the AR submitted that section 218 must be construed harmoniously with section 27 of the General Clauses Act, 1897, which requires strict compliance with the prescribed modes of service before such service can be deemed legally effective. In the present case, no such compliance was made. Accordingly, the delay in filing the appeal was attributable solely to defective and invalid service, a circumstance entirely beyond the control of the appellant.

4.      Conversely, the learned Departmental Representative (DR) submitted written arguments, duly endorsed by the concerned Commissioner Inland Revenue, RTO Islamabad. Through these submissions, the Department asserted that the show cause notices, reminders, and impugned order had been validly served upon the taxpayer through the FBR’s IRIS portal. It was argued that electronic service of notices under section 218(1)(d) of the Income Tax Ordinance, 2001, read with Rule 74 of the Income Tax Rules, 2002, constitutes a lawful and effective mode of service. Such service, it was contended, ensures timely delivery, reduces administrative delays, and binds the taxpayer through the contact information furnished in the official record. In support of this contention, reliance was placed on the judgment of the Hon’ble Peshawar High Court in Tax Reference No. 17-P/2022 (CIR Peshawar Zone, RTO Peshawar v. Miss Shabnam Riaz) dated 05.11.2024, wherein it was affirmed that service through electronic means is to be treated as equivalent to personal service or service by registered post, as envisaged under clauses (a) and (b) of section 218(1) of the Ordinance.

In rejoinder, the learned AR for the taxpayer maintained that there exists a material distinction between service effected through the IRIS portal and the “electronic service” contemplated under Rule 74 of the Income Tax Rules, 2002.

FINDINGS OF THE TRIBUNAL:

5.      We have heard the parties and perused the record. Before interpreting the provisions of section 218(1)(d), which are relevant to the present case, we shall first examine the recent judgment of the Hon’ble Peshawar High Court in the case of Commissioner of Inland Revenue, Peshawar Zone, RTO, Peshawar Vs Miss Shabnam Riaz, bearing Tax Reference No. 79-P/2022, delivered on 27.01.2024 relied upon by the department. In this judgment, the Court critically addresses two main issues: the validity of service of the assessment order on an individual via electronic means and the commencement of the limitation period for filing an appeal under Section 127(5) of the Ordinance.

i.            Validity of Electronic Service [Section 218(1)(d)]:

The Court holds that the service of the assessment order via electronic means is legally valid and in line with Section 218(1)(d) of the Ordinance, which allows for such service provided it is done in the prescribed manner. This provision, introduced by the Finance Act of 2018, treats electronic service as an independent and valid method of serving notices, orders, or requisitions on individuals or entities. The Court disagrees with the Tribunal’s stance, which suggested that the limitation period for filing an appeal would begin only when the taxpayer receives an attested physical copy of the assessment order. The Court points out that the Tribunal’s interpretation fails to align with the legislative intent, which seeks to streamline and modernize service methods through electronic means. The Court emphasizes that the use of "or" in Section 218 signals that each mode of service (including electronic service) is a distinct and independent method that can be considered sufficient for legal purposes when completed correctly, as per the prescribed requirements.

ii.           Commencement of the Limitation Period [Section 127(5)]:

The Court holds that the limitation period for filing an appeal, as prescribed under Section 127(5) of the Ordinance, begins from the date the taxpayer receives the assessment order through any of the prescribed modes of service (including electronic service), not from the date the taxpayer receives an attested copy of the order. Section 127(5) specifies that the appeal must be filed within thirty days from the "date of service" of the assessment order or notice of demand. The use of the word "shall" makes this a mandatory provision, and the Court stresses that the limitation period should not be extended based on subjective interpretations that overlook the clear statutory language.

iii.          Tribunal's Error:

The Court criticizes the Tribunal for condoning the delay in filing the appeal. It argues that the Tribunal’s decision fails to apply the clear statutory framework that defines the commencement of the limitation period. By accepting an alternative interpretation that the limitation period begins only when the taxpayer receives an attested copy of the order (as opposed to the date of electronic service), the Tribunal's decision introduces unnecessary procedural leniency that is inconsistent with the law's intent. The Court points out that such an approach could undermine the efficiency and purpose of the statute, which aims to ensure timely appeals and prevent delays.

In conclusion, the Court holds that electronic service is a valid and sufficient method for serving assessment orders, and the limitation period for filing an appeal starts from the date the taxpayer receives the order via any of the prescribed methods of service, including electronically. The Court finds that the Tribunal misapplied the law and thus erred in its decision to condone the delay in filing the appeal.

6.      However, in the present case, upon consideration of the arguments advanced by both parties and the applicable provisions of law, the following legal questions emerge for determination, which were not specifically addressed in the judgment relied upon:

I.            Whether the service of an order through IRIS, as defined under section 2(30AC) of the Ordinance, constitutes valid service under section 218(1)(d) of the Ordinance?

II.          Whether the exclusive reliance by the Assessing Officer on service through IRIS, without adopting any of the other prescribed modes of service under section 218, can be deemed sufficient compliance with the statutory requirement?

III.        Whether service through IRIS can be equated with service through “electronic means in the prescribed manner” as envisaged in section 218(1)(d) read with Rule 74 of the Income Tax Rules, 2002?

IV.        Whether, in the absence of compliance with the prescribed mode of electronic service under Rule 74 of the Income Tax Rules, 2002, the service of the impugned order through IRIS can be held to be lawful and effective?

V.          Whether the provisions of section 218, which safeguard the taxpayer’s statutory rights such as due process of law and the right of appeal, are to be construed strictly?

7.      For proper appreciation of the legal position, the relevant provisions are reproduced below:

Section 2(30AC): “Iris” means a web-based computer programme for operation and management of Inland Revenue taxes and laws administered by the Board.

Section 218. Service of notices and other documents.— (1) Subject to this Ordinance, any notice, order or requisition required to be served on a resident individual (other than in a representative capacity) for the purposes of this Ordinance shall be treated as properly served on the individual if–

(a)        personally served on the individual or, in the case of an individual under a legal disability or a non-resident individual, the representative of the individual;

(b)        sent by registered post or courier service to the place specified in clause (b) of sub-section (2) or to the individual’s usual or last known address in Pakistan;

(c)         served on the individual in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908); or

(d)        served on the individual electronically in the prescribed manner.

Section 2(44): “Prescribed” means prescribed by rules made under this Ordinance.

Section 2(19B): The expressions “addressee”, “automated”, “electronic”, “electronic signature”, “information”, “information system”, “originator” and “transaction”, shall have the same meanings as are assigned to them in the Electronic Transactions Ordinance, 2002 (LI of 2002).

The Electronic Transactions Ordinance, 2002 [Electronic Ordinance] provides an inclusive definition of the term “electronic”. This term has been defined in section 2(1)(l) of the Electronic Ordinance as under:

(I) “Electronic” includes electrical, digital, magnetic, optical, biometric, electrochemical, wireless or electromagnetic technology;”

The Ordinance has delegated powers to the Board to prescribe the manner for electronic service of notices, orders, and requisitions. In exercise of such delegated authority, the Board has promulgated Rule 74 of the Income Tax Rules, 2002 (“the Rules”), which provides as follows:

Rule 74 of the Income Tax Rules, 2002 – Service of documents electronically:

(1)        This rule applies for the purposes of the service of documents under the Ordinance or these rules.

(2)        Where a person has provided an electronic address, the document required to be served on the person shall be considered sufficiently served if sent to that address.

(3)        For the purposes of sub-rule (2), a document is considered sent to an electronic address if the sender receives–

(a)        in the case of a message sent to a facsimile number, confirmation from the sending facsimile machine that the transmission is sent;

(b)        in the case of a message sent to an electronic mail address, confirmation from the server of the recipient that the message has been received; and

(c)         from the Board a digitally signed e-mail acknowledging the receipt of Electronic Income Tax Return or electronic withholding tax statement.

(4)        In this rule–

(a)        “document” means any notice, order or requisition under the Ordinance; and

(b)        “electronic address” means a facsimile number or electronic mail address. (Emphasis supplied)

8.      We now proceed to address the proposed questions and respond to them seriatim.

Question No. I.      Whether the service of an order through IRIS, as defined under section 2(30AC), constitutes valid service under section 218(1)(d).

Findings:  

Section 2(30AC) defines "IRIS" as a web-based computer program designed for the operation and management of Inland Revenue taxes and laws administered by the Board. While IRIS is indeed an official platform, the mere act of uploading an order onto IRIS cannot, in itself, constitute valid service unless it complies with the express requirement of section 218(1)(d), namely, service by “electronic means in the prescribed manner." The statutory framework clearly distinguishes between "IRIS" being an internal management program, and "electronic service in the prescribed manner" which is specifically regulated under Rule 74 of the Income Tax Rules, 2002. Consequently, service effected solely through IRIS does not, by its own force, fulfill the mandate of section 218(1)(d) of the Ordinance, for the following reasons:

i.     Section 218(1)(d) permits electronic service only “in the prescribed manner.”

2. “Prescribed” means “prescribed by rules” (section 2(44)). The pertinent rule is Rule 74.
3. Rule 74(2) to 74(4) stipulates that electronic service is effected to an “electronic address”, defined narrowly as a facsimile number or electronic mail address; and Rule 74(3) requires specific confirmations (fax transmission report; or server receipt confirmation for email; or a digitally-signed email from the Board acknowledging receipt of an e-return/e-withholding statement).
4. Uploading or placing an order on IRIS (a web portal) is not a service to a “facsimile number” or “electronic mail address,” and it does not inherently produce the confirmations enumerated in Rule 74(3).

Accordingly, in the absence of any rule expressly recognizing the posting of an order on the IRIS portal as service “in the prescribed manner,” the mere availability of an order on IRIS does not fulfill the requirement of section 218(1)(d) ibid. As noted earlier, the expression “IRIS” has been defined in section 2(30AC) as a web-based computer program developed for the operation and management of Inland Revenue taxes and the laws administered by the Board. This program is intended to facilitate the discharge of statutory obligations, including the submission of returns, filing of applications, and furnishing of statements, among other functions. The program comprises four distinct categories of tabs, namely:

i.            Inbox: Where any notice, show-cause notice, or hearing notice issued to the taxpayer appears for compliance.

ii.           Draft: Where a taxpayer’s correspondence in response to a notice, show-cause notice, or hearing notice is retained until it is formally submitted.

iii.          Outbox: Where correspondence formally submitted by the taxpayer in response to a notice, show-cause notice, or hearing notice is placed until further action is taken by the concerned officer.

iv.          Completed Tasks: Where actions taken by the officer on the taxpayer’s submissions, including the passing of an amendment order, are reflected.

It is frequently argued by the Revenue that service of a notice or a show-cause notice through IRIS constitutes valid service. However, such an assertion finds no support either in the principal legislation or in the delegated legislation framed by the Board. This position clearly establishes that IRIS is merely a web-based computer program designed for the internal management of Inland Revenue taxes and not a legally prescribed medium for the service of notices, orders, or requisitions. The law expressly provides only two recognized modes of electronic service, namely, through facsimile number or electronic mail address.

9.      Question No. II.

         Whether exclusive reliance on IRIS, without adopting any other mode under section 218, is sufficient compliance.

Findings: 

Exclusive reliance on IRIS is not sufficient compliance with section 218 of the Ordinance for the following reasons;

i.     Section 218 is couched in mandatory terms, listing specific modes of service. Exclusive reliance on IRIS, without ensuring communication through other recognized means such as personal service (clause (a)), registered post/courier (clause (b)), CPC summons mode (clause (c)), or electronic service in the prescribed manner (clause (d)) of subsection (1) of section 218 ibid does not amount to sufficient compliance. Courts have consistently held that service provisions must be strictly construed, since they are directly linked with the taxpayer’s right to appeal and due process.

2. Where the Department opts for clause (d), it must meet Rule 74’s requirements. When clause (d) is not satisfied (as with a mere IRIS posting), the Department must utilize one of the other enumerated modes.
3. Choosing a non-prescribed electronic method (portal posting) without also affecting service by clauses (a) to (c) results in non-service for purposes of section 218 ibid.

10.            Question No. III.

Whether service through IRIS can be equated with service by “electronic means in the prescribed manner” under section 218(1)(d), read with Rule 74

Findings: 

Service through IRIS cannot be equated with electronic service “in the prescribed manner” unless the Rules are amended to include portal service and to specify confirmations analogous to Rule 74(3).

Reasons:

i.               The Ordinance defers to the Rules on how electronic service is to occur.

2. Rule 74’s taxonomy is exhaustive for present purposes: it limits “electronic address” to fax or email and conditions sufficiency on objective transmission/receipt confirmations.
3. IRIS is an “information system” (see section 2(19B) read with the Electronic Transactions Ordinance definitions), but the decisive criterion is not whether a method is “electronic” in a general sense; it is whether it is “prescribed” by the Rules. IRIS posting is not listed or confirmed.  

11.     Question No. IV.

Whether, absent compliance with Rule 74, service of the impugned order through IRIS can be held lawful and effective.

Finding:

The answer is No. In the absence of Rule 74 compliance (or service under clauses (a) to (c) of section 218(1)), service via IRIS is not lawful and is ineffective to trigger consequences that depend on proper service (including limitation).

Consequences:

i.     Where service is defective, the limitation for appeal under section 131 runs from the date of actual knowledge/receipt of the order (e.g., when the taxpayer obtained the certified copy upon recovery action). The appellant’s filing “within thirty days” thereafter is within time.

2. Any recovery initiated before lawful service is vulnerable, as due process prerequisites have not been met.

iii.   PLD 1963 SC 382 (Imtiaz Ahmed v. Ghulam Ali and others), the Apex Court held that "the proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights”. Thus, it is settled law that when a statute prescribes a specific mode of service, non-compliance renders the service invalid. Similarly, in the case titled Mehar Pervaiz Akhtar vs Director General Excise and Taxation, (PLD 2017 Lah 790) held that “For providing the opportunity to defend, issuance of show cause notice is mandatory, therefore, any assessment order without issuance and due service of the of the show cause notice is nullity.”

12.    Question No. V.

Whether section 218 should be construed strictly, given that it safeguards due process and the right of appeal. 

Findings: 

Yes. Section 218 is a rights-affecting procedural safeguard and must be strictly construed and strictly complied with. Moreover, according to Article 4 of the Constitution of the Islamic Republic of Pakistan, 1973, a citizen has an inalienable right to be proceeded in accordance with law, and if any deviation is noted on the part of the competent authority, the same cannot be allowed to go unnoticed by the judicial forums.

Reasons:

i.     Provisions governing service are the gateway to the taxpayer’s exercise of due process (notice and opportunity to be heard) and the statutory right of appeal.

2. Where the legislature has prescribed specific modes and, for electronic service, specific confirmations (Rule 74(3)), the requirements are mandatory, not directory.
3. A doctrine of “substantial compliance” cannot displace explicit procedural minima when non-compliance would impair the taxpayer’s ability to know of, respond to, or challenge the order within the limitation.
4. It is settled law that when tax laws encroach on taxpayer rights, the rule is clear:

First, interpret the statute strictly, nothing more than what the words demand.

Second, if there's ambiguity, the advantage goes to the taxpayer.

13.    Conclusion:

i.                         IRIS posting alone is not a valid electronic service under section 218(1)(d).

ii.    Exclusive reliance on IRIS without using any other statutory mode is insufficient.

iii.   IRIS is not a prescribed mode of electronic service under Rule 74. Key Distinction.

a.   Service through IRIS: This represents an administrative practice whereby an order or notice is made available on the IRIS portal. However, such availability is not expressly recognized as a valid service under the Ordinance unless specifically prescribed by the relevant rules.

b.   Electronic service under the Ordinance: This refers to the legally sanctioned mode of service contemplated under section 218(1)(d) of the Ordinance, read with Rule 74 of the Income Tax Rules, 2002. It includes service through email or other prescribed electronic means and constitutes valid service in the eyes of law.

iv.  In the absence of compliance with Rule 74 (or clauses (a) to (c) of section 218), service is rendered ineffective. Consequently, the limitation period for filing an appeal shall commence from the date of actual knowledge or receipt of the order. Therefore, the appellant’s appeal, having been filed within thirty days of obtaining the certified copy, stands within the prescribed time.

v.    Section 218’s service regime is a strict-compliance requirement because it safeguards due process and appellate rights.

14.    In view of the above, the application for condonation of delay is accepted, and the appeal of the appellant taxpayer is admitted for regular hearing. Accordingly, the main appeal of the appellant is fixed for 02.09.2025. The office is directed to issue the notice to the parties for such date.

	Sd/- (M. M. AKRAM) JUDICIAL MEMBER
Sd/- (DANISH ALI QAZI) MEMBER