Appellate Tribunal Declares Serving Tax Notices via IRIS Illegal

The Appellate Tribunal Inland Revenue (ATIR) Islamabad has ruled that serving notices to taxpayers solely through the Federal Board of Revenue’s (FBR) IRIS system is “illegal.” A two-member bench of the tribunal issued the order against the FBR, declaring that reliance on IRIS alone does not satisfy the legal requirements for proper service of notices. According to the case record, the appellant, an individual taxpayer, duly filed a return of income, which was deemed an assessment order under section 120(1)(b) of the Income Tax Ordinance, 2001. Later, proceedings were initiated based on information concerning the purchase of immovable property during Tax Year 2022, after which the Assessing Officer passed an ex-parte order. The taxpayer challenged the order before the tribunal. The tribunal observed that the FBR had relied solely on uploading the order on the IRIS portal, without following any of the prescribed modes of service outlined under section 218 of the Income Tax Ordinance. It noted that FBR often contends that notices served via IRIS constitute valid service, but this claim lacks support in both primary and delegated legislation. The order emphasized that IRIS is merely a web-based computer program designed for the internal management of Inland Revenue taxes, not a legally recognized medium for serving notices, orders, or requisitions. The law only recognizes two modes of electronic service: facsimile and email. The tribunal clarified that unless rules are amended to expressly recognize service through the IRIS portal, such service cannot be deemed lawful. In the absence of compliance with Rule 74 or the provisions of section 218(1)(a)–(c), service via IRIS is ineffective and cannot trigger legal consequences, including limitation periods for appeal. As a result, where service is defective, the limitation period under section 131 runs from the date of actual knowledge or receipt of the order, for instance, when a taxpayer obtains a certified copy following recovery action. Any recovery initiated prior to lawful service is therefore vulnerable, as due process requirements have not been met, the tribunal concluded.