FBR Stopped From Accessing Bank Records

The Lahore High Court has overturned tax notices requesting bank statements from taxpayers, ruling that the Federal Board of Revenue (FBR) cannot utilize its investigative powers after the legal deadline has passed. A panel of justices upheld two constitutional petitions, including one initiated by Syed Naved Amjad Andrabi, against the FBR's requests for commercial bank account details under Section 176 of the Income Tax Ordinance, 2001.

Their legal counsel argued that the taxpayers had already filed returns for tax year 2015 and settled their liabilities in compliance with the law, adding that the taxpayers were not under audit for the relevant years and that no legal proceedings were pending against them. The court inquired if the notices were meant to aid in proceedings under Sections 121, 122, or 124 of the ordinance, or any other provision.

The court-appointed judge, Muhammad Ajmal Zahid, held that while Sections 175, 176, and 177 grant authorities the ability to access records and conduct audits, they do not override statutory limits on initiating or concluding tax assessments. The judgment affirmed that the information obtained under Section 176 might be relevant to an assessment but cannot extend the powers granted under Sections 120, 121, 122, and 124 beyond their statutory bounds.

The court emphasized that limitation is not merely a procedural formality but defines the temporal boundaries within which a statutory authority can lawfully exercise its jurisdiction. The ruling was confined to the purpose of the notices in question and did not imply that the expiration of a deadline for one assessment would automatically invalidate every other power available under the ordinance.

The court found that the authorities had not demonstrated a legitimate reason for issuing the notices, leading to the dismissal of the petitions.