Letter from Messrs M.H. Syed and Company, Income Tax Advisors, Hyderabad

LETTER FROM <!--[if gte mso 10]> LETTER FROM MESSRS M.H. SYED AND COMPANY, INCOME TAX ADVISORS, HYDERABAD TO CHAIRMAN, FEDERAL BOARD OF REVENUE (Re: Sanctity of Income Tax Circulars issued by the Federal Board of Revenue -- Clarification regarding) To, The Chairman, Federal Board of Revenue, Islamabad. SUBJECT: SANCTITY OF INCOME TAX CIRCULARS ISSUED BY THE FEDERAL BOARD OF REVENUE CLARIFICATION REGARDING Dear Sir, Please refer to the above noted subject. The Central Board of Revenue at present Federal Board of Revenue used to issue circulars from time to time on different grounds as well as copies of the same are also provided to the Regional Tax Offices, Tax Bar Associations and Chamber of Commerce and Industry all over the country which in my opinion is a guideline for the taxpayers and tax collectors and is helpful in understanding the Income Tax Ordinance, 2001. The legislature at the time of promulgation of the Income Tax Ordinance, 2001 incorporated section 214 which is reproduced hereunder for ready reference. "Income Tax authorities to follow orders of the Central Board of Revenue.---(1) Subject to subsection (2), all Income Tax Authorities and other persons, employed in the execution of this Ordinance shall observe and follow the orders, instructions and directions issued by the Central Board of Revenue. (2) No orders, instructions or directions shall be given by the Central Board of Revenue that will interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate function. In addition to above the legislature also incorporated section 206, which is reproduced hereunder for your ready reference. "206. Circulars---(1) To achieve consistency in the administration of this Ordinance .and to provide guidance to taxpayers and officers of the Central Board of Revenue, the Central Board of Revenue may issue Circulars setting out the Board's interpretation of this Ordinance. (2) A circular issued by the Central Board of Revenue shall be binding on all Income Tax Authorities and other persons employed in the execution of the Ordinance, under the control of the said Board other than Commissioners of Income Tax (Appeals). (3) A Circular shall not be binding on a taxpayer." From the plain reading of above two sections of the Income Tax Ordinance, 2001 it has become crystal clear that the officers of Income Tax Department are legally bound to follow the instructions and the guide lines provided by the Federal Board of Revenue accordingly. It is regretfully noted that the circulars are not being followed in letter and spirit specially at Regional Tax Office, Hyderabad as the orders under section 170(4) of the Income Tax Ordinance, 2001 are not being served upon the taxpayers within the stipulated period of 45 days specially where refund are being issued thus a question mark has been put in front of circulars issued by the Federal Board of Revenue which is against the law and procedure discussed hereinabove. It is, therefore, requested that the sanctity of the circular may please be clarified at your earliest and oblige. Thanking you.