Navigating Legal Hurdles: ATIR Rulings on Scanned Signatures
Overseas Pakistanis are facing significant challenges in contesting Federal Board of Revenue (FBR) decisions, as highlighted by recent rulings from the Appellate Tribunal Inland Revenue (ATIR) Islamabad. A two-member Division Bench-I of the ATIR recently dismissed an appeal filed by a non-resident taxpayer due to procedural issues surrounding electronically scanned signatures. This decision underscores the growing need for reforms in how non-resident individuals interact with Pakistan’s tax and legal systems.
The Case in Detail
The dismissed case involved a non-resident Pakistani who had declared an income of PKR 9,285,590 through an electronic tax return. Initially deemed an original assessment under Section 120(1) of the Income Tax Ordinance, the case was later selected for audit by the FBR under Section 214C. The taxpayer submitted an online reply and supporting documents, but the response was deemed unsatisfactory, resulting in an order under Section 122(1).
Feeling aggrieved, the taxpayer filed an appeal with ATIR. However, the tribunal dismissed the case based on procedural grounds, emphasizing the following issues:
- Scanned Signatures: The appeal and accompanying Power of Attorney (POA) bore electronically scanned signatures, which are not permissible under the law.
- Lack of Explicit Authorization: The POA did not explicitly authorize the taxpayer’s chartered accountant firm to file the appeal, even though it allowed representation and argumentation.
- Filing Delays: The appeal was filed beyond the prescribed time, and the submitted application for condonation of delay also contained scanned signatures.
The Legal Perspective
The ATIR has clarified that filing an appeal is a distinct legal act requiring explicit authorization in the POA and manual signatures for validation. While the POA was signed by two witnesses and authenticated by a Notary Public in Islamabad, the tribunal ruled that these measures did not meet the legal requirements for filing an appeal.
Impact on Non-Resident Pakistanis
The decision has sparked concerns among tax professionals and non-resident Pakistanis, who argue that the ruling is overly harsh. Many overseas Pakistanis face logistical challenges, such as the time and expense of using international courier services to send manually signed documents.
Tax experts have called on the FBR to:
- Amend the Law: Introduce provisions allowing the use of digitally signed or electronically scanned signatures for appeals.
- Address Procedural Barriers: Reduce the additional costs and complexities faced by non-resident taxpayers.
A Call for Reform
This ruling highlights the urgent need for modernizing Pakistan’s tax and legal frameworks to accommodate the realities of a globalized world. By enabling digital signatures, the FBR can ease the compliance burden for overseas Pakistanis and promote a more inclusive approach to tax administration.