The Lahore High Court (LHC) has set aside tax notices seeking taxpayers’ bank statements, ruling that the Federal Board of Revenue (FBR) cannot use its information-gathering powers to pursue assessments after the legal deadline has expired.
A division bench comprising Justice Hassan Nawaz Makhdoom and Justice Muhammad Ajmal Zahid allowed two constitutional petitions, including one filed by Syed Naved Amjad Andrabi, against notices issued to commercial banks under Section 176 of the Income Tax Ordinance, 2001.
The notices sought details of the petitioners’ bank accounts. Their counsel, Advocate Taffazul Haider Rizvi, argued that the taxpayers had filed returns through tax year 2015 and paid their liabilities in accordance with the law. He said the petitioners had not been selected for audits for the relevant years and that no proceedings, inquiry or investigation was pending against them.
During the hearing, the bench asked the tax authorities whether the notices were intended to facilitate proceedings under Sections 121, 122 or 124 of the ordinance, or any other provision. According to the judgment, the authorities’ counsel could not identify a specific proceeding or lawful purpose for the requests.
Justice Zahid, who authored the judgment, held that Sections 175, 176 and 177 provide mechanisms for accessing records, seeking information and conducting audits, but do not override legal limits on the authority to initiate or complete tax assessments.