IHC Orders FBR to Address Flaws in IRIS System

The Islamabad High Court (IHC) has directed the Chairman of the Federal Board of Revenue (FBR) to address the glitches and flaws in its electronic system, known as “IRIS.” This decision follows a constitutional petition that highlights issues within the tax authorities’ handling of taxpayer information and statuses.

Waheed Shahzad Butt, a lawyer based in Lahore, on behalf of a taxpayer seeking income tax refunds, filed the petition. The taxpayer also sought the implementation of an order issued by the Appellate Tribunal Inland Revenue (ATIR) in Islamabad. The petition named several respondents, including the Commissioner of Inland Revenue, Deputy Commissioner of Inland Revenue (DCIR) Islamabad, and a Member of the IT Wing. The case focused on allegations that FBR employees maltreated the taxpayer by changing their Active Taxpayer List (ATL) status without proper justification.

IHC Orders FBR to Address Flaws in IRIS System

The Federal Tax Ombudsman (FTO) conducted an investigation and found that FBR employees had wrongfully marked the taxpayer’s status as “Inactive” without issuing or serving the required statutory notices. PRAL, the IT arm of FBR, conceded that a crucial assignment notice under section 120(3) was not electronically delivered to the taxpayer’s folder. The department did not provide evidence that they had served the notice, instead attributing the issue to IT system failures. The FTO deemed this response insufficient and highlighted the contradictions in PRAL’s stance on this matter.

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The FTO’s report also raised concerns about the involvement of an unrelated officer, Ahmed Shakeel Babar, whose name appeared on the notice even though he never appointed in the relevant unit. This was termed an IT distortion, further questioning the reliability of the IRIS system.

The IHC, in its order, acknowledged the petitioner’s primary request for an investigation into the actions of the tax authorities by the FTO. The court noted that the FTO had submitted a report identifying various flaws in the PRAL system and recommending that the FBR address these issues.

The IHC stated, “In view of the recommendations of the Ombudsman, nothing is remaining that needs to be done by this court. Let a copy of the report of the Ombudsman be sent to the chairman FBR to consider if any steps need to be taken to address the glitches and flaws in the FBR system that have been identified.”

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The court’s directive emphasizes the need for the FBR to take immediate action to rectify the issues within its electronic system. The identified flaws in the IRIS system not only affect the accuracy of taxpayer information but also undermine the credibility of the tax administration process. Ensuring the proper functioning of the IRIS system is crucial for maintaining taxpayer trust and ensuring the fair treatment of taxpayers.

For taxpayers, this ruling is significant as it highlights the importance of proper notice and procedural fairness. The decision sets a precedent for holding tax authorities accountable for their administrative actions and the reliability of their electronic systems.