ATIR sets aside super tax default surcharge for court-protected period
Tribunal rules taxpayer remained liable to pay super tax under Section 4C, but surcharge under Section 205 could not be imposed for period covered by superior court orders
A two-member bench of the Appellate Tribunal, Inland Revenue, Islamabad, has set aside the default surcharge imposed on super tax for the period during which orders of the superior courts protected the taxpayer’s payment obligation.
According to the order in ITA.773/IB/2026, issued on Tuesday, the ATIR ruled that the taxpayer was liable to pay super tax under Section 4C of the Income Tax Ordinance, 2001.
However, the tribunal held that the default surcharge imposed under Section 205 could not be sustained for the period in which the taxpayer’s obligation to pay remained governed by interim and final orders of the superior courts.
The tribunal observed that constitutional guarantees do not permit adverse fiscal consequences against a litigant who acted in compliance with binding judicial orders.
It ruled that the levy of a default surcharge for the protected period was without lawful authority.
The ATIR, therefore, set aside the impugned order to the extent of the default surcharge imposed for the court-protected period.
The appeal was allowed to that extent, subject to the tribunal’s observations.
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