FBR forms independent committees to scrutinize tax appeals before higher courts

The Federal Board of Revenue (FBR) has proposed Independent Case Scrutiny Committees to prevent the tax department from pursuing weak or frivolous cases before higher courts, according to SRO 1138(I)/2026, which outlines draft amendments to the Income Tax Rules, 2002.

The committees, introduced through the Finance Act 2026 for all federal taxes, will review cases before references are filed in High Courts or petitions are submitted to the Supreme Court or the Federal Constitutional Court.

The move is intended to ensure that litigation proceeds only where cases involve sustainable legal grounds, substantial questions of law or significant revenue implications.

Sources said field formations had frequently filed appeals regardless of their legal strength because officials feared scrutiny by the National Accountability Bureau, suspension or disciplinary action if they decided not to pursue a case.

The new framework is aimed at improving the quality of tax litigation, reducing avoidable disputes, ensuring consistency in the legal positions adopted by the department and strengthening litigation management within the FBR.

Three committees will be established with defined territorial jurisdictions.

Each committee will be headed by a retired judge of the Supreme Court, Federal Constitutional Court or a High Court. Its other members will include an advocate with at least 15 years of experience in tax and commercial litigation before superior courts and a serving or retired Inland Revenue Service officer in BS-20 or above.

The panels will determine whether cases warrant the filing of a reference or petition and will also periodically review pending litigation to assess whether its continuation remains justified in the interest of revenue.

They will maintain a database of settled legal questions and judicial precedents to promote consistency in future cases and identify legal or administrative issues requiring legislative action.