The Finance Act 2025 amends Section 131(1) of the Income Tax Ordinance, 2001, to streamline the tax appeal process and bring it into alignment with the revised Section 127. The amendment gives taxpayers a statutory right to bypass the Commissioner (Appeals) and directly file an appeal with the Appellate Tribunal Inland Revenue (ATIR), provided they have surrendered their right of first appeal.
This update provides greater procedural efficiency, especially in high-stakes or precedent-based tax disputes.
Text of the Substituted Sub-Section (1)
“(1) Where the taxpayer, or the Commissioner objects to an order passed by the Commissioner (Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal against such order within thirty days of the receipt of such order:
Provided that the taxpayer may directly appeal against the order of the Officer Inland Revenue or the Commissioner, as the case may be, to the Appellate Tribunal by exercising the option as provided in sub-section (1) of section 127.”*
Key Legal Changes Introduced
Recognition of Direct Appeal Route to Tribunal
For the first time, the law explicitly allows taxpayers to file an appeal directly to the ATIR, bypassing the Commissioner (Appeals)—if they opt to surrender that first appeal right as per Section 127(1).
Example: A taxpayer receives an assessment order from the Officer Inland Revenue and, instead of appealing to the Commissioner (Appeals), chooses to file directly with the Tribunal under the new rule. This is now permissible and legally protected.
Time Limit for Appeal to Tribunal
Whether it’s a direct appeal or after the Commissioner (Appeals), the appeal to the Tribunal must be filed within 30 days from the date of receipt of the order.
Practical Implications for Taxpayers
Strategic Appeal Planning
Taxpayers now have two options after receiving an adverse order:
Conventional Route: Commissioner (Appeals) → Tribunal
Direct Route: Straight to Tribunal (if Section 127 right is waived)
The direct route may be better in cases involving:
Legal questions
High-value disputes
Matters previously litigated at the Commissioner level
Case Insight: A company contesting the same issue already ruled against it by the Commissioner (Appeals) in prior years may now choose to skip the Commissioner and proceed directly to the Tribunal.
FAQs – Section 131(1) Amendment (Finance Act 2025)
What has changed in Section 131(1)?
Taxpayers may now directly appeal to the Tribunal under certain conditions, aligning with their rights under Section 127(1).Can I still file an appeal with the Commissioner (Appeals)?
Yes, that route remains intact. The amendment adds a new option, not replaces the old one.How much time do I have to file a Tribunal appeal?
30 days from the date of receipt of the order.Who can file a direct appeal?
Any taxpayer who formally waives their right to appeal to the Commissioner (Appeals) under Section 127.Does the Commissioner also have this right?
No. Only taxpayers can choose the direct route under the proviso.Are there any limitations to the direct appeal?
Yes, you must surrender the first right of appeal; once waived, you cannot revert.What if I miss the 30-day deadline?
You may apply for condonation with valid reasons, but it’s at the Tribunal’s discretion.Is this new rule applicable to pending appeals?
No, it applies prospectively from the date of the Finance Act 2025.Can this help avoid procedural delays?
Yes. It helps fast-track cases where earlier forums may cause delays or have a history of adverse decisions.Should I always go directly to the Tribunal?
No. Consult your tax counsel—each route has pros and cons depending on the complexity and nature of your case.
