GOVERNMENT OF PAKISTAN

FEDERAL BOARD OF REVENUE

(REVENUE DIVISION)

INCOME TAX MANUAL

PART I

INCOME TAX ORDINANCE, 2001

AMENDED UPTO 30th JUNE, 2021

 227

been made on the basis of return or revised return filed by the taxpayer shall be of
no legal effect].

(2) As soon as possible after making an assessment under this section,

the Commissioner shall issue the assessment order to the taxpayer stating

(a) the taxable income;

(b) the amount of tax due;
(c) the amount of tax paid, if any; and
(d) the time, place and manner of appealing the assessment order.

(3) An assessment order under this section shall only be issued within
five years after the end of the tax year or the income year to which it relates 1[:]

2[Provided that where notice for furnishing a return of income under

sub-section (4) of section 114 is issued in respect of one or more of the last
ten completed tax years in pursuance of proviso to sub-section (5) of section
114 an assessment order under this section shall only be issued within two
years from the end of tax year in which such notice is issued.]

122. Amendment of assessments. (1) Subject to this section, the

Commissioner may amend an assessment order treated as issued under section
120 or issued under section 1213[, 4[ ] 5[or 6[ ], by making such alterations or
additions as the Commissioner considers necessary 7[ ].

8[(2)
No order under sub-section (1) shall be amended by the
Commissioner after the expiry of five years from the end of the financial year in
which the Commissioner has issued or treated to have issued the assessment
order to the taxpayer.]

1
Full stop substituted by the Finance Act 2018.
2
Added by the Finance Act, 2018.
3
Inserted by the Finance Act, 2012.
4
The expression omitted by the Finance Act, 2017
5
Inserted by the Finance Act, 2002
6
Ordinance
7

8
Sub-section (2) substituted by the Finance Act, 2009. The substituted sub-section (2) read as
follows:
(2) An assessment order shall only be amended under subsection (1) within five years after the
 228

(3) Where a taxpayer furnishes a revised return under sub-section (6) 1[or
(6A)] of section 114

(a) the Commissioner shall be treated as having made an amended

assessment of the taxable income and tax payable thereon as
set out in the revised return; and

(b) the taxpaye

this Ordinance to be an amended assessment order issued to
the taxpayer by the Commissioner on the day on which the
revised return was furnished.

(4)
-section (1) 2[,] (3) 3[or (5A)], the
Commissioner may further amend,4[as many times as may be necessary,] the
original assessment within the later of

(a) five years 5[from the end of the financial year in which] the
Commissioner has issued or is treated as having issued the
original assessment order to the taxpayer; or

(b) one year 6[from the end of the financial year in which] the
Commissioner has issued or is treated as having issued the
amended assessment order to the taxpayer.
7[(4A)
In respect of an assessment made under the repealed Ordinance,
nothing contained in sub-section (2) or, as the case may be, sub-section (4) shall
be so construed as to have extended or curtailed the time limit specified in section
65 of the aforesaid Ordinance in respect of an assessment order passed under
that section and the time-limit specified in that section shall apply accordingly.]

1
Substituted by the Finance Act, 2010. The substituted provision has been made effective from
05.06.2010 by sub-clause (77) of clause 8 of the Finance Act, 2010. Earlier the substitution was
made through Finance (Amendment) Ordinance, 2009 which was re-promulgated as Finance
(Amendment) Ordinance, 2010 and remained effective till 05.06.2010.
2
3
Inserted by the Finance Act, 2010. Amendment made in sub-section (4) has been validated through
sub-clause (18)(b) of clause (8) of Finance Act, 2010, with effect from the first day of July, 2003.
4
Inserted by the Finance Act, 2002
5
6
7
Inserted by the Finance Act, 2003. Earlier sub-section (4A) was inserted by S.R.O. 633(I)/2002, dated
14.09.2002 which stands rescinded by SRO 608(I)/2003, dated 24.06.2003 with effect from
01.07.2003. The said sub-section (4A) read as follows:
An amended assessment shall only be made within six years of the date of original
 229

1[(5)
An assessment order in respect of tax year, or an assessment year,
shall only be amended under sub-section (1) and an amended assessment for that
year shall only be further amended under sub-section (4) where, on the basis of
2[audit or on the basis of definite information] the Commissioner is satisfied that

(i) any income chargeable to tax has escaped assessment; or

(ii) total income has been under-assessed, or assessed at too low

a rate, or has been the subject of excessive relief or refund; or

(iii) any amount under a head of income has been mis-classified.]

3[(5A) Subject to sub-section (9), the Commissioner may 4[, ] 5[ ] amend, or

further amend, an assessment order, if he considers that the assessment order is

erroneous in so far it is prejudicial to the interest of revenue.]

6[(5AA)
In respect of any subject matter which was not in dispute in an appeal the
Commissioner shall have and shall be deemed always to have had the powers to amend
or further amend an assessment order under sub-section (5A).]

7[(5B) Any amended assessment order under sub-section (5A) may be passed

within the time-limit specified in sub-section (2) or sub-section (4), as the case may be.]

1
Sub-section (5) substituted by the Finance Act, 2003. The substituted sub-section (5) read as follows:
An assessment order shall only be amended under sub-section (1) and an amended
assessment shall only be amended under subsection (4) where the Commissioner
(a) is of the view that this Ordinance or the repealed Ordinance] has been incorrectly
applied in making the assessment (including the misclassification of an amount
under a head of income, incorrect payment of tax with the return of income, an
incorrect claim for tax relief or rebate, an incorrect claim for exemption of any
amount or an incorrect claim for a refund); or
(b) has definite information acquired from an audit or otherwise that the income has
been concealed or inaccurate particulars of income have been furnished or the

2
Act, 2020 dated 30th June, 2020
3
Inserted by the Finance Act, 2003. Earlier sub-section (5A) was inserted by S.R.O. 633(I)/2002, dated
14.09.2002 which stands rescinded by SRO 608(I)/2003, dated 24.06.2003 with effect from
01.07.2003. The said sub-section (5A) read as follows:
Where a person does not produce accounts and records, or details of expenditure,
assets and liabilities or any other information required for the purposes of audit under section177,
or does not file wealth statement under section 116, the Commissioner may, based on any available

4
Added by Finance Act, 2012.
5
after making, or causing to be made, such enquiries as he deems
omitted by the Finance Act, 2021.
6
Added by the Finance Act, 2010.
7
Inserted by the Finance Act, 2003.
 230

(6) As soon as possible after making an amended assessment under 1[sub-

section (1), sub-section (4) or sub-section (5A)], the Commissioner shall issue an
amended assessment order to the taxpayer stating

(a) the amended taxable income of the taxpayer;

(b) the amended amount of tax due;

(c) the amount of tax paid, if any; and

(d) the time, place, and manner of appealing the amended assessment.

(7) An amended assessment order shall be treated in all respects as an

assessment order for the purposes of this Ordinance, other than for the purposes
of sub-section (1).

(8)
on sales or purchases of any goods made by the taxpayer, 2[receipts of the taxpayer
from services rendered or any other receipts that may be chargeable to tax under this
Ordinance,]and on the acquisition, possession or disposal of any money, asset, valuable
article or investment made or expenditure incurred by the taxpayer.
3[(9) No assessment shall be amended, or further amended, under this section
unless the taxpayer has been provided with an opportunity of being heard] 4[:

Provided that order under this section shall be made within one hundred
and twenty days of issuance of show cause notice or within such extended period
as the Commissioner may, for reasons to be recorded in writing, so however, such
extended period shall in no case exceed ninety days. This proviso shall be
applicable to a show cause notice issued on or after the first day of July, 2021.

Provided further that any period during which the proceedings are
adjourned on account of a stay order or Alternative Dispute Resolution
proceedings or agreed assessment proceedings under section 122D or the time
taken through adjournment by the taxpayer not exceeding sixty days shall be
excluded from the computation of the period specified in the first proviso.]
5
[122A. Revision by the Commissioner. (1) The Commissioner may 6[ 7[, suomoto,]
] call for the record of any proceeding under this Ordinance or under the repealed

1
-
2
Inserted by the Finance Act, 2002
3
Added by the Finance Act, 2002
4
Full stop substituted and two provisos added by the Finance Act, 2021.
5
Added by the Finance Act, 2003.
6
Inserted by the Finance Act, 2004.
7
suomoto