A taxpayer who misses a statutory deadline may lose the right of appeal, face recovery proceedings, pay default surcharge and suffer penalties. What happens when a tax tribunal misses the deadline fixed by law for deciding the taxpayer’s appeal? In Pakistan, usually nothing happens. The taxpayer continues to wait, the disputed demand remains alive, capital stays blocked and the institution responsible for deciding the controversy escapes without any effective consequence.
This glaring inequality between the State and the citizen has been exposed by a recent judgment of the Bombay High Court in Rajesh R. Hemrajani v Income Tax Appellate Tribunal and another. The facts are disturbing enough to shake confidence in any justice system.
The taxpayer’s appeal was fully argued and reserved for judgment on July 1, 2025. No judgment was delivered. After more than three months, the appeal was released on October 7, 2025. It was argued again before a differently constituted Bench and reserved on November 26, 2025. Once more, no judgment followed, and the matter was released on February 27, 2026. The appeal was heard for a third time and reserved on May 13, 2026. Fearing that it would again be released and require a fourth round of arguments, the taxpayer approached the High Court.
The Court recorded that its “judicial conscience is shocked”. It directed the Tribunal to pronounce judgment by August 13, 2026, and ordered circulation of its decision to all Benches of the Indian Income Tax Appellate Tribunal for strict compliance with Rule 34 of the Income Tax (Appellate Tribunal) Rules, 1963.
The importance of the judgment lies beyond the extraordinary hardship suffered by one taxpayer. It converts a procedural rule into an enforceable institutional obligation. A matter cannot be heard, reserved, forgotten, released and heard again as though the litigant’s time, money and endurance have no value.
Rule 34 requires the Tribunal’s order to be written, signed and dated. It may be pronounced immediately after hearing. Where that is not possible, the Bench must ordinarily give a date for pronouncement. If no date is given, every endeavour must be made to pronounce the order within 60 days. Only exceptional and extraordinary circumstances can justify a further period, which should not ordinarily exceed 30 days. The rule also provides for notice of the date, pronouncement in court and alternative arrangements where a member who heard the appeal is unavailable.
India and Pakistan inherited the same tribunal from British India. The tax legislation was comprehensively reorganised through the Indian Income-tax Act, 1922. Following recommendations for an appellate body independent of the tax administration, the Income Tax Appellate Tribunal was constituted on January 25, 1941, under section 5A of that Act. Both countries retained the institution after independence. Pakistan later renamed it the Appellate Tribunal Inland Revenue on October 28, 2009, but its essential character as the final fact-finding authority remained unchanged.
The taxpayer continues to wait, the disputed demand remains alive, capital stays blocked and the institution responsible for deciding the controversy escapes without any effective consequence.
The distinction between the 1922 and 1924 enactments is important. The Central Board of Revenue Act, 1924, created and regulated the revenue administration. The tribunal emerged from the 1922 income-tax law and represented a deliberate attempt to separate adjudication from collection. Confusing these two lineages risks overlooking the very principle upon which the tribunal was founded: those who collect tax should not exercise final control over the adjudication of disputes arising from that collection.
India’s present statutory structure contains two different clocks. Section 363(5) of the Income-tax Act, 2025, effective from April 1, 2026, states that the Tribunal may, where possible, hear and decide an appeal within four years from the end of the financial year in which it was filed. That is a broad disposal target covering the life of an appeal.
Rule 34 deals with a narrower and more serious situation: the appeal has already been heard, arguments have ended and nothing remains except judgment. At that stage, the ordinary period is 60 days and the exceptional outer limit is 90 days.
Pakistan’s law appears stricter on paper. Section 132 of the Income Tax Ordinance, 2001, presently commands that the Appellate Tribunal Inland Revenue (ATIR) “shall decide” an appeal within 90 days of its filing. Appeals pending when the Tax Laws (Amendment) Act, 2024, commenced were required to be decided within 180 days. Where an appeal is not decided within the stipulated period, the Tribunal must seek condonation from the Minister for Law and Justice, and even that extension cannot exceed a further 90 days.
The same section requires the Tribunal to fix hearing and decision dates in consultation with the parties. Adjournment is permissible only for compelling reasons recorded in writing and on payment of costs of not less than Rs50,000. The legislature has therefore used mandatory language, fixed short periods and attempted to discourage adjournments.
The subordinate rules, however, expose the weakness of our framework. Rule 21(4) of the Appellate Tribunal Inland Revenue (Functions) Rules, 2023, provides that orders of a Bench “may” be passed within three months from the conclusion of hearing. If that period is exceeded, reasons for delay are merely to be communicated to the Chairperson.
The contradiction is obvious. The parent statute says that an appeal shall be decided within 90 days of filing. The rule says that an order may be passed within three months after hearing. The statute creates an obligation; the rule appears to offer an option. The statute runs the clock from filing; the rule starts another clock after the hearing has concluded. The only stated consequence of violating the latter is an internal communication to the Chairperson.
A subordinate rule cannot dilute, neutralise or contradict the command of the parent statute. Rule 21(4) must therefore be read subject to section 132. The word “may” cannot become a licence to defer judgment. Nor can an undisclosed note to the Chairperson constitute a remedy for the taxpayer whose appeal remains undecided.
The contrast with India is stark. Indian Rule 34 requires a date of pronouncement, notice to the parties and public pronouncement. Pakistan’s rule requires no date to be announced when the hearing ends. It does not require the case to appear on a publicly accessible list of reserved judgments. It does not require reasons for delay to be served upon the parties. It gives the taxpayer no summary procedure to compel pronouncement. It does not explain what happens if a member is transferred, retires or becomes unavailable. It supplies a deadline without transparency, consequence or remedy.
The arrangement under section 132 is itself constitutionally awkward. Judicial delay is to be condoned by the Minister for Law and Justice, a member of the executive. A final fact-finding tribunal must remain institutionally independent of both the revenue administration and executive discretion. The Minister should not determine whether a judicial body deserves more time in an individual appeal. Any extension should be granted through a reasoned judicial or administrative order of the Chairperson, recorded before expiry of the prescribed period and made available to the parties.
Pakistan does not need to borrow the principle from India. Our own superior courts have repeatedly emphasised it. In Pakistan National Shipping Corporation v Nasir Kamal, the Federal Constitutional Court referred to MFMY Industries Limited v Federation of Pakistan and reiterated that reserved judgments should ordinarily be pronounced within 90 days.
Where complexity makes this impossible, the matter may be reheard for genuine reasons and should, in any event, be decided within 120 days. The Court stressed that without judgment there can be no fruitful outcome of litigation, and that prolonged delay leaves rights uncertain and compounds the hardship of litigants. It described the practice of indefinite delay as impermissible. This principle applies with greater force to tax adjudication. A delayed civil judgment affects the immediate parties.
A delayed tax judgment may also immobilise working capital, obstruct refunds, prolong coercive recovery, distort financial statements and discourage investment. The government simultaneously treats the disputed demand as recoverable revenue while refusing to ensure prompt adjudication of its legality.
In 2025 and 2026, it was highlighted [FBR’s Frivolous Appeals: A Crisis In Judicial Efficiency And Taxpayer Justice, Friday Times, March 15, 2025 and Tax cases backlog, Business Recorder, April 24, 2026] that more than Rs. 5.4 trillion was reportedly locked in tax litigation. Over Rs. 3.3 trillion, involving more than 21,000 cases, was pending at the ATIR level alone. These figures are not evidence merely of taxpayer resistance. They expose high-pitched assessments, mechanical departmental appeals, fragmented adjudication and the institutional inability to bring disputes to finality.
The first reform required is immediate amendment of Rule 21(4). The word “may” must be replaced with “shall”. An order should ordinarily be pronounced within 60 days of conclusion of hearing and, for exceptional reasons recorded before expiry of that period, no later than 90 days. This will harmonise the Pakistani rule with both the Bombay judgment and our own jurisprudence.
At the conclusion of every hearing, the Bench should announce a date for pronouncement. Every reserved case should automatically appear on the ATIR website, showing the date of hearing, date of reservation, scheduled date of pronouncement and present status. Electronic alerts should be generated for the Bench and Chairperson after 45, 60 and 75 days. Any extension should be reasoned, published and communicated to both parties.
A case should not be released merely because the Bench failed to write its judgment in time. Institutional failure cannot be cured by punishing the litigant with another hearing. Rehearing should remain an exceptional course, supported by recorded reasons such as death, incapacity or unavoidable unavailability of a member. Even then, the appeal should receive immediate priority and should not return to the ordinary queue.
ATIR should publish an annual statement of reserved judgments, delays, reasons and compliance with section 132. This is not interference with judicial independence. Independence protects adjudication from external pressure; it does not protect unexplained inaction from institutional accountability.
Technology can make compliance almost automatic. We proposed e-Tribunals and virtual benches years ago, together with a unified National Tax Tribunal independent of FBR and the executive. Digital case management can now record hearings, track reserved cases, issue notices, prevent files from disappearing and make delays visible. Pakistan has spent heavily on tax administration while leaving tax adjudication dependent upon opaque and outdated practices.
The ultimate reform remains the creation of an independent National Tax Tribunal by merging the inland revenue and customs tribunals, with suitably constituted appellate Benches and a direct appeal to the Supreme Court on substantial questions of law. Reducing appellate tiers, ensuring professional appointments and placing the institution under judicial rather than executive supervision will restore consistency and credibility.
The immediate issue, however, requires no constitutional amendment and no foreign loan. The Ministry of Law and Justice and the ATIR Chairperson can amend the rules, create an electronic reserved judgment register and enforce the existing statutory timeline.
A reserved judgment is not the private property of a Bench. It is a public duty held in trust. The law cannot demand payment of tax within days while tolerating adjudication without an effective deadline. Pakistan does not need another committee or circular. It needs a rule with a clock, a consequence and a remedy.