Income Tax Ordinance, 2001 — Section 127: Appeal to the Commissioner (Appeals)

127. Appeal to the Commissioner (Appeals). — 3[(1) 4[ ] 5[Any person, other than State-Owned Enterprise (SOE),] dissatisfied with any order passed by a Commissioner or an6[Officer of Inland Revenue] under 7[sub-section (2A) of section 120,] section 121,122, 143, 144, 8[162,] 170, 182, 9[ ] 10[or 205], or an order under sub section (1) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of sub-section (3) of section 172 11[declaring] a person to be the representative of a non-resident person [or an order giving effect to any finding 1 Inserted through The Tax Laws (Amendment) Act, 2024. 2 Section 126A omitted by the Finance Act, 2025. The omitted section read as follows: “126A. Pecuniary jurisdiction in appeals. — (1) 2[Notwithstanding anything contained in any other provision of this Ordinance,– ]

(a)an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed twenty million rupees; or

(b)an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds twenty million rupees 2 [Explanation. – For the purposes of this section value of assessment of tax means the net increase in tax liability of a person as a result of order sought to be assailed and value of refund means net reduction in refund as a result of order sought to be assailed.]

(2)A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in Cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section 133.

(3)A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in cases under clause (b) of sub-section (1) may file a reference before the High Court in accordance with section 133.

(4)The cases pending before the Commissioner (Appeals) having the value of assessment of tax or, as the case may be, refund of tax exceeding twenty million rupees shall on 2[or before the 31st day of December], 2024 2[and shall be deemed to have taken effect on and from the 16th day of June, 2024] stand transferred to the Appellate Tribunal Inland Revenue.

(5)All cases transferred from the Commissioner (Appeals) to the Appellate Tribunal under sub-section (4) shall be decided by the Appellate Tribunal within the period provided for under section 132 which period shall commence from 2[the date of transfer under sub-section (4).]” 3 Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1) read as follows: “(1) Any person dissatisfied with any proceeding under this Ordinance in which an order has been issued by a Commissioner of Income Tax (other than the Commissioner (Appeals)) or a taxation officer may prefer an appeal to the Commissioner (Appeals) against the order.” 4 Expression inserted by the Finance Act, 2024. 5 The expression “Subject to section 126A, any] person” substituted by the Finance Act, 2025. 6 The words “Taxation officer” substituted by the Finance Act, 2014. 7 The expressions inserted through Finance Act, 2020 dated 30th June, 2020 8 Inserted by the Finance Act, 2004. 9 The figures and commas “183, 184, 185, 186, 187, 188 and 189” omitted by the Finance Act, 2010. 10 The word and figure “or 189” substituted by the Finance Act, 2009. 11 The word “treating” substituted by the Finance Act, 2003 258 Chapter X – Procedure or directions in any order made under this Part by the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court], or an order under section 221 refusing to rectify the mistake, either in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person 1[, 2[ 3[ ] ]may prefer an appeal to the Commissioner (Appeals) against the order] 4[: Provided that an aggrieved person under sub-section (1) may have the option to either file appeal before Commissioner Inland Revenue (Appeals) directly or may surrender his right of appeal before Commissioner Inland Revenue (Appeals) and avail the next statutory appellate forum by filing the appeal directly before the Appellate Tribunal Inland Revenue.] 5[ ] 6[(2) No appeal under sub-section (1), shall be made by a taxpayer against an order of assessment unless the taxpayer has paid the amount of tax due under sub section (1) of section 137.]

(3)An appeal under sub-section (1) shall

(a)be in the prescribed form;

(b)be verified in the prescribed manner;

(c)state precisely the grounds upon which the appeal is made;

(d)be accompanied by the prescribed fee specified in sub-section

(4); and 1 Inserted by the Finance Act, 2011. 2 The words “a provisional” substituted by the word “an” by the Finance Act, 2012. 3 The expression “except an assessment order under section 122C,” omitted by the Finance Ordinance, 2017. 4 Full stop substituted and new proviso added by the Finance Act, 2025. 5 Sub-section (2) substituted by the Finance Ordinance, 2002. The substituted sub-section (2) read as follows: “No appeal may be made by a taxpayer against an assessment unless the amount of tax due under the assessment that is not in dispute and fifteen percent of the disputed tax has been paid by the taxpayer.” 6 Sub-section (2) substituted by the Finance Act, 2021. The substituted sub-section (2) read as follows: “(2) No appeal under sub-section (1), shall be made by a taxpayer against an order of assessment unless the taxpayer has paid,

(a)the amount of tax due under sub-section (1) of section 137 and

(b)no appeal under sub-section (1) shall be made by a taxpayer against] an order of assessment unless the taxpayer has paid the amount of tax due under sub-section (1) of section 137.” 259 Chapter X – Procedure

(e)be lodged with the Commissioner (Appeals) within the time set out in sub-section (5). 1[(3A) The Board may prescribe mechanism for electronic filing of the appeals.]

(4)The prescribed fee 2[shall be] 3[(a) in the case of appeal against an assessment

(i)where the appellant is a company, five thousand rupees; or

(ii)where the appellant is not a company, two thousand and five hundred rupees; or]

(b)in any other case

(i)where the appellant is a company, 4[five] thousand rupees; or

(ii)where the appellant is not a company, 5[one thousand] rupees. 6[(5) An appeal shall be preferred to the Commissioner (Appeals) within thirty days of the following

(a)where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and

(b)in any other case, the date on which the order to be appealed against is served.]

(6)The Commissioner (Appeals) may, upon application in writing by the appellant, admit an appeal after the expiration of the period specified in sub-section (5) if the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from lodging the appeal within that period. 1 Sub-section (3) inserted by the Finance Act, 2021. 2 The word “is” substituted by the Finance Act, 2002 3 Clause (a) substituted through Finance Act, 2020 dated 30th June, 2020 the substituted clause read as follows: “(a) in the case of an appeal against an assessment, 3[one thousand rupees]3[ ]; or” 4 The word “one” substituted through Finance Act, 2020 dated 30th June, 2020 5 The word “two hundred” substituted through Finance Act, 2020 dated 30th June, 2020 6 Sub-section (5) substituted by the Finance Act, 2002. The substituted sub-section (5) read as follows: “ “(5) An appeal shall be lodged with the Commissioner (Appeals) –

(a)where the appeal relates to an assessment order, within thirty days of the date of service of the demand relating to the assessment; or

(b)in any other case, within thirty days of the date of service of the notice of the decision or determination appealed against.” 260 Chapter X – Procedure