CAF-2 · Chapter 16
Appeals, References and Petitions MCQs with Answers
15 multiple-choice questions on Appeals, References and Petitions for CAF-2 Taxation Principles and Compliance. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Under Section 127, what is the mandatory pre-condition that a taxpayer must fulfill before filing an appeal against an assessment order before the Commissioner (Appeals)?
- A) A) The taxpayer must pay 50% of the disputed tax demand.
- B) B) The taxpayer must pay the amount of tax due under section 137(1) (i.e., the tax payable with the return).
- C) C) The taxpayer must submit a bank guarantee for the disputed amount.
- D) D) There is no pre-condition; the appeal can be filed directly.
Show answer & explanation
Answer: B) B) The taxpayer must pay the amount of tax due under section 137(1) (i.e., the tax payable with the return).
No appeal shall be made by a taxpayer against an order of assessment unless the taxpayer has paid the amount of tax due under subsection (1) of section 137 (tax due at the time of furnishing the return).
Question 2
What is the prescribed fee for an individual (non-company) taxpayer filing an appeal before the Commissioner (Appeals) against an order of assessment?
- A) A) Rs. 1,000
- B) B) Rs. 2,500
- C) C) Rs. 5,000
- D) D) Rs. 20,000
Show answer & explanation
Answer: B) B) Rs. 2,500
In case an appeal is made against an order of assessment, the application shall be accompanied by a fee of Rs. 5,000 where the appellant is a company, and Rs. 2,500 where the appellant is not a company.
Question 3
A taxpayer files an appeal before the Commissioner (Appeals). What is the maximum initial period for which the Commissioner (Appeals) can stay the recovery of the disputed tax to avoid undue hardship?
- A) A) 30 days
- B) B) 60 days
- C) C) 90 days
- D) D) 180 days
Show answer & explanation
Answer: A) A) 30 days
The Commissioner (Appeals) may stay the recovery of tax for a period not exceeding 30 days in aggregate. He may grant a further extension of 30 days, provided the order on the appeal is passed within that extended period.
Question 4
What is the maximum statutory time limit (including extensions) within which the Commissioner (Appeals) must pass an order after an appeal is filed?
- A) A) 90 days
- B) B) 120 days
- C) C) 180 days
- D) D) 120 days, extendable by 60 days for reasons recorded in writing.
Show answer & explanation
Answer: D) D) 120 days, extendable by 60 days for reasons recorded in writing.
The order shall be passed not later than 120 days from the date of filing the appeal, or within an extended period of 60 days, for reasons to be recorded in writing by the Commissioner (Appeals).
Question 5
If a taxpayer is aggrieved by an order passed by the Taxation Officer, but wishes to bypass the Commissioner (Appeals), does the Income Tax Ordinance allow this?
- A) A) No, the taxpayer must exhaust the Commissioner (Appeals) forum first.
- B) B) Yes, the taxpayer may surrender his right of appeal before the Commissioner (Appeals) and file directly before the Appellate Tribunal Inland Revenue (ATIR).
- C) C) Yes, but only with the prior approval of the Federal Board of Revenue.
- D) D) Yes, but only if the disputed tax exceeds Rs. 50 million.
Show answer & explanation
Answer: B) B) Yes, the taxpayer may surrender his right of appeal before the Commissioner (Appeals) and file directly before the Appellate Tribunal Inland Revenue (ATIR).
An aggrieved person may have the option to either file an appeal before the Commissioner (Appeals) directly or may surrender his right of appeal before the Commissioner (Appeals) and avail the next statutory appellate forum by filing the appeal directly before the ATIR.
Question 6
What is the prescribed fee for a company to prefer an appeal to the Appellate Tribunal Inland Revenue (ATIR)?
- A) A) Rs. 5,000
- B) B) Rs. 10,000
- C) C) Rs. 20,000
- D) D) Rs. 50,000
Show answer & explanation
Answer: C) C) Rs. 20,000
The prescribed fee for an appeal to the Appellate Tribunal is Rs. 20,000 in the case of a company, and Rs. 5,000 in cases other than a company.
Question 7
Under Section 131, if the Appellate Tribunal Inland Revenue (ATIR) decides to grant a stay on the recovery of tax, what is the maximum duration for which this stay order is initially valid?
- A) A) 30 days
- B) B) 60 days
- C) C) 90 days
- D) D) 180 days
Show answer & explanation
Answer: C) C) 90 days
If on filing of an application in a particular case, the Tribunal may, for reasons to be recorded, stay the recovery of such tax for 90 days.
Question 8
To file a reference application before the High Court against an order of the Appellate Tribunal, the aggrieved person must do so within how many days of the communication of the order?
- A) A) 30 days
- B) B) 60 days
- C) C) 90 days
- D) D) 120 days
Show answer & explanation
Answer: B) B) 60 days
Within 60 days of the communication of the order of the Appellate Tribunal, the aggrieved person or the Commissioner may file a reference before the High Court.
Question 9
On what specific grounds can a reference application be filed before the High Court against an order of the Appellate Tribunal?
- A) A) On any question of fact or law.
- B) B) Only on a question of fact.
- C) C) Only on a question of law arising out of the Tribunal's order.
- D) D) When the disputed tax liability exceeds Rs. 100 million.
Show answer & explanation
Answer: C) C) Only on a question of law arising out of the Tribunal's order.
A reference to the High Court can only be filed stating any "question of law" arising out of the Appellate Tribunal's order.
Question 10
The High Court may stay the recovery of tax pending the decision of a reference application. What is the mandatory condition for the High Court to grant this stay?
- A) A) The taxpayer must provide a bank guarantee for the full amount.
- B) B) The taxpayer must deposit not less than 30% of the tax determined by the Appellate Tribunal.
- C) C) The taxpayer must deposit 50% of the tax determined by the ATIR.
- D) D) No deposit is required if the High Court finds the case has merit.
Show answer & explanation
Answer: B) B) The taxpayer must deposit not less than 30% of the tax determined by the Appellate Tribunal.
The High Court may stay recovery of tax, subject to deposit with the assessing authority of not less than thirty percent (30%) of the tax determined by the Appellate Tribunal.
Question 11
An aggrieved person (other than a State-Owned Enterprise) wishes to apply for the resolution of a dispute through the Alternative Dispute Resolution Committee (ADRC). What is the minimum threshold of the tax liability required to qualify for this mechanism?
- A) A) Rs. 10 million
- B) B) Rs. 25 million
- C) C) Rs. 50 million
- D) D) There is no minimum threshold.
Show answer & explanation
Answer: C) C) Rs. 50 million
An aggrieved person may apply for ADRC where the liability of tax is Rs. 50 million or above (this limit does not apply if the aggrieved person is a State-Owned Enterprise).
Question 12
Which of the following persons acts as the Chairperson of the Alternative Dispute Resolution Committee (ADRC)?
- A) A) The Chief Commissioner Inland Revenue having jurisdiction over the case.
- B) B) A retired judge not below the rank of a judge of a High Court.
- C) C) A reputable businessman nominated by the Chamber of Commerce.
- D) D) A senior Chartered Accountant having 10 years of experience.
Show answer & explanation
Answer: B) B) A retired judge not below the rank of a judge of a High Court.
The Committee comprises a retired judge not below the rank of a High Court judge (who shall be the Chairperson), the CCIR, and a nominated professional/businessman.
Question 13
The ADRC issues a decision regarding a tax dispute. Under what condition does this decision become legally binding on the Commissioner?
- A) A) It is automatically binding as soon as it is issued.
- B) B) It is binding if the aggrieved person is satisfied, withdraws the pending appeal from the court/appellate authority, and communicates this withdrawal to the Commissioner within 60 days.
- C) C) It is binding only if the FBR approves the decision.
- D) D) It is never binding; it is merely an advisory recommendation.
Show answer & explanation
Answer: B) B) It is binding if the aggrieved person is satisfied, withdraws the pending appeal from the court/appellate authority, and communicates this withdrawal to the Commissioner within 60 days.
The decision shall be binding on the Commissioner when the aggrieved person, being satisfied, has withdrawn the pending appeal and communicated the order of withdrawal to the Commissioner within 60 days of the service of the decision.
Question 14
In an appeal, the appellate authority issues an order providing direct relief (e.g., a refund) to the taxpayer. What is the statutory time limit within which the Commissioner must issue the new appeal effect assessment order?
- A) A) Two months from the date the order is served on the Commissioner.
- B) B) One year from the end of the financial year in which the order is served.
- C) C) Two years from the end of the financial year in which the order is served.
- D) D) 30 days from the date of the order.
Show answer & explanation
Answer: A) A) Two months from the date the order is served on the Commissioner.
Under Section 124, where direct relief is provided to the taxpayer, the new assessment order has to be made within two months from the date the order is served on the Commissioner.
Question 15
Under Section 136 of the Income Tax Ordinance, 2001, in any appeal proceedings regarding an assessment order or any other decision, upon whom does the burden of proof lie?
- A) A) The Commissioner Inland Revenue
- B) B) The Federal Board of Revenue
- C) C) The Taxpayer
- D) D) Both the Taxpayer and the Commissioner equally
Show answer & explanation
Answer: C) C) The Taxpayer
In any appeal by a taxpayer, the burden shall be on the taxpayer to prove, on the balance of probabilities, the extent to which the order does not correctly reflect their tax liability or that the decision is erroneous.