ISLAMABAD, Jan 22: The Central Board of Revenue (CBR) has directed all its Regional Commissioners of Income Tax (RCITs) to stop the practice of issuing pre-show cause notice to an assessee prior to a notice.

An official announcement said that CBR has taken the decision in compliance with the Federal Tax Ombudsman (FTO) order.

The RCITs have also been asked by the CBR that all show cause notices issued earlier be withdrawn and cancelled immediately. However, the approval of the inspecting additional commissioner (IAC) fro pre-show cause notice be taken under section 65, the announcement said.

The FTO in his decision had termed the issuing of pre-show cause notice completely ‘illegal and unwarranted without prior approval of (IAC)’.

Earlier, the CBR issued pre show-cause notice to an assessee prior to an issuance of notice under section 65 of the income tax ordinance 1979.

The CBR also clarified that any action in case required under the said section of the ordinance, must not be initiated without prior approval of the IAC.

The FTO in his decision of a case dated December 29, 2001 regarding issuance of illegal pre-show cause notice, filed by Sufi Restaurant had observed that the practice, prevailing in the CBR of issuing pre-show cause notice under section 65 of the income tax ordinance 1979 without prior approval of IAC was completely illegal and unwarranted.

He had stated in his ruling that the department may call it a pre-notice but in fact, it amounted to initiations of proceedings under section 65 of the said ordinance.