Lahore High Court declares FBR notices seeking old bank data illegal

The Lahore High Court has declared illegal notices issued by the Federal Board of Revenue (FBR) to commercial banks

LAHORE: The Lahore High Court has declared illegal notices issued by the Federal Board of Revenue (FBR) to commercial banks seeking taxpayers’ old bank account information after the expiry of the prescribed limitation period, ruling that tax authorities must exercise their powers within the boundaries established by law.

The verdict was announced by a bench comprising Justice Muhammad Ajmal Zahid in Writ Petition No. 27851/2015, Syed Naved Amjad Andrabi versus Assistant Commissioner Inland Revenue, along with a connected petition, W\.P. No. 32717/2015.

The petitions challenged notices dated September 9, 2015, and October 16, 2015, issued to commercial banks under Section 176 of the Income Tax Ordinance, 2001. Through these notices, the tax authorities had sought information about the petitioners’ bank accounts for Tax Years 2011 to 2014.

The petitioners argued that the notices were unlawful because the relevant limitation period had expired and the tax authorities could not use the information-gathering process to revive matters that could no longer be pursued under the applicable legal framework.

Petitioners challenge bank information requests

The petitioners, represented by lawyers Tafazzul H. Rizvi, Syed Naved Amjad Andrabi and Khurram Saleem, maintained that they had regularly filed their income tax returns up to 2015.

They further submitted that their tax cases had never been selected for audit and that bank statements had already been provided to the relevant authorities.

According to their arguments, the direct issuance of notices to commercial banks for historical financial records amounted to an impermissible fishing expedition. They contended that the tax department could not use such requests to reopen old tax matters after the statutory time limit had elapsed.

The petitioners sought judicial intervention against the notices, arguing that the FBR’s actions exceeded the powers available to it under the law.

The FBR was represented before the court by lawyers Ibrar Ahmad, Muhammad Yahya Johar and Muhammad Yasin Zahid.

Court stresses statutory limits

While deciding the petitions, the court held that the tax authorities could not seek information beyond the period permitted by law. It emphasised that statutory powers must be exercised within the prescribed legal framework and cannot be used to bypass limitation requirements.

The court also ruled against reopening old proceedings merely on the basis of bank statements or information obtained through the challenged notices.

The decision underscores the importance of following procedural and statutory safeguards when tax authorities seek financial information from banks or examine taxpayers’ historical records.

The ruling does not remove the FBR’s lawful authority to obtain information or conduct tax proceedings where permitted by the relevant legislation. Rather, it reinforces the requirement that such powers must be exercised within applicable legal limit

Notices set aside

Accepting the petitions, the Lahore High Court set aside the challenged notices issued to the commercial banks. The court also restrained the FBR from taking adverse action against the petitioners on the basis of information obtained through those notices.

The judgment provides relief to the petitioners by preventing the use of information gathered under the impugned notices as a basis for adverse action.

The ruling also highlights the legal distinction between the tax department’s authority to collect information and its ability to initiate or revive proceedings after the expiry of a statutory limitation period.

The decision reinforces the principle that tax administration must remain within the limits prescribed by law, while ensuring that taxpayers’ rights are protected against actions taken without a valid legal basis.