From 1 September 2026, Inland Revenue officers are required to initiate new income tax assessment proceedings only where the case has been selected and assigned through FBR’s Compliance Risk Management (CRM) System.
The requirement applies to proceedings including sections 121, 122, 122A and 122C of the Income Tax Ordinance, 2001. According to Income Tax Circular No. 1 of 2026, proceedings initiated outside the prescribed CRM mechanism may be treated as unauthorized and could potentially be considered void ab initio. Proceedings already underway as of 31 August 2026 may continue, but any fresh reassessment, amendment or show-cause notice issued from 1 September onward must comply with the new framework.
This is an important development from a tax administration perspective. The selection of a taxpayer for assessment will now itself form part of the procedural framework that may need to be examined when reviewing the validity of newly initiated proceedings. The measure reflects FBR’s broader shift towards risk-based and system-driven tax administration rather than discretionary case selection at field formation level.