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Best judgment assessment
(1) Where a person fails to —
(ab) furnish return of income in response to notice under sub- section (3) or sub-section (4) of section 114; or;
(ac) furnish return of income in response to notice under sub-section (3) of section 117; or (b) furnish a return as required under section 143 or section 144; or (c) furnish the statement as required under section 116; or (d) produce before the Commissioner, or a special audit panel appointed under sub-section (11) of section 177 or any person employed by a firm of chartered accountants or a firm of cost and management accountants under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purpose of making assessment of income and determination of tax due thereon, the Commissioner may, based on any available information or material and to the best of his judgement, make an assessment of the taxable income or income of the person and the tax due thereon and the assessment, if any, treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect .
(1A) For the purposes of making a best judgment assessment under sub- section (1), the Commissioner may determine taxable income on the basis of sectoral benchmark ratios prescribed by the Board. Explanation.- The expression sectoral benchmark ratios means standard business sector ratios notified by the Board on the basis of comparative cases and includes financial ratios, production ratios, gross profit ratio, net profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such sectors as may be prescribed.
(2) As soon as possible after making an assessment under this section, the Commissioner shall issue the assessment order to the taxpayer stating—
(a) the taxable income;
(b) the amount of tax due;
(c) the amount of tax paid, if any; and (d) the time, place and manner of appealing the assessment order.
(3) An assessment order under this section shall only be issued within six years after the end of the tax year or the income year to which it relates :
Provided that where notice for furnishing a return of income under sub-section (4) of section 114 is issued in respect of one or more of the last ten completed tax years in pursuance of proviso to sub-section (5) of section 114 an assessment order under this section shall only be issued within two years from the end of tax year in which such notice is issued.
(ab) furnish return of income in response to notice under sub- section (3) or sub-section (4) of section 114; or;
(ac) furnish return of income in response to notice under sub-section (3) of section 117; or (b) furnish a return as required under section 143 or section 144; or (c) furnish the statement as required under section 116; or (d) produce before the Commissioner, or a special audit panel appointed under sub-section (11) of section 177 or any person employed by a firm of chartered accountants or a firm of cost and management accountants under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purpose of making assessment of income and determination of tax due thereon, the Commissioner may, based on any available information or material and to the best of his judgement, make an assessment of the taxable income or income of the person and the tax due thereon and the assessment, if any, treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect .
(1A) For the purposes of making a best judgment assessment under sub- section (1), the Commissioner may determine taxable income on the basis of sectoral benchmark ratios prescribed by the Board. Explanation.- The expression sectoral benchmark ratios means standard business sector ratios notified by the Board on the basis of comparative cases and includes financial ratios, production ratios, gross profit ratio, net profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such sectors as may be prescribed.
(2) As soon as possible after making an assessment under this section, the Commissioner shall issue the assessment order to the taxpayer stating—
(a) the taxable income;
(b) the amount of tax due;
(c) the amount of tax paid, if any; and (d) the time, place and manner of appealing the assessment order.
(3) An assessment order under this section shall only be issued within six years after the end of the tax year or the income year to which it relates :
Provided that where notice for furnishing a return of income under sub-section (4) of section 114 is issued in respect of one or more of the last ten completed tax years in pursuance of proviso to sub-section (5) of section 114 an assessment order under this section shall only be issued within two years from the end of tax year in which such notice is issued.
Amendment history (18)
- Section 120A omitted by the Finance Act, 2013. The omitted section 120A
- New Section (120B) inserted though Finance Act, 2019.
- Section 121 substituted by the Finance Act, 2003. The substituted section 121
- Omitted by the Finance Act, 2010. The omitted clause (a)
- Clause “(aa)” omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause read as
- Inserted by the Finance Act, 2017.
- Clause (ac) inserted by the Finance Act, 2024.
- Inserted by the Finance Act, 2015
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2012.
- Sub-section (1A) inserted by the Finance Act, 2024.
- The word “five” substituted by the Finance Act, 2022.
- Full stop substituted by the Finance Act 2018.
- Added by the Finance Act, 2018.
- The expressionor issued under section 122C,”omitted by the Finance Act, 2017
- Inserted by the Finance Act, 2002
- Ordinance “ omitted by the Finance Act, 2012.
- assessment order relates” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 245
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.