A. Background: (1) (a) TLQC 3765 of 3.10.26 about Faceless Audit and Assessment by SRO 1665 & KC Comments (b) TLQC 3750 of 23.9.26 about Systems & AI ensure almost all your Transactions Reporting to Revenue Authorities - Be ready (2) Other relevant TLQCs are in para-E.

B. Kasbati & Co Views & Recommendations

1. Your Entity Tax Team Development to take care of future Notices due to Electronic Scrutiny, AI, dealing any Cash based matters issue taken out of bank: Due to matters in para B to D and for Tax, Levies, Corporate Compliance & Savings, we recommend your team members to attend the Courses considering their Education & Experience. These courses can be attended Physically at Karachi; Online from Karachi Lahore, Islamabad, etc. Recorded Lecture are also available. Click here for the Master CTM Flyer. Specific Level as per the following Workshop & Courses, click Flyers and Tentative Registration Links. Please click on the Link for (a) Comparative Study to decide relevant Level by Mr Asif Kasbati FCA, FCMA, LLB and Courses Director (b) View of High Level Professionals view (c) Participants views 

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3. Multiplication: Although all the Commentaries are to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this QC to Impart Knowledge to the maximum Employees, Relatives, Groups, etc as soon as possible, as they may get Notice anytime.

C. Updated Commentary

1. Reference

Further to KQU 4119 of 7.10.26, being an important matter, we would inform you about SRO 1690 - Draft rules for consideration of insertion of new Rule 38B, of ITR, 2002. regarding Procedure for Electronic Scrutiny and intimation issues Detected by the Automated System under section 120 of ITO, 2001 (Attachment 3772.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

The following draft of certain further amendments in the ITR, 2002, which the FBR proposes to make in exercise of the powers conferred by sub-section (2A) [KC: Refer to para D] of section 120 read with sub-section (1) of section 237 of ITO, 2001, is hereby published for information of all persons likely to be affected thereby and, as required by sub-section (3) of the said section 237, notice is hereby given that objections or suggestions thereon, if any, may for consideration of the Board be sent within three days of publication of the amendments in the official Gazette. Any objections or suggestions which may be received from any person, before the expiry of the aforesaid period, shall be taken into consideration by the FBR, namely:-

2. Draft amendments

In the aforesaid Rules, after rule 38A, the following new rule shall be inserted, namely :-

"38B. Procedure for electronie scrutiny and intimation of issues detected by the automated system.- (1) There shall be an automated system including CRM hereinafter referred to as "the system", to process the return of income furnish by tax payer, implemented under sub-section (2A) of section 120 of the Income Tax Ordinance, 2001 (XLIX of 2001).

(2) The system may make the intimation of issues detected, through an online advice or advance intimation sent through IRIS, pointing out the factual, legal mistakes or discrepancies, aimed at allowing the taxpayer to clarify the issue, rectify

the errors pointed out by the system or take other corrective action before any legal or penal action is initiated.

(3) The same system generated advance intimation containing discrepancies can also be sent by the Officer of Inland Revenue holding jurisdiction.

(4) Such intimation shall specify the time period for response, which shall not be less than seven days, during which the taxpayer shall clarify, rectify or take other corrective action for removal of discrepancy or discrepancies, as the case may be, pointed out therein.

(5) In case of no response from the taxpayer is received, within the stipulated time, to the intimation as provided in sub-rule (4), a reminder shall be sent to the taxpayer which shall not be less than seven days.

(6) The record of issue or discrepancies detected, intimation sent to the taxpayer and response received, if any, shall be communicated to the Officer of Inland Revenue having jurisdiction over the taxpayer.

(7) The intimations sent to the taxpayer, responses received, and actions taken shall be recorded in the dashboard designed under the system.

(8) The aforesaid procedure for automated scrutiny, analysis and cross-matching of other available data, issues pointed out by the system and electronic communication thereof to the taxpayer shall be implemented through Change Request Form (CRF) for smooth and efficient operation and implementation of the said system.

(9) The Officer of Inland Revenue having jurisdiction over the taxpayer shall analyse the response from the taxpayer, or otherwise, and shall take appropriate action, if required, under the relevant provisions of the Income Tax Ordinance, 2001 (XLIX of 2001) and the rules made thereunder.".

D. Extract for ITO Section – 120 (2A)

(2A) A return of income furnished under sub-section (2) of section 114 shall be processed through automated system to arrive at correct amounts of total income, taxable income and tax payable by making adjustments for-

(i) any arithmetical error in the return;

(ii) any incorrect claim, if such incorrect claim is apparent from any information in the return;

(ii) disallowance of any loss, deductible allowance or tax credit under parts VIII, IX and X respectively of Chapter III; and

(iv) disallowance of carry forward of any loss under clause (b) of sub-section (l)of section 182A:

Provided that no such adjustments shall be made unless a system generated notice is given to the taxpayer specifying the adjustments intended to be made:

Provided further that the response received from the taxpayer, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such notice, adjustments shall be made.

Provided also that where no such adjustments have been made within six month of filing of return, the amounts specified in the return as declared by the taxpayer shall be deemed to have been taken as adjusted amounts on the day the return was filed and the taxpayer shall be intimated automatically through Iris

Provided also that the provisions of this sub-section shall apply from the date notified by the Federal Board of Revenue in the official Gazette

E. Multiplication

lthough all the Commentaries are to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this QC to Impart Knowledge and Reduce Tax Buden on your entity, if Other Become better Complaint (including Govt entities and Officials).

F. List of other relevant QCs

(a) TLQC 3764 of 3.10.26 about Updated Income Tax Rules from FBR and KC Views

(b) TLQC 3662 of 7.8.26 about Fast Track FBR reforms & Cashless Economy – Be ready

(c) TLQC 3642 of 28.7.26 about Updated Income Tax Ordinance from FBR and KC Recommendation

(d) TLQC 3551 of 11.6.26 about Over Rs 160 billion Pending cases at ATIR to be heard shortly – Be ready

(e) TLQC 3445 of 26.2.26 about FBR–LUMS Collaboration to for Training Programs – Be ready

(f) TLQC 3587 of 29.6.26 about Budget 2026-27: Finance Act Gazette plus 1,500 pages & KC Recommendations

(g) TLQC 3551 of 11.6.26 about Over Rs 160 billion Pending cases at ATIR to be heard shortly – Be ready

(h) TLQC 3133 of 22.5.25 about Shops being Sealed for Tax Evasion - Hope that U are Compliant

(i) TLQC 3059 of 17.3.25 about BTB for 85% Cashless Economy!

(j) CDQC 293 of 13.11.25 about Crackdown on Massive Fabric smuggled goods & KC Views

G. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Advisory, Statement or Return Filing or Review services, or related accounting matters like the above, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com.

Best regards for Here & Hereafter
Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

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