1992 P T D (Trib.) 971

[Income-tax Appellate Tribunal Pakistan]

Before Farhat Ali Khan, Chairman, Manzur-ul-Haque, Accountant Member and Saiyid Saeed Ashhad Judicial Member

I.TAs. Nos.1778/KB to 1786/KB, 1788/KB of 1985-86 and 230/KB to 233/KB of 1987-88, decided on 12/05/1990.

Per Manzur-ul-Haque, Accountant Member, Farhat Ali Khan, Chairman and Saiyid Saeed Ashhad, Judicial Member Agreeing---

(a) Income Tax Ordinance (XXXI of 1979)---

----S. 100---Refund---Once refund is determined as a result of assessment or in consequence of relief allowed in appeal, revision, or reference, S.100 does not allow the Income-tax Officer to ponder in his sight whether to allow or not to allow refund---Determination of refund as a result of assessment on I.T. 30 is the final round ---Assessee need not make a formal application for refund and the Income-tax Officer after examining the application may not call for any such evidence which in his opinion is essential to dispose of the claim of refund---Income Tax Officer, during the assessment proceedings is expected to have examined all the documents, original challans etc. essential for the determination of refund and as a result of such exercise refund is determined and marked out on I.T.30---Any subsequent exercise carried out to determine refund will render the earlier one finalised in assessment proceedings redundant.

(b) Income Tax Ordinance (XXXI of 1979)---

----Ss. 96, 97, 98, 99 & 100---Claim of refund by assessee---Procedure---Once the Income Tax Officer as a result of assessment or after giving appeal effects to the orders of the superior Courts, determines the refund on IT-30 there is neither any necessity of a refund application nor any perusal of limitation is involved---Claim of assessee for refund having been settled under the provision of S.100, he was entitled to refund accordingly.

In a situation visualised in section 96 of Income Tax Ordinance, 1979 a person may have suffered deduction of tax, although his income was far below that taxable limit, he must, therefore, get his amount back without going through the rigorous exercise of assessment proceedings. What he has to do in such circumstances is to file his claim within two years after end of the assessment year to which the refund relates. On receipt of such application the I.T.O. has to carry out necessary verification and determine the amount of refund. Section 97 visualises a situation where income of any person is included in the income of another person. Such another person shall be entitled to a refund in respect of such income which he has included in his income. Subsection (2) of section 97 discusses a situation where refund is not claimed due to incapacity, insolvency, liquidation, death or any other cause then his legal heir shall be entitled to claim such refund. Section 98 deals with refund where salaries are paid in arrears. In all the above cases since the I.T.O. has to make enquiries, to verify facts, and to determine the exact amount of refund, a period of limitation has been set forth in section 99(2)(a) and (b) of the Income Tax Ordinance as the cases involved in such refunds are not of regular assessees. Whereas section 100 exclusively deals with refund created as result of assessment or appeal. The heading given to section 100 is refund on assessment or appeal. Once the I.T.O., as a result of assessment or after giving appeal effects to the orders of the superior Courts, determines the refund on IT-30 there is neither any necessity of a refund application nor any period of limitation is involved.

What happens when an assessment results in the creation of demand and tax becomes payable. The I.T.O. enforces recovery and realises the tax levied. But when the assessment results in refund, the I.T.O. informs the tax payer through a notice under section 29, conveying the amount of refund determined. After the determination of refund and intimation sent to the tax payer through a notice of demand, there does not remain any justification for withholding the refund or asking the assessee to apply and when an application is made, the I.T.O. starts reverification. This is not fair. It is not only unjust and unwarranted but borders on the realm of harassment, it is an exercise in futility to verify what has already been verified and determined. That amount which has been determined has to be paid to the assessee and the I.T.O. must not indulge in determining and redetermining such refunds. There will be no end to it.

Even the C.B.R. in a number of circulars, issued from time to time, has elaborated the necessity of avoiding this duplicity. There was no necessity of any 'refund application since the assessee's claim for refund stood settled under the provisions of section 100 of the Income Tax Ordinance. He is entitled to the refund accordingly.

(c) Income Tax Ordinance (XXXI of 1979)---

----Chap.X (Ss.96-107)---Scheme of Chap. X of Income Tax Ordinance, 1979-- Held, it was only during the assessment proceedings that the Income Tax Officer gets full opportunity to verify the facts and determine the liability of tax---Income Tax Officer could not start any additional proceedings for refund after .the computation of tax.

The Scheme of Chapter X of Income Tax Ordinance, 1979 dealing with `Refund and Tax Credit' visualises the following two situations:--

(i) Refund in cases where the claimant is not the assessee (sections 96, 97 and 98). His claim of refund will be disposed of under section 99 of the Income Tax Ordinance; and

(ii) Refund in cases where the claimant is a regular assessee. His claim will be disposed of under section 100 of the Income Tax Ordinance.

Again under the situation described at S.No.(II), there could be two types of claimants:--

(a) Where refund has been claimed in the return and the Assessing Officer has failed to give effect to the claim while computing the income;

(b) Where refund has not been claimed through an oversight in the return filed and the assessee holds receipted challan for the payment made.

Here refund created as a result of regular assessment is not being discussed as such cases are normally disposed of under section 100 of the Income Tax Ordinance. Once they are determined in the computation as reflected in IT-30 which forms part of the assessment order, refunds have to be issued under the provision of section 100 as it stood before as well as after the amendment in 1985. The amendment is purely of a clarificatory nature.

In case where the Income-tax Officer after going through the assessment proceedings and after verification of tax paid or deducted from the assessee has already determined the excess refundable to the assessee on completion of the assessment proceedings, there remains nothing further for the assessee which should be satisfied.

Emphasis is on `verification' of tax paid and `determination' of the excess refundable. When once these taxes have been carried out there is left nothing but to issue the refund. Thus, it is only during the assessment proceedings that the I.T.O. gets full opportunity to verify the facts and determine the liability of tax. He cannot start any additional proceedings for refund after the computation to tax.

(d) Income Tax Ordinance (XXXI of 1979)---

----Ss. 156 & 96---Refund---If the Income Tax Officer fails to take notice of the claim of refund made in the return through an oversight, he may rectify the order suo motu under the provisions of S.156.

(e) Income Tax Ordinance (XXXI of 1979)---

----Ss. 156, 96 & 50---Refund---Assessee held a receipted challan for payment under S.50, but for any reason failed to claim that amount at the time of filing the return---Such assessee may during the course of assessment proceedings or any time after the assessment order, provided the limitation under S.156 has not expired, apply to the I.T.O. for necessary rectification.

(f) Income Tax Ordinance (XXXI of 1979)---

----Ss. 156 & 99---Application for proceedings under S.156 cannot be submitted for proceedings under S.99, or rejected as having become time-barred---Income Tax Officer must consider the application under S.156 for rectification provided same has been made within time.

(g) Income Tax Ordinance (XXXI of 1979)---

----Ss. 96, 97, 98 & 99---Income Tax Rules, 1982, 8.193---C.B.R. Circular No.ITB-3(6) 1985 dated 27-3-1985---Refund in cases where the claimant is not assessee has been visualised in Ss.96, 97 & 98 of the Income Tax Ordinance, 1979 and in all these cases provisions of S.99 of the Ordinance read with 8.193 of the Income Tax Rules, 1982 are attracted simply because in such cases the income Tax Officer is not seized of any such opportunity as in the assessment proceedings---Income Tax Officer has to make an independent verification to dispose of the claims filed on the prescribed form (under 8.193) and limitation prescribed under S.99 will be attracted.

Per Saiyid Saeed Ashhad, Judicial Member, Agreeing with Manzur-ul-Haque Accountant Member---

(h) Income Tax Ordinance (XXXI of 1979)---

----S. 100---Refund---Filing of an application was not necessary for claiming refund of excess tax paid or recovered from the assessee in cases where assessments were finalised and refunds were determined as per Form IT-30-A.

(1962) 46 ITR 523 and Inayatullah v. ITO (1989) PTD 876 ref.

(i) Income Tax Ordinance (XXXI of 1979)---

----S. 100---Refund---Once the refund had been clearly mentioned in the Form I.T.30-A then it was the statutory duty 'and obligation of the Income Tax Officer to refund the amount found in excess of the tax actually due and payable by the assessee and the assessee was under no obligation to move an application for claiming the refund which was determined.

(1962) 46 ITR 523 and Inayatullah v. ITO (1989) PTD 876 ref.

(j) Income Tax Ordinance (XXXI of 1979)---

----Ss. 156, 100 & 99(2)---Refund---Omission or failure of the Assessing Officer to determine the refund while finalising the assessment in respect of a return of income will be considered to be a mistake or error apparent from record and the same can be rectified by the defaulting officer in exercise of the power conferred on him by S.156---Case of an assessee where the omission or mistake in determining refund has been rectified by the Assessing Officer under S.156 will be at par with the case of an assessee in respect of whom refund had been determined at the time of finalisation of assessment and he will be entitled to claim the same without making a claim in this behalf.

Under section 156 of the Income Tax Ordinance, the tax officers have been empowered to rectify mistakes, errors and defects creeping in their orders which were apparent from the record. It is well-established that a mistake apparent from the record is one the rectification of which does not require any long drawn process of arguments and consideration for arriving at a decision and further that the point or the issue was not capable of being decided in more than one manner and there could have been only one finding thereon. Where in the return of income an assessee had shown tax payments and had claimed refund on account of excessive payment/deduction of amounts by way of tax then it was the duty of the assessing officer to verify such payments before finalising the assessment and give credit thereof in Form IT-30-A. Verification of payments made on account of tax would invariably lead to refund in favour of the assessee where the assessee mentioned tax payment in his return of income. In such cases, it is the bounden duty of the assessing officer to give credit in respect of the amounts shown by the assessee as payments by way of tax while finalising the assessment and his failure to do so would clearly amount to mistake or error apparent from the record as the same would be in clear disregard of the provisions of the Income Tax Ordinance. Determination of the refund on account of excessive payments by way of tax could not be said to be the issue or point involving adjudication by means of long-drawn arguments or interpretation of any provision of law but would involve mere calculation of what was due and payable. Omission or failure of the assessing officer to determine the refund while finalising the assessment in respect of a return of income will be considered to be a mistake or error apparent from the record and the same can be rectified by the defaulting assessing officer in exercise of the powers conferred on him by section 156 of the Income Tax Ordinance. After rectification of the mistake resulting due to omission or failure of the assessing officer to determine the refund, the assessee will be entitled to claim the refund in accordance with the provision of section 100 of the Income Tax Ordinance and the time limit prescribed by section 99(2) of the Income Tax Ordinance of filing or moving an application for claiming of refund will not apply even in the case of an assessee whose refund had been determined by way of rectification and not in the original assessment. Thus, the case of an assessee where the omission or mistake determining refund has been rectified by the assessing officer in exercise of the powers under section 156 of the Income Tax Ordinance will be at par with the case of an assessee in respect of whom refund had been determined at the time of finalisation of assessment and he will be entitled to claim the same without making a claim in this behalf.

Nasrullah Awan, Sahid Jamal, D.R. and Khurshid Anwar, D.R. for Appellants (in ITAs Nos. 1778/KB to 1786/KB and 1988/KB of 1985-86).

Farooq Ali, F.C.A. Rehan Naqvi, Mansoor Ahmed Khan; Iqbal Naeem Pasha, Siraj-ul-Haque, Z.H. Ansari, Mudassar Shah and Suleman Shah for Respondents (in ITAs Nos. 1778/KB to 1786/KB and 1988/KB of 1985 86).

Farooq Ali, F.C.A. Rehan Naqvi, Mansoor Ahmed Khan, Iqbal Naeem Pasha, Siraj-ul-Haque, Z.H. Ansari, Mudassar Shah and Suleman Shah for Appellants (in ITAs Nos. 230/KB to 233/KB of 1987-88)

Nasrullah Awan, Sahid Jamal, D.R. and Khurshid Anwar, D.R. for Respondents (in ITAs Nos. 230/KB to 233/KB of 1987-88).

Date of hearing: 12th May, 1990.

ORDER

MANZUR-UL-HAQ (ACCOUNTANT MEMBER).---Appeals in cases from serial Nos.1 to 10 have been filed by the department against the orders of learned A.A.C. setting aside the orders passed under section 99(3) of the Income-tax Ordinance,. 1979. Appeals from Serial Nos.11 to 14 have been filed by the assessee against the order of the learned A.A.C. `F Range, Karachi, confirming the order of the I.T.O. under section 99(3) of the Income -tax Ordinance, 1979.

Mr. Nasrullah Awan, Legal Adviser, alongwith learned D.Rs. Messrs Shahid Jamal and Khurshid Anwar appeared on behalf of the department while a number of learned Advocates, I.T.Ps. and C.As. appeared to express their views on the issue involved in the above appeals. Besides Messrs I.N. Pasha, Siraj-ul-Haque and Mansoor Ahmed Khan were invited as Amicus Curiae to assist the Court.

In a not very lengthy submission. Mr. Nasurllah Awan, Advisor, wrapped up his arguments inviting our attention to the provisions of sections 96 to 100 under Chapter X of the Income Tax Ordinance, 1979 and also rule 193 of the Income-tax Rules which prescribes the form for claiming refund. Provisions of section 96 of the Income Tax Ordinance, 1979 read as under:--

96, Refunds.--(1) Where any person satisfies the Income-tax Officer that the amount of tax paid by him or on his behalf, for any year exceeds the amount with which he is properly chargeable under this Ordinance for that year, he shall be entitled to a refund of the amount so paid in excess.

Where any advance or loan, to which sub-clause (e) of clause (20) of section 2 applies, is repaid by an assessee, he shall be entitled to a refund of the tax, if any, paid by him as a result of such advance or loan having been treated as dividend under the aforesaid provisions."

The learned counsel pointed out that section 96 stipulates that if a person has paid tax for any year which exceeds the amount which he is properly chargeable to under the Ordinance, he shall be entitled to a refund. The two essential conditions are that:--

(a) the tax must have been paid directly; or

(b) indirectly by deduction at the source.

To claim refund of such amount; section 99 of the Income Tax Ordinance suggests the procedure. Section 99 reads as under:--

"(99). Form of application. disposal of claims for refund and limitation.---(1) An application for refund under section 96, 97 or 98 shall be made in the prescribed form and verified in the prescribed manner.

(2) An application under subsection shall be made,--

(a) in any case to which subsection (2) of section 96 applies, within one year or the end of the income year in which the advance or loan is repaid; and

(b) in other cases, within two years of the end of the assessment year to which it relates:

Provided that an Income Tax Officer may, after obtaining the previous approval in writing of the Inspecting Assistant Commissioner, admit an application made after the expiration of the aforesaid period, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period."

From the provision of the above section it follows that to claim refund an application must be made on a proper form as laid down under Rule 193 and within the period prescribed by subsection (2) of section 99.

If the I.T.O. is satisfied he will allow the refund under section 93(3) of the Income Tax Ordinance but where he is not satisfied he may reject the applications under the provision of the same subsection.

Not only under section 96 but also under the provisions of sections 97 and 98 of the Income Tax Ordinance, in order to claim a refund, an application must be made on prescribed form and within the prescribed time, the learned counsel contended. These are mandatory provisions; he said. To claim refund under section 96 the limitation is of one year and in other cases it is two years.

As regards section 100 of the Income Tax Ordinance the learned counsel opined that it does not do away with the limitation. He cited the following two cases (1954) I T R 670 and (1963) 50 I T R 637 and also Palkhi Wala Seventh Edition, page 1106.

In his submission, Mr. I.N. Pasha, the learned amicus curiae, pointed out that in the first 8 cases assessments were made under section 62/65 of the Income Tax Ordinance and in none of these cases quantum of refund was determined. The respondents, had however, filed letters for rectification of the orders made by the I.T.O. and for determination of refund. The I.T.O. treated these letters as application for refund and passed order under section 99 instead of rectifying the order under section 156 of the Income Tax Ordinance. In appeal the learned AA.C. set aside the orders and directed the I.T.O. to verify assessee's claim of refund of payments made under section 50(5) at the custom stage. The learned counsel also relied on (1938) 6 Taxation 414. He pointed out that there is no appeal if application for refund becomes time barred but an appeal can lie on rejection of the refund application. The departmental appeals in all the 8 cases from serial Nos. 1 to 8 should therefore, be dismissed because in none of the cases the question of limitation is involved. Mr. I.N. Pasha, the learned counsel supported the decision of this Tribunal bearing I.T.A. Nos.1485 and 1486/KB dated 24-1-1990 and pointed out that section 99 deals only with those cases of refund where no assessments have been made. A refund can be claimed even before assessment.

The next speaker called upon to assist the Court was Mr. Siraj U1 Haque, the learned Advocate, who also supported Tribunal's decision contained in I.TA. Nos.1485 and 1486/KB of 1985-86 dated 24-1-1990. He however, pointed out that the provision of section 100 as substituted by Finance Act, 1985 was quoted on page 8 of the order instead of the contents of the original section 100. This has created some confusion. The original section 100 reads as under:--

100. Refund on appeal, etc.-- Where as a result. of any order passed in appeal, revision, reference or other proceedings under this Ordinance, (not being an order setting aside an assessment) refund of any amount becomes due to the assessee, the Income' Tax Officer shall, except otherwise provided in this Ordinance, refund the amount to the assessee irrespective of whether he has or has not made any claim in that behalf."

It is stated that the substituted section 100 is more clear than the one which existed before. An application for refund in his opinion was mandatory before the amendment as the title given was that of refund on appeal etc. whereas in the substituted section the words are clear, "Refund on assessment and appeal etc." Besides, the sections under which assessments have been finalised and refunds determined as a result of such assessment have clearly been stated in the substituted section 100. The substituted section reads as under:--

100. Refund on assessment and appeal, etc.--Where as a result of any order passed under section 59, 59-A, 62 or 63 or in appeal, revision, reference or other proceedings under the Ordinance (not being an order setting aside an assessment), refund of any amount becomes due to the assessee, the Income Tax Officer, shall, except as otherwise provided in this Ordinance, refund the amount to the assessee irrespective of whether he has or has not made any claim in that behalf."

He further argued that where an amendment is brought in, it should be presumed that status of law was different. The learned Advocate drew support from the following case-law:---

(1996) ITR 523; (1981) 132 ITR 875; (1967) 69 ITR 67; (1985) 52 Taxation 21; (1988) 62 PTD 66 and (1934) 2 ITR 52.

Mr. Farooq Ali, the learned counsel for Messrs Barkat Bros and Peoples Medical Supply Agency submitted that refund was determined on IT-30 in both the cases. It was only the application for refund which was submitted after a period of three years. The learned counsel also relied on circular No.3 of 1978, dated 2nd February, 1978, which reads as under:--

"CIRCULAR N03 OF 1978 (INCOME-TAX)

SUBJECT:-- ISSUE OF REFUND VOUCHER

I have been directed to say that the Board has decided that where on assessment any refund is found due to any assessee, refund voucher `account payee only' should be sent to the assessee by registered post upon completion of assessment."

He argued that circular does not provide for any application. Refund has to be issued alongwith the assessment order.

Mr. Mudassar Shah, the learned counsel, in his submission presented the scheme of Chapter X of the Income Tax Ordinance under the head `Refund and Tax Credit'. Explaining the provisions of sections 96 to 98, he said refunds covered by these sections can be claimed only under section 99, whereas, section 100 speaks of assessment. He discussed the provision of section 99(3) in detail and pointed out that under the provision of this subsection assessment proceedings are not necessary. He also pointed out that under section 64(1) limitation for assessment has been provided. No assessment under that section could be made after the expiry of the two years from the end of assessment year in which the total income was assessable. Whereas section 99(2) reads as under:--

99(2) An application under subsection (1) shall be made,--

(a) in any case to which subsection (2) of section 96 applies, within one year or the end of the income year in which the advance or loan is repaid; and

(b) in other cases, within two years of the end of the assessment year to which it relates:

Provided that an Income-tax Officer may, after obtaining the previous approval in writing of the Inspecting Assistant Commissioner admit an application made after the expiration of the aforesaid period, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period."

In this way, he argued, no refund can be claimed. The learned counsel also pointed out that section 100 was not amended it was substituted by Finance Act, 1985, by making the provision more clear and comprehensive.

The next learned counsel called upon to assist the Tribunal was M. Mansoor Ahmad. He supported the finding of the Tribunal contained in I.T.As. Nos.1485 and 1486/KB of 1985-86 dated 24-1-1990. He also drew the attention of the Bench to the language of section 50(5) of the Income Tax Ordinance which reads as under:--

"50(5).--Notwithstanding anything contained in any law for the time being in force.

(a) the Collector of Customs shall, in the case of every importer of goods, collect advance tax commuted, on the basis of the value of such goods as increased by the customs duty and sales tax, if any, leviable thereon, at the rates specified in the first schedule, and credit for the tax so collected in any financial year shall, subject to the provisions of section 53, be given in computing the tax payable by such importer for the assessment year commencing on the first day of July next following the said financial year, or in the case of an assessee to whom section 72 or section 81 applies, the assessment year, in which the said date as referred to therein, falls, whichever is the later;

(b) the tax under clause (a) shall be collected in the wine manner and at the same time as the customs duty, as if such goods (even though exempt from such duty) were liable to such duty, and all the provisions of the Customs Act, 1969) shall so far as may be, apply accordingly:

Provided that nothing contained in clause (a) or clause (b) shall apply to any goods or class of goods or persons or class of persons importing such goods or class of goods as may be specified in this behalf by the Central Board of Revenue by notification in the official Gazette.

Explanation: As used in this subsection;

(i) value in relation to any goods, means the value as determined under section 25 of the Customs Act, 1969 (IV of 1969), as if goods were subject to ad valorem duty; and

(ii) Collector of Customs means a person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969) and includes a Deputy Collector of Customs or an officer of Customs appointed as such under the aforesaid section."

The learned counsel argued that from the language of law as it appears in section 50(5) of the Income Tax Ordinance, a duty has been cast on the I.T.O. to give credit for the advance tax. There does not, therefore, appear to be any need or occasion for a formal refund application to be made when the statute itself recognises the advance tax and provides adjustments as credit. It thus becomes an essential and statutory part of the assessment proceedings falling within the ratio of the Trib's D.B. decisions, dated 24-1-1990 in I.T.As. Nos. 1485 and 1486/KB of 1985-86 .... Continuing his argument the learned advocate pointed out that if no notice is taken of the payment made under section 50(5) then it becomes justiceable matter and the learned AA.C. in the cases cited above has rightly set aside the issue directing the I.T.O. to dispose it of according to law. He also referred to section 96 of the Income Tax Ordinance, sub-clause (1) of which reads as under:--

"96. Refund:--(1) Where any person satisfies the Income Tax Officer that the amount of tax paid by him, or on his behalf, for any year exceeds the amount with which he is properly chargeable under this Ordinance for that year, he shall be entitled to a refund of the amount as paid in excess:"

and pointed out that according to this subsection one has to satisfy the I.T.O. that he has paid tax in excess and is, therefore, entitled to a refund. But the language of section 100 is quite different. The unamended section 100 reads as under:--

100. Refund on appeal etc.--Where, as a result of any order passed in appeal, revision, reference or other proceedings under Ordinance, (not being an order setting aside an assessment) refund of any amount becomes due to the assessee the Income Tax Officer shall, except otherwise provided in this Ordinance, refund the amount to the assessee irrespective of whether he has or has not made any claim in that behalf."

He further said that the letter etc. used after the words refund on appeal is significant as it referred to the assessment made under the Income -tax Act which has later been clarified by amendment in 1985. The new section 100 is of clarificatory nature which spells out the assessment orders passed under section 59(1), 62 or 63 or in appeal, revision, reference or other proceedings under the Ordinance in clear terms. He also referred to section 329 of the Indian Income Tax Act, 1961 to suggest that Indian Act is basically different from the provision of the Income Tax Ordinance 1979. The learned counsel also relied on 8 I T C 387 and A I R 1979 SC 1144. In the latter case it was held:--

"Here it is obvious that the claim of the respondent was a just claim supported as it was by the recommendation of the Assistant Collector of Customs and hence in the exercise of our discretion under Article 136 of the Constitution, we do not see any reason why we should proceed to hear this appeal and adjudicate upon the pleas of the appellant based on section 110 of the Madras Port Trust Act (II of 1905)."

Mr. ZA. Jaffery the learned I.T.P. supported the D.B. judgment of this Tribunal bearing I.TAs. Nos. 1485 and 1486/KB of 1985-86 dated 24-1-1990. Mr. Rehan Naqvi the learned counsel made a written submission. His arguments briefly were as under:--

"(i) That so far as the eight cases list of which is attached herewith, these relate to rejection of application made under section 156 of the Income Tax Ordinance, 1979 which the Income Tax Officer treated as application for refund and thus in these cases no question of law regarding limitation for submission of application of refund is involved.

(ii) In my opinion the questions which require a decision from the learned Income-tax Appellate Tribunal are as under:--

(a) Whether or not in cases where refund of tax has been determined as a consequence of orders passed under sections 59, 59-A and 62 or 63 of the Income-tax Ordinance, 1979 application for claiming refund under Rule 193 of Income Tax Rules, 1982 is to be made and if made whether limitation as laid down under section 99(2)(b) of the Income Tax Ordinance, 1979 would be attracted?

(b) Which are these cases where application for refund under Income Tax Rule 193 is to be made and when the limitation as laid down under section 99(2)(b) of the Income Tax Ordinance, 1979 would be attracted?

(iii) In respect of the question No.l it may be submitted that after section 100 of the Income Tax Ordinance, 1979 was substituted vide Finance Act, 1985, once the amount of refund was shown in IT-30, it was to be issued straightaway and thus no application for refund under Income Tax Rule 193 was required to be submitted and thus no question of limitation under section 99(2)(b) of the Income Tax Ordinance, 1979 arises and in this connection your honour's kind indulgence is invited to an extract from C.B.R. Circular letter No.ITB-3(21)/1985, dated November 24,1985 which is as follows:--

"Calculations of tax payable are made on IT-30 form which is a part of the assessment order. While preparing IT-30 credit for the payments made by the taxpayer is required to be given. Credit for tax paid once given legally becomes final. Thus, subsequently, tax already paid shown in the IT-30 cannot be challenged by the Department nor can the Department, for the purposes of refund, ask the taxpayer concerned to produce further evidence in support of the tax claimed and shown to have been paid.

After the recent amendment in section 100 of the income Tax Ordinance, 1979 the requirement of filing applications for issuance of refund stand dispensed with. Now the refund vouchers have also to be issued alongwith demand notices. In these circumstances, the Assessing officers will not be in a position to carry out any verification of payments if the same have been shown in the IT-30. The refund shown in IT-30, if any, will have to be issued straightway.

The problem has been examined in the Board and I am directed to state that wherever any tax payment is claimed to have been made by the taxpayer it may be verified before giving credit for the same in the IT-30. Thus, in all cases where the returns tax payments are shown to have been made effort must be made by the assessing officers to verify such payments before finalising the assessment. No credit for unverified tax payment should be given in IT-30s. This should enable the Income Tax Officers invariably to issue refund vouchers alongwith the assessment orders, without delay in all cases where refunds have been created on IT-30s.

All concerned may please be advised accordingly:"

(iv) Further, your honour's kind indulgence is also invited to an extract from Circular Letter C No.ITB-3(6)/1985, dated March 27, 1985 which deals with the refunds due in respect of exempt income and is as under:--

A question has been referred to the Board as to whether filing of return is necessary for claiming refund where income is exempt under Income Tax Ordinance, 1979.

The issue has been examined and I am directed to say that filing of returns solely for the purposes of claiming refund is not required. In such circumstances application for refund under section 99 of the income Tax Ordinance, 1979 can be given without filing the return.

(v) From the above your honour would appreciate that in the case of exempt income, the application for refund is required to be submitted without return of income although according to Note 1 of the application this was a specific requirement.

(vi) Now this is the case where limitation under section 99(2)(b) of the Income Tax Ordinance, 1979 would be attracted as the assessment of refund is to be made within the prescribed period of limitation under section 64 of the Income Tax Ordinance, 1979.

(vii) Coming to question No.2 which relates to sections 96, 97 and 98 of the Income Tax Ordinance, 1979 it may be submitted that these sections cover not assessed to income-tax and in such cases, therefore, the requirements of section 99(1) and (2) of the Income-tax Ordinance, 1979 read with Income Tax Rule 193 are to be complied with keeping in view the provisions of section 64 of the Income Tax Ordinance, 1979.

(viii) Incidentally your Honour's kind indulgence is invited to section 48(2) of the Repealed Income Tax Act, 1922 which provided for issue of refund as a consequence of orders passed by the Appellate Assistant Commissioner or the Appellate Tribunal. Indian Income Tax Act, 1961, also had the similar provision vide section 240 of the Income Tax Act, 1961. Keeping in view the aforesaid provisions therefore, the legislature thought for causing a refund to be made by the Income Tax Officer under section 100 of the Income Tax Ordinance, 1979, if the order has been passed by the Income Tax Officer under sections 59, 59-A, 62 and 63."

Replying to the arguments of the learned Advocates, and the learned I.T.P.'s Mr. Nasrullah Awan, the learned LA., for the department submitted that the provisions of section 93 ,are mandatory and to claim any refund an application has to be filed on the prescribed form within the prescribed time. At this point of time Mr. Shahid Jamal, the learned D.R. wanted to make his own submissions which he was allowed to do. He drew our attention to note No.l appended to rule 193 of the Income Tax Rules, and suggested that a refund becomes due only after assessment. Because with every prescribed application under section 99, a return of total income has to be filed and it is only as a result of the assessment that refund becomes due to an assessee. It may be filed before the assessment or with the return of income or after the assessment. He relied on (1936) 4 I T R 100. He also supported the views of the learned counsel for the department that refund application under section 99 is compulsory. He was also of the view that refund does not become due even after the working given on IT-30. He referred to Circular No.7 of 1977 bearing No.1 (17) ITI-77 dated 2-7-1977, to point out that refund becomes due only after an order to this effect is passed by the I.T.O. as in the case of charging additional tax under section 87 of the Income Tax Ordinance which is not valid without a separate order under that section. Its working on IT-30 is not considered sufficient. On that analogy refund does not become due by a simple working or credit given on IT-30. He also pointed out that the issue of refund has assumed special importance with the introduction of the self -assessment scheme where returns are accepted without any question. Hence the possibility of bogus claims cannot be ruled out.

Besides making submissions at the bar, Mr. I.N. Pasha, the learned Advocate, also made a written submission regarding taxes paid under section 50(5) of the Income Tax Ordinance, 1979. He explained that since no credit for taxes paid under section 50(5) of the Income Tax Ordinance was granted by the I.T.O. in the assessments made under section 59(1), the appellants from serial Nos. 1 to 8 applied for rectification of the order under section 156 and allowing the refund claimed. The I.T.O. considered their requests as applications under section 99(1) of the Income-tax Ordinance and discarded them as time-barred. The learned C.I.T. (A) in appeal set aside the order with direction to settle the appellant's claim of refund. This time the department fell aggrieved and filed a second appeal before the Tribunal.

The main points of Mr. I.N. Pasha's submission are as under:--

(a) There is no appeal against the order passed under section 99(3), the I.T.O. made efforts, in vain, to shut out the appeals by treating assessee's application for rectification as application for refund under section 99(1). Reliance placed on (1938) 6 I T R 414 in which-it was held by the Privy Council; "The mere fact that in assessments purport to have been made under that subsection does not shut out the appeal; it must be shown that the circumstances of the case bring it within the scope of that subsection."

(b) The learned A.A.C. rightly equated assessee's application with application under section 156.

(c) In case the I.T.O. quantifies the refund and makes mention thereof in IT-3b, whether the assessee would still be required to submit an application under section 99(1). His submissions are:--

(i) An application under section 99(2)(b) can be made before assessment is completed or the amount of refund is quantified (section 96(1)).

(ii) Where the amount of refund is quantified in IT-30 provisions of section 92(2)(b) cease to be applicable and I.T.O. has to issue, refund suo Motu.

(iii) Amendment in section 100 was procedural. It was, therefore, retrospective in nature. (Reliance placed on Craies on Statute Law pages 400-401 (Sixth Edition))"

Mr. Pasha supported Tribunal's finding in 1485-1486/KB of 1985-86 of 24-1-1990 and pointed out that more or less the same issue was decided by the Lahore High Court in (1989) P T D 876.

Mr. Rehan Hasan Naqvi, vide his written submission dated 12-5-1990 made the following observation:--

"In my opinion the questions which require a decision from the learned Income Tax Appellate Tribunal are as under:--

(a) Whether or not in cases where refund of tax has been determined as a consequence of orders passed under sections 59, 59-A and 62 or 63 of the Income Tax Ordinance, 1979, for claiming refund under Rule 193 of Income Tax Rules, 1982 is to be made and if made whether limitation as laid down under section 99(2)(b) of the Income Tax Ordinance, 1979 would be attracted.

(b) Which are those cases where application for refund under Income Tax Rules 193 is to be made and when the limitation as laid down under section 99(2)(b) of the Income Tax Ordinance, 1979 would be attracted?

(iii) In respect of the question No.1 it may be submitted that after section 100 of the Income Tax Ordinance, 1979 was substituted vide Finance y Act, 1985, once the amount of refund was shown in IT-30, it was to be issued straightaway and thus no application for refund under Income-tax Rules 193 was required to be submitted and thus no question of limitation under section 99(2)(b) of the Income Tax Ordinance, 1979 arises and in this connection your honour's kind indulgence is invited to an extract from C.B.R. Circular Letter No.ITB-3(21)/1985, dated November 24, 1985 which is as follows:--

Calculations of tax payable are made on IT-30 form which is a part of the assessment order. While preparing IT-30, credit for the payments made by the taxpayer is required to be given. Credit for tax paid once given legally becomes final. Thus subsequently, tax already paid shown in the IT-30 cannot be challenged by the Department nor can the Department for the purposes of refund, ask the taxpayer concerned to produce further evidence in support of the tax claimed and shown to have been paid.

After the recent amendment in section 100 of the Income Tax Ordinance, 1979 the requirement of filing applications for issuance of refund stands dispensed with. Now the refund vouchers have also to be issued alongwith demand notices. In these circumstances, the assessing officers will not be in a position to carry out any verification of payments if the same have been shown in the IT-30. The refunds shown in IT-30 if any will have to be issued straightway.

The problem has been examined in the Board and I am directed to state that wherever any tax payment is claimed to have been made by the taxpayer it may be verified before giving credit for the same in the IT-30. Thus, in all cases, where in the returns tax payments are shown to have been made effort must be made by the assessing officers to verify such payments before finalizing the assessment. No credit for unverified tax payment should be given in IT-30s. This should enable the Income-tax Officer invariably to issue refund vouchers alongwith the assessment orders, without delay in all cases where refunds have been created on IT-30s.

All concerned may please be advised accordingly."

Further, your honour's kind indulgence is also invited to an extract from Circular Letter No.ITB-3(6)/1985, dated March 27, 1985 which deals with the refunds due in respect of exempt income and is as under:--

A question has been referred to the Board as to whether filing of return is necessary for claiming refund where income is exempt under Income Tax Ordinance, 1979.

The issue has been examined and I am directed to say that filing of returns solely for the purposes of claiming refund is not required. In such circumstances application for refund under section 99 of the Income Tax Ordinance, 1979 can be given without filing the return."

From the above your honour would appreciate that in the cases of exempt income, the application for refund is required to be submitted without return of income although according to Note 1 of the application this was an specific requirement.

(vi) Now this in the case where limitation under section 99(2)(b) of the Income Tax Ordinance, 1979 would be attracted as the assessment of refund is to be made within the prescribed period of limitation under section 64 of the Income Tax Ordinance, 1979.

(vii) Coming to question No.2, which relates to sections 96, 97 and 98 of the Income Tax Ordinance, 1979 it may be submitted that these sections cover only those cases where the claimants of refund are not assessed to income tax and in such cases, therefore, the requirements of section 99(1) and (2) of the Income Tax Ordinance, 1979 read with Income Tax Rules 193 are to be complied with keeping in view the provisions of section 64 of the Income-tax Ordinance, 1979.

Mr. Mudassar Shah, in his brief written submission had to say as under:--

"It is the case of the department that the application for refund referred to in section 96(1) which is an all embracing subsection according to the department has to be filled for claiming all refunds other than resulting from an appeal, revision or reference. In this connection I invite your honour's kind attention towards section 99(1) which says that "An application for refund under sections 96, 97 and 98 shall be made in the prescribed form and in the prescribed manner." Had section 96(1) been of a general nature, then there was no necessity of mentioning sections 97 add 98 also in section 99(1) which would have been worded as under:--

An application for refund under section 96 shall be made in the prescribed form and verified in the prescribed manner.

The legislators have referred to sections 97 and 98 also in section 99(1) which clearly shows that each of sections 96, 97 and 98 are of specific nature and deal with the specific situations as have been discussed in these sections. As a matter of fact wherever there is a reference to section 96, it refers to section 96(2) in which a specific situation has been discussed. In subsections (1) and (2) of section 97 also the reference is not only to section 96 but to section 98 also. Subsection (1) of section 97 Says that "where the income of any person is included under any provisions of this Ordinance and the total income of any other person, such other person only shall be entitled to a refund under section 96 or section 98 (As the case may be means more than one situation or two different situations) in respect of such income." Here again the legislators have referred to both sections 96 and 98. Had section 96 been of a general nature, there would have been a reference of this section only. Similar is the position of subsection (2) of section 97. Here again both the sections have been mentioned which clearly shows that each of these two sections deals with specific situations which have been discussed in sections 96(2), 98(1) and 98(2).

It is, therefore, most humbly submitted that an application for refund mentioned in section 99(1) has to be filed for claiming refunds in situations discussed in sections 96(2), 97 and 98 only."

We have very carefully examined the submissions made by the learned Advocates and I.T.Ps. Every one of them except the learned A.R. of the department supported the finding of the D.B. judgment in I.T.As. Nos.1485 and 1486/KB dated 24-1-1990. Issues involved in the case decided above were exactly the same as are involved in cases from S.Nos. 1 to 8. We reproduce the order, at length for proper comprehension of the issue:--

Mr. Shahid Jamal, the learned D.R. submitted that returns for the assessment years 1980-81 and 1981-82 were filed under the SAs. and were assessed under section 59(1) of the Income Tax Ordinance on 7-3-1981. As a result of such assessments refunds were determined as under:--

1980-81	Rs.2,407
1981-82	Rs.3,349

Application for refund was made on 21-3-1985. It is submitted that both the applications were barred by limitation as the assessee should have applied for refund by 30-6-1983 i.e. within two years of the finalisation of assessment under the provision of section 99 of the Income Tax Ordinance 1979, which reads as under:--

99. Form of application disposal of claims for refund and limitation.--

(1) An application for refund under section 96, 97 or 98 shall be made in the prescribed form and verified in the prescribed manner.

(2) An application under subsection (1) shall be made.

(3) (a) in any case to which subsection (2) applies, within one year or the end of the income year in which the advance or loan is repaid; and

(b) in other cases, within two years of the end of the assessment year to which it relates:

(c)..................................................................

He further submitted that citation of the amended section 100 of the Income Tax Ordinance by the learned A.A.C. was not relevant as it came into force by the Finance Act, 1985. The learned A.A.C. by setting aside the order under section 99(3) has revived the limitation period which he was not competent to do he required.

The learned AAC in his impugned order made the following observation:--

"Records have been perused. It is apparent that the refund had duly been quantified and assessed. In view of the change in law and the factual position the refund stand and assessed as a result of assessment proceedings would no longer than be hit by the time of 2 years as stipulated under section 99(2)(b) requiring application to be made within two years. The change has done away the requirement of making application by the appellant and falls under the broad grouping of machine section. The impugned order is hereby set aside. The I.T.O. shall call for evidence viz. challans, bills of entry etc. and issue the refund.

Mr. Mudassar Shah, the learned counsel, started his investment with the scheme of Chapter No.10 under the head refund and tax credit and pointed out that section 99 which stipulates limitation period of two years applies only to refunds cases mentioned in sections 96, 97 and 98 and not to refunds created as a result of assessment proceedings under section 59(1), 62 or 63. In short, he pointed out, section 99 does not apply refunds determined as a result of regular assessment or cases decided in appeal.

Mr. Shahid Jamal, the learned D.R. replying to the arguments of the learned counsel pointed out that section 99 is of universal application and covers all assessments.

We have heard the arguments of the learned representatives. We feel inclined to agree with the contention of the learned counsel that once refund is determined as a result of assessment or in consequence of relief allowed in appeal, revision, reference, section 100 of the Income Tax Ordinance does not allow the ITO to ponder in his sight whether to allow or not to allow refund. We do not agree with the learned DR that determination of refund as a result of assessment, on IT-30, is not the final round. The assessee must make a formal application for refund and. the ITO after examining the application may call for any such evidence which, in his opinion, is essential to dispose of the claim.

We do not agree with this view Legislature will ill-afford to allow such triviality. During the course of assessment proceedings the ITO is expected to have examined all the documents, original challans etc. essential for the determination of refund. As a result of such exercise refund is determined and worked out on IT-30. Any subsequent exercise carried out to determine refund will render the earlier one finalised in assessment proceedings redundant.

Now let us turn to examine the scheme of Chapter 10 dealing with refund and tax credit:-

"Section 96. Refund.--(1) Where any person satisfies the Income Tax Officer that the amount of tax paid by him, or on his behalf, for any year exceeds the amount with which he is properly chargeable under this Ordinance for that year, he shall be entitled to a refund of the amount so paid in excess.

(2) Where any advance or loan to which sub-clause (e) of clause (2) of section 2 applies, is repaid by an assessee, he shall be entitled to a refund of the tax, if any, paid by him as a result of such advance or loan having been treated as dividend under the aforesaid provision.

97. Person entitled to claim refund in certain cases.--(1) Where the income of any person is included under any provisions of this Ordinance in the total income of any other person such other person only shall be entitled to refund under section 96 or section 98, as the case may be in respect of such income.

(2) Where any person is unable to claim or receive any refund under section 96 or section 98, as the case may be, on account of incapacity, insolvency, liquidation, death or any other cause, his legal representative or the trustee, or guardian or receiver, as the case may be, shall be entitled to claim or receive such refund for the benefit of such person or his estate.

98. Refund where salary etc. is paid in arrears.--Where, by reason of,--

(a) income chargeable under the head `salary' being paid in arrears or in advance; or

(b) any interest chargeable under the head `Interest on securities' being received in arrears."

an assessee's total income is assessable at a rate higher than that at which it would otherwise have been assessed, the Income Tax Officer, may on an application made by the assessee within one year of the date of receipt thereof, determine the tax payable as if the said income or interest had been received by him during the income year to which it relates and may refund the amount of tax if any, paid in excess thereof.

In a situation visualised in section 98 a person may have suffered deduction of tax, although his income was far below that taxable limit, he must, therefore, get his amount back without going through the rigorous exercise of assessment proceedings. What he has to do in such circumstances is to file his claim within two years after end of the assessment year to which the refund relates. On receipt of such application the I.T.O. has to carry out necessary verification and determine the amount of refund. Section 97 visualises a situation where income of any person is included in the income of another person. Such another person shall be entitled to a refund in respect of such income which was included in his income. Subsection (2) of section 97 discusses a situation where refund is not claimed due to incapacity, insolvency, liquidation, death or any other causes, then his legal heir shall be entitled to claim such refund. Section 98 deals with refund where salaries are paid in arrears. In all the above cases since the I.T.O. has to make enquiries, to verify facts, and to determine the exact amount of refund, a period of limitation has been set forth in section 99(2)(a) and (b) of the Income Tax Ordinance as the cases involved in such refunds are not regular assessees. Whereas section 100 exclusively deals with refund created as result of assessment or appeal. The heading given to section 100 is `refund on assessment or appeal'. We are thus clear in our mind that once the I.T.O., as a result of assessment or after giving appeal effects to the orders of the superior Courts, determines the refund on IT-30 there is neither any necessity of a refund application nor any period of limitation is involved.

What happens when an assessment results in the creation of demand and tax becomes payable. The I.T.O. enforces recovery and realises the tax levied. But when the assessment results in refund, the I.T.O. informs the taxpayer through a notice under section 29, conveying the amount of refund determined. After the determination of refund and intimation sent to the tax payer through a notice of demand, there does not remain any justification for withholding the refund or asking the assessee to apply and when an application is made, the I.T.O. starts re-verification. This, in our view, is not fair. It is not only unjust and unwarranted but borders on the realm of harassment, it is an exercise in futility to verify what has already been verified and determine That amount which has been determined has to be paid to the assessee and t' I.T.O. must not indulge in determining and re-determining such refunds. The will be no end to it. Even the provision of original section 100 before substitution by the Finance Act 1985 reads as under:--

"100. Refund on assessment and appeal, etc.--- Where as a result of at order passed under section 59, 59-A, 62 or 63 or in appeal, revisit: reference or other proceedings under the Ordinance (not being . order setting aside an assessment), refund of any amount becomes due to the assessee, the Income Tax Officer shall, except as otherwise provided in this Ordinance, refund the amount to the assessee irrespective of whether he has or has not made any claim in that behalf."

Even the C.B.R. in a number of circulars, issued from time to time, has elaborated the necessity of avoiding this duplicity.

In view of above discussion we hold that there was no necessity of any refund application since the respondent's claim for refund stood settled under the provisions of section 100 of the Income Tax Ordinance. He is entitled to the refund accordingly.

Let us now turn to the contention of the learned A.R. of the department Mr. Nasrullah Awan and the learned D.R. Mr. Shahid Jamal, briefly stated, what the learned A.R. wanted to convey is that section 100 has not done away with provision of section 99. The limitation is still there and it must be followed in every case of refund. Reliance placed on:--

(1) (1954) 26 I T R 670 and

(2) (1963) 50 I T R 337 are, however, not relevant.

In the case quoted at S.No.(1) a letter was sent to the I.T.O.

"regarding a trust stating that as the trust was wholly for charitable purpose its income was exempt from tax and claimed refund in respect of tax deducted at source from certain dividends.

It was held that the requirement of Rules 36 and 37 of the Income Tax Rules were mandatory as they were to be read as part of the Act, and therefore, an application for refund of tax should be in the prescribed form signed and verified by the claimant himself and accompanied by a return of income

The second case cited by the learned A.R. relates to the assessment of a non-resident Shipping Co, which is not relevant to our discussion. The learned A.R. also relied on comments of Palkhiwal 7^th Edition, page 1106 relating to section 239(2) of the Indian Income Tax Act to highlight his submission that there is a time limit for refund application and the period of limitation cannot be extended by any Court.However, on the same page the following commentary has also appeared.

In any case where as a result of any order passed in appeal reference, revision rectification or amendment proceeding refund of any amount to the assessee the I.T.O. is bound to refund the amount to the assess without his having to make any claim in that behalf.

Now let us for a moment, turn to the provision of section 100 of the Pakistan Income Tax Act as it stood before 1985.

Where as result of any order passed in appeal, revision reference or other proceeding under this Ordinance . Refund the amount to the assess irrespective of whether he has or has not made any claim in that behalf.

The direction contained in this section to issue refund n cases where it has become due as a result of any proceedings under the Ordinance so manifest that it does not require any detailed discussion on the issue.

Similarly, Mr. Shahid Jamal, the learned D.R. had cited a case of the Rangoon High Court (1936) 4ITR 100.In that case an assessee company had suffereda loss and was declared non-assessable to tax in respect of that year which it held in certain companies and that income tax upon these dividends had been deducted at the source at the rate at which the company s profits and gain were assessable.

It was held:

"For these reasons, in my opinion, the rule must be discharged and theapplication for a mandamus dismissed with costs ten gold mohars. It is no part of the function of this Court to express any opinion as to whether the Government should make a refund in whole or in part ex gratia and we express no opinion about it."

This case is thus not relevant to the issue in hand

Mr. Shahid Jamal, the learned D.R., also made a reference to an old Circular No.7 of 1977 and also to section 87 of the Income Tax Ordinance where- a separate order is passed for charging additional tax for failure to pay advance tax, to impress upon the Bench that there has to be a separate order for refund. An adjustment made on IT-30 was not sufficient. Perhaps the learned D.R. was not mindful of C.B.R's Circular letter No.ITB-3(21)(1985), dated 24-11-1985 whose relevant paragraph reads as under:--

"The problem has been examined in the Board and I am directed to state that wherever any tax payment is claimed to have been made by the taxpayer it may be verified before giving credit for the same in the IT-30. Thus, in all cases, where in the returns tax payments are shown to have been made effort must be made by the assessing officers to verify such payments before finalizing the assessment. No credit for unverified tax payment should be given in IT-30s. This should enable the Income Tax Officers invariably to issue refund vouchers alongwith the assessment orders, without delay in all cases where refunds have been created on IT-30s."

Circular No.ITB-3(6)/85 of 27-3-1985, goes one step further in the case of claimants of refund who enjoy exemption under the Income Tax Ordinance. It says:--

"A question has been referred to the Board as to whether filing of return is necessary for claiming refund where income is exempt under Income Tax Ordinance. The issue has been examined and I am directed to say that filing of returns solely for the purposes of claiming refund is not required. In such circumstances application for refund under section 99 of the Income Tax Ordinance, 1979 can be given without filing the return."

Mr. Shahid Jamal emphasised the importance of verification of refund claims from yet another angle. He said that under the self-assessment scheme most of the returns have to be accepted under section 59(1) without any probe or enquiries. In such circumstances the chances of allowing excessive refund and bogus refunds are more than in ... regular assessments under section 62 of the Income Tax Ordinance. Here again the learned D.R. lost sight of the provisions of section 65 which has armed the departmental officers adequately to deal with such situations where excessive relief has been granted to the assessee.

A similar view was held by the Kerala High Court in the case of Abdul Sultan Haji Moosa Sait v. Agricultural Income Tax Officer. It was held that:--

"Where as a result of an order passed in appeal, reference, revision, rectification or amendment preceding, refund of any amount becomes due to the assessee, the Agricultural I.T.O. is bound to refund the amount to the assessee without an assessee having to make any claim in that behalf and the period of limitation laid down in section 50 would not apply."

Similarly, the period of limitation does not apply. -

" to claims for refund of tax on account of reversal or modification of a judgment by the Supreme Court. In such cases the question of limitation does not arise at all as it is the duty of the authorities to make a refund under section 66(4) Allahabad High Court (1962) 46 ITR 523."

Having discussed the views of Mr. Nasrullah Awan, the learned A.R. appearing for the Department and Mr. Shahid Jamal, the learned D.A. we now dilate on almost identical views expressed by all the learned Advocates and I.T.Ps either appearing on invitation to assist the Tribunal or representing the respondents in cases cited above. Their renditions on the subject of refund can be described in the words of General Walter, F. Ulmer of U.S. Army.

"The essence of a General's job is to assist in developing a clean sense of purpose ... to keep the junk from getting in the way of important things.

Genl. Walter F. Ulmer

(U.S. Army)"

The Scheme of Chapter X dealing with `Refund and Tax Credit' vistialises the following two situations:--

(i) Refund in cases where the claimant is not the assessee (sections 96, 97 and 98). His claim of refund will be disposed of under section 99 of the Income Tax Ordinance and

(ii) Refund in cases where the claimant is a regular assessee. His claim will be disposed of under section 100 of the Income Tax Ordinance.

Again under the situation described at S.No.(II), there could be two types of claimants:

(a) Where refund has been claimed in the return and the Assessing officer has failed to give effect to the claim while computing the income; and

(b) Where refund has not been claimed through an oversight in the return filed and the assessee holds receipted challan for the payment made.

Here refund created as a result of regular assessment is not' being discussed as such cases are normally disposed of under section 100 of the Income Tax: Ordinance.Once they are determined in the computation as reflected in IT 30 which forms part of the assessment order refunds have to be issued under the provision of section 100 as it stood before as well as after the amendment in. 1985, We must not lose sight of the substance contained in this section both before and after, the amendment ispurely of a clarificatory nature as held in the D.B. judgment cited above and supported by a number of case-laws on this issue, the latest being Lahore High Court's judgment in the case of Inayatullah' v I.T.O 1989 P.T.D.876 and C.B.R. 18-A Circular No.ITB-3(21) /1985 of 24-11-1985.A similar view was expressed in the editorial of Vol. 48 Taxation 1983.

"In case where the Income-tax Officer after going through the assessment proceedings and after verification of tax paid or deducted from the assessee has already determined the excess refundable to the assessee on completion of the assessmentproceedings, there remains noting furtherfor the assesseewhich should be satisfied

It may be seen from the above observation that emphasis is on verificationof tax paid and determination of the excess refundable.When once these taxes have been carried out there is left nothing but to issue the refund.Thus it is only during the assessment proceedings that the I.T.O. gets full opportunity to verify the facts and determine the liability of tax.He cannot start any additional proceedings fro refund after the computation of tax.The four department for refusing the refund determined under section 59(1) on the ground that they had become time-barred, therefore, succeed for reasons discussed above.

Reverting to the discussion with regard to the situation mentioned at (a) above, if the ITO fails to take notice of the claim of refund made in the return through an oversight, he may rectify the order suo motu under the provision of section 156 of the Income 'Tax Ordinance'. The other situation mentioned at (b) is equally clear.Since the assessee holds a receipted challan for payment made under section 50, but for any reason failed to claim that amount at the time of filing thereturn, he may during the course of assessment order provided the limitation undersection 156 has not expired, apply to the ITO for necessary rectification. Here an application proceeding under section 156 cannot be substituted for proceeding under section 99 of the Income Tax Ordinance, or rejected as having become time-barred. This, is what exactly the ITO did in the cases from S. No.(1) to(l0) We hold that the action of the ITO was not legal. He must consider the applications under section 156for rectificationprovidedThey have been made within time.

Now our interest in'' proposition' mentionedat S.No. (i) isjustacademic in so far as no such case is before us for adjudication. Refund in cases where the claimant is not an assessee has been visualised in sections 96, 97 and 98 of .the Income-tax Ordinance. In all these cases provisions of section 99 read with Rule 193 are attracted simply because in such cases the ITO is not seized of any such opportunity as the assessment proceeding He has to make an independent verification to dispose of the claims filed on the prescribed form (under Rule 193). Here the limitation prescribed under section 99 will be attracted. We quote the CBR's Circular ' C. No.ITB-3 6 19$5 of 27-3-1985, which is very relevant to the issue and does not require any interpretation.

A question has been examined and I am directed to say the filing of return is necessary for claiming refund where income is exempt, under Income Tax Ordinance 1979.

The issue has beenexamined ,and I am directed to say that filing of return solely forthe' purposes of claiming refund is not required. In such circumstances application for refund under section99 of such circumstances application for refund under section 99 of the Income-tax Ordinance 1979 can be given without filing the return.

SAIYID SAEED ASHHAD (JUDICIAL MEMBER).---I have gone s through the order proposed to be delivered by the learned A.M., Mr. Manzur- u1-Haque, and l find myself in agreement with the finding arrived at by him to the effect that filing of an application was not necessary for claiming refund of excess tax: paid or recovered from the assessee in cases where assessments were finalized and refunds were determined as per Form IT 30A. I will, however, like to make the following observations:--

The point for determination involved in the aforesaid appeals was as to whether filing of an application claiming refund of the excess tax found, due and payable to the' assessee after finalization of the assessment was a necessary condition and whether on failure of the assessee to file application for refund of the excess tax paid as determined in Form IT-30-A, within the period is specified, in section 99(2) of the Income Tax Ordinance would preclude an assessee from filing an application and claiming the refund of excess tax. In this connection it may be pointed out that the above question was also involved in I.T.A. Nos. 4485, 1486/KB of 1985-86, which were decided vide Tribunal's order dated-24-1-1990, wherein it was held by the Division Bench which consisted of myself and Mr. Manzur-ul-Haque, the learned A.M. that filing an application for claiming of refund of the excess tax Found due and payable to the assessee after finalization of the assessment as per endorsement on Form IT-30-A was not required and once the refund had been determined by the ITO as per Form IT-30-A, the same had to be refunded or paid back to the assesseshis having made or moved any application for claim of refund. It was also held that the period of limitation laid down in section 99(2) of the Income Tax Ordinance, within which application for claiming refund could be filed, had no application to the case of an assessee whose assessment was finalized and he was entitled to refund by way of excess tax. A similar question had also been considered and adjudicated upon by the Lahore High Court in the case of Inayatullah v. I.T.O. and others in Writ Petition No.3511 of 1988 decided on 29-1-1989 and reported in 1989 PTD 876, wherein it was held by the High Court that when the amount was to be refunded and was clearly mentioned in Form IT-30-A and the refund had become due to the assessee, the Income Tax Officer was bound to refund the amount irrespective of the fact whether he had or had not made any claim in that behalf. It will be appropriate to reproduce the relevant portion from the above judgment of the High Court of Lahore, which is as under:--

"The first point emerging for consideration in this case is that when a refund becomes due to an assessee, under section 100 the ITO is bound to refund the amount irrespective of the fact whether he has or has not made any claim in that behalf. It is to be noticed that the amount of the refund is clearly mentioned in the assessment Form IT-30-A. There should be thus no doubt that this amount was due to the petitioner but, the ITO failed to discharge his statutory obligation. In this regard the other cognate issue deserving attention of the Bench is that the ITO thought of holding the inquiry after the petitioner had moved an application for refund. These premises seemingly lent a basis for the petitioner's argument that the ITO endeavoured to coin some justification to refuse the refund."

From the above discussion of the High Court of Lahore, there cannot be any doubt with regard to the answer of the controversy or the issue involved in aforesaid appeals. It is clearly established that once the refund had been clearly mentioned in the Form IT-30-A then it was the statutory duty and obligation of the ITO to refund the amount found in excess of the tax actually due and payable by the assessee and the assessee was under no obligation to move an application for claiming the refund which was determined.

Another question/point closely connected with the above issue and which also required determination in the aforesaid appeals was as to whether the failure of the ITO to determine the refund either due to inadvertence or ignorance or on account of oversight the question of refund could be taken up for consideration by the ITO on an application under section 156 of the Income-tax Ordinance. In this connection it is to be observed that under section 156 of the Income-tax Ordinance, the tax officers have been empowered to rectify mistakes, errors and defects creeping in their orders which were apparent from the record. It is well-established that a mistake apparent from the record is one the rectification of which does not require any long-drawn process of arguments and consideration for arriving at a decision and further that the point or the issue was .not capable of being decided in more than one manner and there could have been only one finding thereon. Where in the return of income an assessee had shown tax payments and had claimed refund on account of excessive payment deduction of amounts by way, of tax then it is the duty of the assessing officer to verify such payments before finalising the assessment and to give credit thereof in Form IT-30-A. Verification of payments made on account of tax would invariably lead to refund in favour of the assessee where the assessee mentioned tax payment in his return of income. In such cases, it is the bounden duty of the assessing officer to give credit in respect of the amounts shown by the assessee as payments by way of tax while finalising the assessment and his failure to do so would clearly amount to mistake or error apparent from the record as .the same would be in clear disregard of the provision of the Income-tax Ordinance as well as the law laid down by the High Court of Lahore in the above-quoted case. Determination of the refund on account of excessive payments by way of tax could not be said to be the issue or point involving adjudication by means of long-drawn arguments or interpretation of any provision of law but would involve mere calculation after due and payable. In view of the above discussion I have not the least doubt in my mind that omission or failure of the assessing officer to determine the refund while finalising the assessment in respect of a return of income will be considered to be a mistake or error apparent from the record and the same can be rectified by the defaulting assessing officer in exercise of the powers conferred on him by section 156 of the Income Tax Ordinance. After rectification of the mistake resulting due to omission or failure of the assessing officer to determine the refund, the assessee will be entitled to claim the refund in accordance with the provision of section 100 of the Income-tax Ordinance and the time limit prescribed by section 99(2) of the Income Tax Ordinance for filing or moving an application for claiming of refund will not apply even in the case of an assessee whose refund had been determined by way of rectification and not in the original assessment. Thus, the case of an assessee where the omission or mistake determining refund has been rectified by the assessing officer in exercise of the powers under section 156 of the Income Tax Ordinance will be at par with the case of an assessee in respect of whom refund had been determined at the time of finalisation of assessment and he will be entitled to claim the same without making a claim in this behalf.

With the above observations I endorse the finding arrived at by the learned A.M. Mr. Manzur-ul-Haque.

M.B.A./1601 /TOrder accordingly.