I.T.A. No. 30/KB of 2006, decided on 11th April, 2007. VS I.T.A. No. 30/KB of 2006, decided on 11th April, 2007., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1780 (2007)

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 170(1)(4)---Refund---Application for issuance of refund on prescribed form---Taxation Officer before rejecting the same had acted in the manner as if he was making formal assessment of the assessee---Show-cause notice was issued stating that claim of commutation pension in the income as exempt was not legally correct---Claim was bifurcated---On the basis of such bifurcation and his own calculation of tax, confrontation was made to the assessee and later, after obtaining reply, the request for refund was dismissed---Validity---Finding of First Appellate Authority was with regard to chargeability of various amounts shown by the assessee in his return---Discussion with regard to chargeability had been done in consequence of filing of application for refund---Assessing Officer, while rejecting refund application, had made the assessment also after discussion as to whether various amounts received by the assessee were subject to charge under various provisions of law or not---Action of treating the application, a return and discussion of various claims of' the assessee spoke of entering into a jurisdiction available only to the assessing authority---Duty of the refunding authority was controlled to the extent of the cross check of the documents for calculation of the amount of refund only and to satisfy that no other tax was outstanding against him before issuance of the refund---Validity and legality of the various claims of the assessee in his return which practically was the deemed assessment order was not his responsibility and he was not supposed to check the vires thereof-Departmental appeal was without any merit and the entire proceedings from the stage of refunding authority and onwards were under a misunderstood procedure of law---Appeal was dismissed by the Appellate Tribunal and direction was given for issuance of refund to the taxpayer if no other proceedings were pending against him.

I.T.A. No.319/KB of 2006 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 170---Refund---Jurisdiction---Present system had distributed various functions to various authorities---Previous method of making assessments and issuance of refund by the same authority had now been done away---Assessment in fact was initially made by the assessee himself, the same was then processed by the information processing section---Provisions of S.170 of the Income Tax Ordinance, 2001 had come out with entirely a different scenario---Working and determination of refund was on the basis of assessee's own calculation which could later be reopened after audit---Unless it had actually been done by the concerned authority the person attached, with the responsibility of issuance of refund did not have any authority to look beyond S.170 of the Income Tax Ordinance, 2001.

(c) Income Tax Ordinance (XLIX of 2001)---

---S. 170---Income Tax Ordinance (XXXI of 1979); S. 96---Refund---'Satisfaction'---Meaning---Jurisdiction of refunding authority and various functions of other authorities---Provision of S.170 of the Income Tax Ordinance, 2001 and S.96 of the Income Tax Ordinance, 1979 were pari matiria to each other so far as the procedure regarding issuance of refund was concerned---Section 96 of the Income Tax Ordinance, 1979 provided for issuance of refund after the satisfaction of the Assessing Officer which satisfaction was never considered as to include legality of the assessment' or determination of error or mistakes therein as the authority for the issuing of refund was the same which had made the assessment but situation in the Income Tax Ordinance; 2001 was different---Assessing Authority in most of the cases was assessee himself unless Audit department which was entirely a separate set-up finds out fault in the said assessment---While for issuance of refund the authority was Enforcement and Collection Division, refund issuing authority was neither entrusted with the duty of making an assessment nor could it do audit---Central Board of Revenue had distributed work to separate departments with clear and unambiguous jurisdiction---Facilitation Division, Information processing department, Enforcement Division etc. all had separately defined jobs---Job of Audit was totally with Audit Division and they could not issue refund---Likewise the refunding authority had got nothing to do with assessment or assessment work.

(d) Interpretation of statutes---

----Neither the Courts nor any other quasi judicial authority could extend or reduce the application of a provision of law under the garb of interpretation---Intendments expressed by law makers as' a result of natural meaning of a provision could never be ignored and one was not allowed to enter into the legislation' through interpretation.

(e) Income Tax Ordinance (XLIX of 2001)---

----S. 170---Income Tax Ordinance (XXXI of 1979), S.96---Refund---Interpretation---If an authority while issuing refund under Income Tax Ordinance, 1979 was not entitled to go into the legality of the assessment even earlier, the subsequent change in methods would also not change the interpretation.

(f) Income Tax Ordinance (XLIX of 2001)---

----'Assessment'-Definition-Assessment has been defined to be as determination of the income of an assessee---For that matter an assessment can be any assessment and shall obviously include a deemed assessment, a re-assessment or a revised deemed assessment.

(g) Income Tax Ordinance (XLIX of 2001)---

----Ss. 120 & 170---Assessment---Refund---Proceedings in respect of refund---Assessment under S.120 of the Income Tax Ordinance, 2001, be it under any of its section or subsection, was an assessment---In a deemed assessment where the acknowledgment slip had been held to be as an assessment order, application of mind by the department was not required and no one could say that the same was not an assessment order and the consequential action in terms of issuance of refund on the basis thereof would require further proceedings with regard to determination of income---Process of issuance of refund was only a consequential action---Assessment and refund proceedings were two separate independent matters---Proceeding with an application filed by the assessee for refund, scrutiny of the return would amount entering into the purview of S.120 of the Income Tax Ordinance, 2001 which obviously could not be the spirit---Authorities were not stopped from initiating proceedings under Ss.120, 122 or 221 of the Income Tax Ordinance, 2001 as the case may be---Any comment or argument that gives the impression that non-application of mind by the taxation authority made it an order of the lesser status could easily be repelled and the language of law which declares the return to be an assessment order.

(h) Income Tax Ordinance (XLIX of 2001)---

----S. 170---Refund---Provisions of Chapter VI of the Income Tax Ordinance, 2001 deals with refund and additional payment for delayed refunds and had got nothing to do with determination of income, checking of or validity and veracity or legality of an assessment-Re opening of assessment, cancellation of appeals or other provision of the kind were part of other chapters and separate provisions had been provided for the same---Such responsibilities had been assigned separately to the other authorities mentioned in the respective sections.

(i) Income Tax Ordinance (XLIX of 2001)---

----S.170---Refund---Jurisdiction---Jurisdiction to issue refund starts after the end of the jurisdiction of the return receiving authority---Since the Assessing Officer could not issue a refund converse position was that a Taxation Officer assigned with the duty of issuance of refund may not have the power to make an assessment---Determination of the legality of a return, scrutiny of the claim of profit and loss were part of assessment proceedings, such process could not be allowed to be done by the refunding authorities under S.170 of the Income Tax Ordinance, 2001.

(j) Income Tax Ordinance (XLIX of 2001)---

----Ss.170 & 171(1)---Refund---Expression "satisfied"---Connotation---Jurisdiction of authorities---Application for processing of refund shall be filed by the taxpayer and it was he who was to determine as to whether he deserved a refund or not---Term "satisfied" used in S.171(1) of the Income Tax Ordinance, 2001 was not satisfaction of the refunding authority but of the taxpayer---Refunding authority shall see as to whether the refund determined by the Assessing Officer was on the basis of valid documents and there was no other demand outstanding against him---Refunding authority later was to decide the issue within 45 days during which he will obviously call for the record of the assessing authorities on the basis of which the refund had been determined---Such report as well as transfer of the record from the assessing authority would suffice the matter---Refunding authority would proceed on the basis of information passed on to him by the assessee along with the refund application which he could verify from record---Such verification was restricted to the extent of the facts that tax payment was in excess of the assessee's demand and no other demand was outstanding against the assessee.

Sajidullah Siddiqui, D.R. for Appellant.

Amjad Jawed Hashmi for Respondent.

ORDER

This appeal on behalf of the Department is on a common issue. As per grounds, the Department has challenged the direction of the CIT(A) through which he has directed to allow exemption of the amount paid as medical allowance on cessation of his service from KPT. The grounds are reproduced as follows:

(1) That the order of the learned CIT(Appeals) Zone-III, Karachi is bad in law and on facts of the case.

(2) That the CIT(A) has not considered the terms of Golden Hand Shake Scheme, wherein officers and employees are entitled to medical treatment in KPT Hospital for 30 months from the date of release from service as mentioned in Para 1. 3(a)(d) and 1. 3(a)(e) of the KPT Golden Hand Shake Scheme, 2004 and also the amount being benefit in lieu of remaining service. Thus exemption as per clause 139(b) is not available in respect of amount of Rs.81,000.

2. Brief facts leading to this appeal are that the assessee filed application for refund under section 170(1) of the Income Tax Ordinance, 2001 on the prescribed form and in the prescribed manner. Taxation Officer before rejecting the same under section 170(4), had acted in the manner as if he was making formal assessment of the assessee. He issued show-cause notice to the assessees stating that the claim of commutation of pension amounting to Rs.21,29,293 in the income as exempt was not legally correct. The claim was bifurcated into various heads as follows:--

On the basis of above bifurcation and his own calculation of tax etc., confrontation was made to the assessees and later, after obtaining reply, the request for refund was dismissed. This is a ten pages order in the case of Mr. Mukhtar Ahmed which otherwise, could be called as well written one but since it is under the garb of a jurisdiction which was apparently not available to him under section 170, one cannot appreciate its quality. Against the order appeal was filed by the assessee. The learned AR before CIT(A), firstly; challenged the very jurisdiction of the Taxation Officer under section 170 to check the validity and legality of assessment order which the CIT(A) held that the same was validity exercised. His opinion was that order was passed under section 170(4) of the Income Tax Ordinance, 2001 which exclusively deals with the payment of refunds to the taxpayers. For ready reference, the relevant part of his order is reproduced as follows:--

"I have examined the facts of the case put forth by the learned A.R. of the taxpayer. The contention of the learned A.R. that the Taxation Officer has acted beyond his lawful jurisdiction is not correct. The order has been passed by the Taxation Officer under section 170(4) of the Income Tax Ordinance, 2001 which exclusively deals with the payments of refunds to the Taxpayer. This section is independent of sections 177 and 122 of the Income Tax Ordinance, 2001. In my considered opinion the decision of the learned High Court, Karachi has no relevance to the case under consideration. Subsection (1) of section 170 of the Income Tax Ordinance, 2001, states that:--

"A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable under this Ordinance may apply to the Commissioner for a refund of the excess".

Since, tax was not properly charged, therefore, the Taxation Officer proceeded under the law and made an order rejecting the claim under section 170(4) of the Income Tax Ordinance.

The claim of refund was rejected owing to the following points:--

Bonus of Rs.3,45,881.12 included in the calculation of commutation of pension was claimed as exempt by the taxpayer, and

Amount of medical allowance at Rs.81,000 given to the taxpayer in lump sum was claimed as exempt.

I have gone through the order passed by the Taxation Officer as also the arguments of the learned Advocate. To my mind, the first amount was given to the employee on account of foregone services and assume the nature of Golden Handshake. The learned AR has not been able to disprove the correctness of the salary certificate issued by the KPT. It may be mentioned that income from salary as defined in section 12 of the Income Tax Ordinance, 2001, is taxable exempt exempted under the 2nd Schedule. The difference of Rs.3,55,881.12 calculated by the Taxation Officer between the total amount of commutation of pension excluding excess period, is taxable under the provision of sub-clause (iii) of clause (c) of subsection (2) of section 12 of the Income Tax Ordinance, 2001. The Taxation Officer, in this connection also placed reliance on the salary certificate issued by the KPT which is as follows:--

The Taxation Officer therefore, rightly concluded that the difference was not exempt from tax. I, therefore, do not see any reason to interfere with the order of the Taxation Officer on this account.

Regarding the second amount, the Taxation Officer is not right in concluding that the amount paid to the appellant as medical allowance (Rs.81,000 i.e. 10% of the salary) is taxable. This amount is very clearly exempt under clause 139(1)(b) of Part-I of the Second Schedule which reads as follows:--

139(b) Any medical allowance received by an employee not exceeding ten per cent of the basic salary of the employee if free medical treatment or hospitalization or reimbursement of medical or hospitalization charges is not provided for in the terms of employee;

Clause 139(b) is therefore very clear. It is available to salaried persons only, and is exempt in the hands of the assessee whether actually incurred or not. Under the circumstances Taxation Officer is directed to allow medical expenses amounting to Rs.81,000."

3. The learned D.R. argued his case by relying upon the language of parallel section from the Income Tax Law of India. In the said law, the Indian legislature has drafted the provision in the manner that the satisfaction of the Assessing Officer is pre-condition for issuance of refund. He also 'referred a judgment again from the Indian jurisdiction which holds that the satisfaction of the Assessing Officer is a pre-condition and no refund can be issued unless this pre-condition is fulfilled. He said that the issuance of refund being subject to the satisfaction of the Assessing Officer would include legality of assessment as well as proper scrutiny of the various claims. The claim, he remarked, is not escot-free and the assessee has not been given a blankit chit so as to take the advantage of the misdoings.

The provision of Indian Income Tax law is not much of a relevance to the Income Tax Law of Pakistan. Even otherwise neither Indian provision nor the case-law referred by the learned DR is of any help to the Department. The said decision deals with an entirely different situation. The learned D.R. further arguing his case referred section 170. He said that pre-condition is that the refund should be properly determined. This proper determination is like providing jurisdiction to the Department of entering into the correctness and legality of the assessment. Furthermore, in section 170(3), satisfaction is necessary, in absence whereof refund cannot be issued. He, however, agreed that this will entirely be with reference to the application of refund and either acceptance or rejection thereof. On a question as to how he can support the method of rejection which appears to be a full-fledged assessment order he could not give any satisfactory reply. The Assessing Officer has not only written a long order but has also dilated each and every issue as if it was a case of assessment of income etc. He said that as the last sentence speaks of rejection only, the Assessing Officer was entitled to proceed in the manner which gives the impression of the scrutiny by way of checking veracity and validity of the assessment. He claims that the law has provided full power and it does not prejudice the assessee's claim in any manner.

4. The learned DR in fact was more concerned towards the possibility of misuse of the provision than jurisdiction of S.170. He said that the issue of refund is a very sensitive and complex matter. Everybody attached with the responsibility of refund becomes over conscious. He feels himself legally obliged to take due notice of illegalities; irregularities, errors and mistakes in the assessment order for the fear of allegations in future. He said that the responsibility is attached with a lot of apprehensions and care. One feel himself very uncomfortable for the reasons of possible allegations and reprimands from the superiors. It is, therefore, in fact for the reason of abundant precautions that the Taxation Officer considers himself as legally bound to look into the validity and legality of the assessments. Further in the new system which accepts every return without scrutiny, one needs to be more conscious and careful:

5. The AR opening his arguments said that the jurisdiction entrusted upon the Assessing Officer with regard to allowance or, in the alternative, rejection of the refund claim has not properly been understood by the concerned authorities. He said that the legislature in its wisdom, after a long history of the attitude of the Income Tax Department towards the deducted tax, has brought this provision in law so as to provide relief to the taxpayers. A separate chapter for the purpose, therefore, has been prescribed which was not there in the said shape in the Income Tax Ordinance, 1'979. The provisions of section 96 of the erstwhile Ordinance were not as comprehensive as are in the present section. However, both of them, so far as the purpose is concerned, are pari materia. However, under the provisions of section 170 of the Income Tax Ordinance, 2001, the legislature has asked the taxpayers to file their claim in a formal manner for issuance of determined refund and for this purpose, has laid down certain parameters. These parameters, he argued, do not have any relationship with the completed assessment land the refund procedure starts after determination of the same after assessment. He said that section 170 speak. of an action which is to be initiated by the assessee on his satisfaction that he had paid amount of tax in excess of his obligation to pay. This excess is to be determined on the basis of an assessment finalized under any of the provisions of the Income Tax Ordinance, 2001. It is not material as to under what provision of the Income Tax Law the assessment has been finalized. It may be a deemed assessment, a normal assessment, assessment in continuation to the cancellation of an order or re-assessment after cancellation of the earlier finalized assessment. Be that of any style, an assessment, if it ends into a refund, entitles the assessee to file an application under the provision of section 170(1) of the Income Tax Ordinance, 2001, the A.R. added. The A.R. further argued that under the provisions of section 170(3), the Assessing Officer does have power to scrutinize the claim of the assessee but the security is limited to the extent of the jurisdiction assigned under the said provision of law. Referring the provision he said that the Taxation Officer can only verify:

(i) that the tax has been over-paid, and

(ii) that there is no other tax due towards the taxpayer under some other provision of the Ordinance.

6. The Taxation Officer learned A.R. pointed out, is to decide this issue within 45 days from receipt of an application either in `yes' or `no' and in between he is bound to give a notice to the said assessee.

He said that after the introduction of the provision as above, the Central Board of Revenue has issued instructions in various ways through which Taxation Officer has been directed to follow the prescribed procedure and issue refunds. The C.B.R, he remarked, is the highest administrative forum in the hierarchy of the Income Tax Departments and its directions are binding on all its subordinate officers in terms of section 8. Any action taken by the Assessing Officer in contravention to the prescribe procedure of law which has further been elaborated by the C.B.R., is an illegality which alone is enough to hold the proceedings continued by the Taxation Officer in consequence to the application filed by the assessee as illegal. All the instructions issued by the C.B.R. through various circulars boil down to one point i.e. refund should immediately be issued on request notwithstanding any other proceedings initiated by the Department in any shape whatsoever. The A.R. said that this Tribunal has already given a judgment on this issue. The judgment has been announced by a Division Bench of the I.T.A.T., Karachi and has been registered as I.T.A. No. 319/KB of 2006, dated 17-6-1993. He said that in the above referred judgment, this Tribunal has, in clear and unequivocal terms has held that the proceedings initiated under section 170(3) are independent from that of the assessment as well as reopening of the assessment etc.

7. It is correct that the present system has distributed various functions to various authorities. The previous method of making assessments and issuance of refund by the same authority has now been done away. Assessment in fact is initially made by the assessee himself the same is then processed by the information processing section. The new provision in terms of section 170 has come out with entirely a different scenario. The working and determination of refund etc. is on the basis of assessee own calculation which, however, can later be reopened after audit. However, unless it has actually been done by the concerned authority the person attached with the responsibility of issuance of refund does not have an authority to look beyond section 170. Old provision of section 96 in the Income Tax Ordinance, 1979 is pari meteria to some extent to the new provisions of section 170. For comparative discussion mentioning of the relevant provisions shall be of help. The same are reproduced:--

Section 96 of the Income Tax Ordinance, 1979 (Repealed).

Section 96 Refunds.---(1) Where any person satisfies the (Deputy Commissioner) 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 (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.

S. 170. Refunds: (1) A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable under this Ordinance may apply to the Commissioner for a refund of the excess.

[(IA) Where any advance or loan, which sub-clause (e) of clause (19) of section 2 applies, is repaid by a taxpayer, 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.]

(2) An application for a refund under sub-clause (1) shall be---

(a) made in the prescribed form;

(b) verifiable in the prescribed manner, and

(c) made within two years of the later of---

(i) the date on which the Commissioner has issued the assessment order to the taxpayer for the tax year to which the refund application relates; or

(ii) the date on which the tax was paid.

(3) Where the Commissioner is satisfied that tax has been overpaid, the Commissioner shall

(a) apply the excess in reduction of any other tax due from the taxpayer under this Ordinance;

(b) apply the balance of the excess, if any, in reduction of any outstanding liability of the taxpayer to pay other taxes; and

(c) refund the remainder, if any, to the taxpayer.

(4) The Commissioner shall, within forty five days of receipt of a refund application under subsection (1), serve on the person applying for the refund an order in writing of the decision (after providing the taxpayer an opportunity of being heard).

(5) A person aggrieved by

(a) an order passed under subsection (4); or

(b) the failure of the Commissioner to pass an order under subsection (4) within the time specified in that subsection,

may prefer an appeal under Part III of this Chapter.)

8. A plain reading of the above two provisions make it clear that they are both pari materia to each other so far as the procedure regarding issuance of refund is concerned. Section 96 provides for issuance of refund after the satisfaction of the DICT. This satisfaction was never considered as to include legality of the assessment or determination of error or mistakes therein. It was for the obvious reason that the authority in all the cases for the issuing of the refund was the same which had made the assessment. In such a situation obviously no one could object to his own decision except for valid additional information. The situation c now is different. The assessing authority in most of the cases is assessee himself unless Audit Department which is entirely a separate set-up finds out fault in the said assessment. While for issuance of refund the authority is Enforcement and Collection Division. He is neither entrusted with the duty of making an assessment nor can he do the Audit. The C.B.R. has distributed the work to separate department with clear and unambiguous jurisdiction. The facilitation Division, Information processing department, Enforcement Division etc. all have separately defined jobs. The job of Audit at Karachi is totally with Audit Division and they cannot issue refund. Likewise the refunding authority has got nothing to do with assessment or assessment work. The principle of interpretation specially in respect of fiscal statutes is to apply the language of law in its natural and true meanings. Neither the Courts nor any other quasi judicial authority can extend or reduce the application of a provision of law under the garb of interpretation. The intendments expressed by law makers as a result of natural meaning of a provision can never be ignored and one is not allowed to enter into the legislation through interpretation. There are certain exceptions to these rules which are for the special circumstances but, however, since the said situation does not arise in this case we need not enter into the same. It is true that there is not much change in the language of the earlier as well as new provisions. Hence, if an authority while issuing refund under Income Tax Ordinance, 1979 was not entitled to go into the legality of the assessment even earlier, the subsequent change in methods would also not change the interpretation. Refund proceedings start from the stage of assessment. Assessment has been defined to be as determination of the income of an assessee. For that matter an assessment can be any assessment and shall obviously include a deemed assessment, a re-assessment or a revised deemed assessment.

9. It may be worth-mentioning at this stage that during the course of discussion Mr. Shabbar Zaidi who was present in the Court was also allowed to add to the arguments as an Amicus Curiae. He supporting taxpayer's view said that an assessment, be that in any form is a final discharge of the liability of an assessee. He commented that even a deemed assessment on filing of return is an assessment and unless it is cancelled or revoked it remains in field. The assessee can always claim refund on the basis of said deemed order and that refunding authority's jurisdiction only permits him to check the challans of .payment and other auxiliary and ancillary matters and not legality or validity of the claims made by the assessee in its return. Since the other arguments made by learned Amicus Curiae has already been covered by the legal advisor of taxpayer Mr. Amjad Javed Hashmi as well as the learned D.R. we ignore them.

10. We reiterate that assessment under section 120, be it under any of its section or subsection, is an assessment. It is true that in a deemed assessment where the acknowledgement slip has been held to be as an assessment order, application of mind by the Department is not required. However, no one can say that the same is not an assessment order and the consequential action in terms of issuance of refund on the basis thereof would require further proceedings with regard to determination of income etc. The process of issuance of refund is only a consequential action and learned A.R. is fully justified in remarking that assessment and refund proceedings are two separate independent matters. While proceeding with an application filed by the assessee for refund, scrutiny of the return would amount entering into the purview of section 120 which obviously cannot be the spirit. Nobody has stopped the authorities from initiating proceedings under sections 120, 122 or 221 as the case may be. However, any comment or argument that gives the impression that non-application of mind by the Taxation authority makes it an order of the lesser status can easily be repelled for the reason of above discussion and the language of law which declares the return to be an assessment order.

11. Having said that we revert back to the provision under discussion i.e. section 170. This provision starts with the title of refunds. It forms part of Chapter VI of the Income Tax Ordinance, 2001. The chapter deals with the provisions relating refunds and additional payment for delayed refunds. It has got nothing to do with determination of Income, checking of or validity and veracity or legality of an assessment. Furthermore, reopening of assessment, cancellation of appeals or other provision of the kind are also part of other chapters and separate provisions have been provided for the same. These responsibilities have been assigned separately to the other authorities mentioned in the said respective sections in detail which obviously would not require any discussion herein. The assessing authority which in fact practically is only receiving authority becomes "functus officio" in respect of proceedings with regard to issuance of refund. The jurisdiction to issue the refund starts after the end of the jurisdiction of the return receiving authority. Since the Assessing Officer cannot issue a refund converse position is that a taxation officer assigned with the duty of issuance of refund may not have the power to make an assessment. Determination of legality of a return, scrutiny of the claim of profit and loss are part of assessment proceedings, this process cannot be allowed to be done by the refunding authorities under section 170.

(i) So far as processing of refund application is concerned the application for refund shall be filed by the taxpayer and it is he who is to determine as to whether he deserves a refund or not. The term "satisfied" used in section 171(1) is not satisfaction of the refunding authority but of the taxpayer.

(ii) The refunding authority shall see as to whether the refund determined by the Assessing Officer is on the basis of valid document and there is no other demand outstanding against him.

(iii) The refunding authority later is to decide the issue within 45 days during which he will obviously call for the record of the assessing authorities on the basis of which the refund has been determined. This report as well as transfer of the record from the assessing authority would suffice the matter. The refunding authority, therefore, would proceed on the basis of the information passed on to him by the assessee along with the refund application which he can verify from record. This verification as already dilated by us is restricted to the extent of the facts that tax payment is in excess of the assessee's demand and no other demand is outstanding against the assessee.

12. In the above case the finding of the CIT(A) is with regard to chargeability of various amounts shown by the assessee in his return. The discussion with regard to the. chargeability has been clone in consequence to the filing of the application for refund. The Assessing Officer while rejecting refund application has made the assessment also alter discussion as to whether various amounts received by the assessee were subject to charge of various provisions or not. His action of treating the application, a return and discussion of various claims of the assessee speaks of entering into a jurisdiction available only to the assessing authority which this Tribunal has already disapproved in the judgment decided vide I.T.A. No. 30/KB of 2006 (Tax Year 2006).

13. In the aforementioned judgment this Tribunal has held that the duty of the refunding authority is controlled to the extent of the cross check of the documents for calculation of the amount of refund only and to satisfy that no other tax is outstanding against him before issuance of the said refund. The validity and legality of the various claims of the assessee in his return which practically is the deemed assessment order is not his responsibility hence he is not supposed to check the vires thereof. Since the issue has been discussed by us in detail in the earlier part of this judgment, we hereby hold that the departmental appeal in this case is without any merit and the entire proceedings from the stage of the refunding authority and onwards are under a misunderstood procedure of law. The appeal, therefore, is dismissed and direction is hereby given for issuance of' refund to the taxpayer if no other proceedings are pending against him on this day.

14. The appeal is accordingly decided.

C.M.A./61/Tax (Trib.)Appeal rejected.