VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1873 (2008)

Income Tax Ordinance (XLIX of 2001)---

----Ss.170(4) & 115(4)---Refund---Application for issuance of refund was rejected by an order under S.170(4) of the Income Tax Ordinance, 2001 on the ground that originally statement under S.115(4) of the Income Tax Ordinance, 2001 for a complete discharge of liability was filed and subsequently returns were filed by revising earlier statutory statements---First Appellate Authority directed to accept the return and proceed in accordance with law---Validity---Revising of entire assessment was not permissible under S.170(4) of the Income Tax Ordinance, 2001---Proper course for department was to initiate, under proper provisions of law, to amend any assessment as S.170(4) of the Income Tax Ordinance, 2001 did not empower any such type of proceedings as had been undertaken by the Taxation Officer which were beyond his jurisdiction---Order was cancelled being void, illegal ab initio by the Appellate Tribunal---Refund applications were not hit by such illegal order which was to take its legal course---Order passed by the First Appellate Authority was maintained and departmental appeals having no substance were dismissed.

Ashraf Ahmed Ali, D.R. for Appellant.

Siraj-ud-Din Khalid, for Respondent.

ORDER

Through the titled appeals, the department calls in question the combined First Appellate Order, dated 27-12-2007 on the common sole ground that the learned CIT/WT(A), Zone-I, Lahore was not justified in holding that rejection of refund application was illegal, therefore, not sustainable in the eye of law.

2. Relevant facts of the case under consideration are that the respondent-assessee is an AOP deriving income from providing transport services. At first appellate stage, the respondent-assessee preferred appeals against the order passed under section 170 of the Income Tax Ordinance, 2001 by the Taxation Office, MTU, Lahore for the tax years 2003 to 2005 which were disposed of by the learned CIT(A) with the following findings:

"After considering the rival arguments and following the judgments of superior Courts cited by the A.R., I am of the opinion that normal returns filed for the first time are liable to be accepted. It was observed that rejection of appellant's application for refund for all the three years under appeal by the taxation officer was illegal and not sustainable in the eyes of law. The Taxation Officer is accordingly directed to accept the returns and proceed in accordance with the provisions of law."

3. Heard both sides and perused relevant orders.

4. After hearing the contentions of both the parties and perusal of the relevant orders, it is observed that applications requesting for issuance of refund vouchers were filed but by an order under section 170(4) of the Income Tax Ordinance, 2001, the Taxation Officer refused the same. For rejecting these applications, the plea as expressed in the impugned order is that originally statement under section 115(4) for a complete discharge of liability was filed, thereafter the income tax returns with the claims of refund were filed and subsequently the returns were by revising earlier statutory statements. In this background of the matter, the Taxation Officer rejected the refund applications. However, the learned First Appellate Authority by recording the findings reproduced supra has allowed the relief.

5. Under these circumstances, we do not feel any reluctance in expressing ourselves in an unequivocal manner that revising of the entire assessment is not permissible under section 170(4) of the Income Tax Ordinance, 2001. The proper course for the department was to initiate under the proper provisions of law to amend any assessment as section 170(4) does not empower any such type of proceedings as have been undertaken by the Taxation Officer which are beyond his jurisdiction. Accordingly, this, order is to be cancelled being void, illegal ab initio. As far as the fate of refund applications is concerned, these are not hit by such illegal order which is to take its legal course. Keeping in view the discussion supra and the reasons recorded in the impugned order the order passed by the learned First Appellate Authority is maintained. In the result, the departmental appeals having no substance are dismissed accordingly.

C.M.A./86/Tax (Trib.)Appeals dismissed.