VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1896 (2009)

Income Tax Ordinance (XLIX of 2001)---

---Ss. 221, 120, 115(4) & 233---Rectification of mistake---Sale of various products of Pakistan Mobile Communication---Statement under S.115(4) of the Income Tax Ordinance, 2001 was filed claiming refund on the basis of certificate---Certificate was issued by the principal of the company that the tax had been, withheld---Taxation Officer rejected the refund application---First Appellate Authority vacated the refund rejection order and directed the Taxation Officer to pass fresh order strictly in accordance with law and as per provision of S.233 Of the Income Tax Ordinance, 2001---Taxation Officer instead of issuing of refund issued show-cause notice under S.221(2) of the Income Tax Ordinance, 2001---Assessee contended that Taxation Officer without considering the fact that the assessment had already been finalized under S.120 of the Income Tax Ordinance, 2001 and requirement of additional documents or reinvestigation of the evidence already filed by the assessee did not permit to call the documents by recourse to S.221 of the Income Tax Ordinance, 2001---Taxation Officer violating the law had amended the assessment by rectifying under S.221 of the Income Tax Ordinance, 2001 taking suo motu action---Initial condition for exercise of such powers was that the mistake must be apparent on the face of record which may be seen on the surface of the record and did not require investigation or further evidence---Validity---First Appellate Authority had directed to restore the assessment under S.120 of the Income Tax Ordinance, 2001 and to issue refund after examining the evidence of tax withheld by the principal in accordance with law and considering the facts and circumstances of the case required no further interference which was upheld by the Appellate Tribunal.

2006 SCMR 619; 1992 PTD 570 and 1993 PTD 964 (Trib.) ref.

Dr. Abdus Sattar Abbasi, D.R. for Appellant.

Abdul Tahir Ansari, ITP for Respondent.

ORDER

The department through this appeal has objected to the impugned order of the learned CIT(A), dated 6-2-2007 on the following grounds:--

*That keeping in view, the facts and circumstances of the case, the learned CIT(A) Hyderabad was not justified to annul the order passed by the Taxation Officer under section 221 by declaring as illegal, null and void ab initio without considering the facts of the case.

*That keeping in view of the facts and circumstances of the case the learned CIT(A) Hyderabad was not justified to issue directions regarding restoration of assessment under section 120 of the Income Tax Ordinance, 2001 and to issue refund:

*That the Taxation Officer very rightly finalized the assessment under section 221 in the light of clarification issued by Mr. Qaisar Shahzad Specialist. Corporate Taxation, Pakistan Mobile Communication Ltd. and provision of law as explicit on the face of proof of payment/Challan.

2. This appeal was heard ex parte on 17-3-2009 as the Taxpayer-respondent did not attend on the date of hearing. The order in this respect was passed by this Tribunal on 27-3-2009. The Taxpayer-respondent subsequently filed miscellaneous application bearing MA(Recalling) No.43/ & 138/KB/2009 on the ground that no notice regarding date of hearing was ever received by the assessee or his counsel and considering the submissions made by the learned counsel for the Taxpayer, the said order, dated 27-3-2009 has been recalled on 25-4-2009 and now the main appeal is again before us.

3. Learned counsel representing the Tax-payer has contended that the Tax -payer in this case is an individual engaged in the business of sale of various products of Pakistan Mobile Communication Ltd. as the authorized dealer. For the tax year under review the statement under section 115(4) was filed claiming refund on the basis of certificate issued by the Principal. The principal of the company has issued certificate, dated 15-9-2005 declaring that the tax has been withheld. The Taxation Officer rejected the refund application filed by the Tax-payer and appeal in this regard was filed before learned CIT(A) who has vide order, dated 29-3-2006 vacated the refund rejection order and directed the Taxation Officer to pass fresh order strictly in accordance with law and as per provision of section 233 of the Ordinance, 2001. It has been contended that the certificate issued by Messrs Pakistan Mobile Communication Ltd., dated 21-11-2005 is already available on record. The Taxation Officer issued letter, dated 22-7-2006 in compliance with that order of learned CIT(A) and the clarification received from the principal vide letter, dated 21-12-2005 along with notice under section 114 of the Income Tax Ordinance, 2001. In the meanwhile as the Taxation Officer delayed the refund of excess tax deduction the Tax-payer filed a complaint before the Federal Tax Ombudsman and the following findings were made by the Federal Tax Ombudsman on the complaint of the Taxpayer:--

"In this case, the Assessing Officer opined that since the discount income earned by the complainant was not offered for taxation, therefore, he required the claimant to file the return under section 114 in regard to this income so that his tax liability and the resultant refund, if any could be determined. Instead of filing the return, the complainant chose to approach this office with the result that the Taxation Officer has kept the proceeding in abeyance. The question as to whether any refund is due or not is to be filed, therefore, the Taxation Officer has not yet worked out the tax liability and the amount refundable, if any also remains undetermined. In such circumstances, the question of issuance of refund would not arise. Thus no case of mal-administration has been made out."

4. The tax-payer in accordance with the above referred findings of the Federal Tax Ombudsman filed return of income under section 114 of the Ordinance, 2001 of the portion of discount and also filed refund application on 11-11-2006. The Taxation officer instead of issuing of refund issue show-cause notice under section 221(2) of the Ordinance, 2001 vide letter, dated 28-11-2006 and, dated 5-12-2006. It has been contended that the Taxation Officer without considering the fact that the assessment has already been finalized under section 120 of the Ordinance, 2001 and the requirement of additional documents or reinvestigation of the evidence already filed by the assessee does not permit to call the documents by recourse of section 221 of the Ordinance, 2001. But the Taxation Officer violating the law has amended the assessment by rectifying under section 221 taking suo motu action. It has been contended that the initial condition for exercise of such powers is that the mistake must be apparent on the face of the record which may be seen on the surface of the record and does not require investigation of further evidence. On behalf of the Tax-payer in this regard the decisions of the Honourable Supreme Court of Pakistan reported as 2006 SCMR 619, 1992 PTD 570 (S.C. Pak) and the decision of this Tribunal reported as 1993 PTD 964 (Trib.) have been referred.

5. We have noted that the learned CIT(A) has directed to restore the assessment under section 120 of the Ordinance and to issue refund after examining the evidence of tax withheld by the principal in accordance with law and considering the above facts and circumstances of the case require no further interference, which is, therefore, upheld.

6. The appeal filed by the department is hereby dismissed.

C.M.A./98/Tax(Trib.)Appeal dismissed.