2010 P T D (Trib.) 582
[Income-tax Appellate Tribunal Pakistan]
Before Javid Iqbal, Judicial Member and Mrs. Abida Ali, Accountant Member
I.T.A. No.79/PB of 2008, decided on 21/05/2009.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss.170(2)(c) & 120(1)(b)---Refund---Limitation---Application for refund of excess amount tax deducted was filed which fact had been denied by the department, while assessee once again appealed for issuance pf refund---Taxation Officer rejected application being barred by limitation---Validity---Refund had been refused being barred by limitation i.e. after the prescribed period of two years---Assessee contended that not only the application was filed within time but genuine refund could not be refused otherwise---Assessee produced the acknowledgment receipt of application submitted before the Taxation Officer and signed by the official of department---Such application bore the seal and stamp of the department and also initial of income tax official---Order treated as passed under S.120(1)(b) of the Income Tax Ordinance, 2001 was still intact and had not been amended under the provision of S.122 of the Income Tax Ordinance, 2001---Appellate Tribunal held that refund claimed and created under the deemed assessment order should be issued accordingly.
Pfizer Laboratories (Pvt.) Ltd.'s case PLD 1998 SC 64 and 2008 PTD (Trib.) 320 rel.
(b) Income Tax Ordinance (XLIX of 2001)---
----S.170(4)---Refund---Failure to pass order within the prescribed period---Effect and procedure thereafter---Section 170(4) of the Income Tax Ordinance, 2001 prescribed the period of 45 days (now 90 days) within which the matter of fund should be decided by Taxation Officer---In case of failure of Taxation Officer to pass any order within the prescribed period as per government policy for early issuance of refund to assessee, right of appeal under S.170(5) of the-Income Tax Ordinance, 2001 had been provided to assessee, where appeal was filed the power of Taxation Officer shifted to First Appellate Authority and he after satisfaction of required conditions and evidence could pass any order about the refund---If the assessee did not file any appeal after 45 days and matter still remained pending before the Taxation Officer, the law did not place any bar on Taxation Officer to give any "decision or to pass any order---If the order was passed against the assessee, he could file appeal as provided in the Income Tax Ordinance, 2001, while during pendency of appeal Taxation Officer ceased to pass any order on the issue of refund.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss.120 & 170---Assessment---Refund---Return filed by the assessee had to be treated as deemed assessment order and through such deemed assessment order refund claimed also be treated as created.
Muqarrab Khan, D.R. for Appellant.
Mushtaq Akbar, C.A. for Respondent.
ORDER
JAVID IQBAL, (JUDICIAL MEMBER).---Through this order we intend to dispose of the departmental appeal directed against the impugned order dated 13-8-2008. The grounds agitated are reproduced as under:--
(1) That the Learned C.I.T.(A) was not justified to annul the order by holding that refund application dated 31-7-2007 was barred by time as neither such application was filed by the taxpayer nor any original application for refund on the prescribed format is available as per assessment record.
(2) That Taxation Officer has rightly rejected the refund application under section 170(4) of the Income Tax Ordinance, 2001 due to lack of verification of tax deducted at source. Furthermore there is no embargo on the Taxation Officer to pass the order under section 170(4) after the expiry of 45 days.
Briefly the relevancy of the facts as per record are that assessee/respondent is a Private Limited Company, derives its income from manufacturing and sale of plastic mats. Return of total income for the year under appeal was filed, which was treated as deemed assessment order under section 120(1)(b) of Income Tax Ordinance, 2001 (hereinafter called Ordinance, 2001). As per impugned order, application for refund, of excess amount of tax deducted was filed as on 16-5-2005 which fact has been denied by the Department, while subsequently assessee once again appealed for issuance of refund. Taxation Officer rejected application, holding it to be barred by limitation.
Assessee feeling aggrieved filed appeal before the L/C.I.T.(A) who vide the impugned order annulled the order passed under section 170(4) by holding that it has been passed after period of 45 days. Department being not satisfied from the impugned order has instituted the present appeal before us. L/DR read out the grounds of appeal while L/A.R. repeated the arguments as have already been incorporated in the impugned order.
L/A.R. at the time of hearing of appeal also produced the acknowledgement receipt of refund application filed on 16-5-2005 in original which bears the departmental seal along with initial of someone of income tax official, while the L/A.R. also pleaded that any amount of assessee due to assessee from department could not be retained by the Department. In support of his this contention he referred the judgment of Honourable Supreme Court of Pakistan cited as PLD 1998 SC 64. Beside above L/A.R. also repeated the arguments delivered and submitted before L/C.I.T.(A) and are incorporated in the impugned order also for sake of convenience and best understanding of facts of the case are reproduced as under:-
The appellant, a private limited company deriving income from manufacturing and sale of plastic mats. Return for the charge year was filed declaring (sic) Application for refund was filed on 16-5-2005 seeking refund of the excess amount of tax deducted. The appellant also filed another refund application dated 31-7-2007 for issuance of refund which was accompanied by the relevant deduction proof as claimed in the return for amount of Rs.5,355,154. The refund applications were duly processed, the tax payment challans were not verified from the relevant banks as placed on file. On 30-1-2008 the Taxation Officer E&C-IX served a notice on the appellant that the refund for the said period is barred by time and cannot be entertained due to time limitation as provided under section 170(2)(c) of the Ordinance 2001. The appellant submitted written reply quoting some relevant judgments wherein it has been held that the refund becoming due should be paid immediately irrespective whether the assessee has made any application or not, and that the filing of the application for refund under section 170(2) is directive and not mandatory and therefore, the refund due as a result of the deemed assessment should not be withheld. Further, the appellant also reminded to the Taxation Officer of the application made for refund on 16-5-2005 which was made within the time specified and submitted a photocopy as well. The Taxation Officer rejected the plea taken by the appellant and also rejected the earlier application of refund made on 16-5-2005 for the reason that the application is not traced on file and further it is not on the prescribed form. An order was passed under section 170(4) for the rejection of the applied refund and this has given rise to this appeal.
To rebut the above arguments, departmental comments were also asked by the L/C.I.T.(A) which were also submitted and have also been incorporated in the impugned order.
After having heard the arguments of the rival parties and from the perusal of the impugned order, it is seen that the L/C.I.T.(A) instead of giving finding on the issue of refund as to whether assessee was entitled to it or not he has annulled the order passed under section 170(4) of the Ordinance, 2001, where refund was refused by the Taxation Officer, however, vide the impugned conclusion still the issue of dispute remains undecided.
Section 170(4) prescribes the period of 45 days within which the matter of refund should be decided by Taxation Officer. In case of failure of Taxation Officer to pass any order within the prescribed period, as per Government policy for early issuance of refund to assessee right of appeal under section 170(5) has been provided to assessee, where appeal is filed then the power of Taxation Officer shifts to L/C.I.T.(A) and he after satisfaction of required conditions and evidence could pass any order about the refund.
In case if the assessee does not file any appeal after 45 days and matter still remains pending before the Taxation Officer, the law does not place any bar on Taxation Officer to give any decision or to pass any order. If the order is passed against the assessee, he can file appeal under the provision of appeal as provided in the Ordinance, while during pendency of appeal, then as per law Taxation Officer ceased to pass any order on the issue of refund.
In present matter in hand, Taxation Officer has passed the order refusing the claim of refund for the reason of filing of refund application' beyond prescribed period of two years and on prescribed format. The L/C.I.T.(A) has annulled the order of Taxation Officer in the ultimate of which matter remain in abeyance on the issue of refund where on this score the intention of legislation appear to be the early and timely issuance of refund to assessee, thus the period of 45 days has been prescribed in the law.-The order has been passed after 213 days. The annulment of order is not the proper order, the L/C.I.T.(A) was supposed to give the finding about the issue of refund but it has not been done so. It is also of worth-mentioning that if view of L/C.I.T.(A) is taken to be correct than what will be the ultimate of an order in which Taxation Officer allowed the refund but the order has been passed after 45 days of date of filing of refund application, as per the impugned finding of L/C.I.T.(A), it would also be liable to annulment, of course it must not to be so. Considering the spirit and intention of legislation as embodied in section 170(4), we deem it just and proper to conclude the issue by ourselves instead of remanding the same to L/C.I.T.(A) for fresh adjudication.
The filing of return has not been denied by Department. As per return of total income, assessee has filed the same and as per section 120(1)(b) it is treated as deemed assessment order. Through this deemed assessment order refund claimed also be treated as created.
The refund has been refused by the Taxation Officer for the reason, of application of refund is barred by limitation i.e. after the prescribed period of two years. While as per contention of L/A.R. of assessee not only the application was filed within time but he relied upon the case-law of Pfizer Laboratories (Pvt.) Ltd. cited as PLD 1998 SC 64 and also the judgment of ITAT cited as 2008 PTD 320 (Trib.) wherein it has been held that genuine refund could not be refused. Before us the learned A.R. of assessee produced the acknowledge receipt of application submitted before the Taxation Officer and signed by the official of department as on 16-5-2005. The said application bears the seal and stamp of the department and also initial of income tax official which fact has also been recorded in the impugned order. In this way the L/C.I.T.(A) has not doubted the genuineness of application filed by assessee as on 11-10-2005. While also the judgment of Honourable Supreme Court of the country and the other judgment of Lahore Bench of the Tribunal on identical issue, support the contention of L/A.R. of assessee. It is also not to be out of place to mention here that/order treated as passed under section 120(1)(b) is still intact and has not been amended under the provision of section 122 of the Ordinance, 2001. Thus giving accumulative effects to the above facts and legal position of the matter, we hold that refund claimed and created under the deemed assessment order should be issued accordingly.
In this way appeal is disposed of in the above indicated manner.
C.M.A./169/Tax(Trib.)Order accordingly.