This appeal arises out of the order of CIT(A) dated 20-5-2008 holding rejection of refund application by the Taxation Officer as illegal for being hit by limitation. Feeling aggrieved, the Revenue has assailed the order through instant appeal.
2. Facts relevant for disposal of appeal are that taxpayer's claim of refund for tax years 2005 and 2006 was refused by the Taxation Officer. The refusal was confirmed by the CIT(A) vide its order dated 22-2-2007. Against this order, the taxpayer moved an application under section 221 of Income Tax Ordinance, 2001 seeking rectification to the extent of tax year 2006. The mistake of fact pleaded was that in the consolidated order, facts relating to tax year 2005 were wrongly taken for the tax year 2006. It was also contended, that while deciding the appeal, First Appellate authority could not adjudicate upon ground No, 6 raised in the memo of appeal. It was further urged that refusal of refund order dated 11-12-2006 was time barred for having been passed after 45 days as B stipulated in section 170(4) of Income Tax Ordinance, 2001. It was argued that the limitation of 45 days expired on 18-11-2006 because the application for refund was moved on 14-10-2006.
3. Learned CIT(A) allowed the application for rectification accepting that the facts relevant to tax year 2005 were wrongly taken for the tax year 2006. The Commissioner (Appeals) also accepted the appeal for tax year 2006 on the ground of limitation, holding order for refusal of refund dated 11-12-2006 as time barred.
4. DR has assailed the interpretation of the section 170(4) made by the learned CIT(A) and submits that the same is against the intent of legislature. It is contended that omission under subsection
(4) to section 170 is appealable under subsection (5). The AR on the other hand has attempted to defend the impugned order but has emphasized on other grounds which are not adjudicated upon in the impugned order. He submits that the jurisdiction of Commissioner/Taxation Officer under section 170(4) is limited and refusal of refund cannot be based on defects in the deemed assessm ent order under section 120 or under section 115 read with section 169(3) of the Income Tax Ordinance, 2001.
5. Heard learned representatives of the parties.
6. We agree with the submission of DR. The interpretation made by learned CIT(A) in the impugned order is a result of isolated reading of subsection (4) of section 170. A careful reading of section 170, as a whole, reveals that consequence of failure to pass order under subsection (4) within the specified period of 45 days is given in clause (b) of subsection (5) to section 170. Whereby a cause of action arises in favour of the taxpayer and the taxpayer being aggrieved of the inaction on the part of Commissioner can prefer an appeal under Part III of Chapter X. Part III of Chapter X bears the title of "APPEALS" and contains provisions relating to appeals and procedure before CIT(A), Income Tax Appellate Tribunal and reference to High Court. Section 127 provides first appeal before CIT(A) to the taxpayer against any order passed by a Commissioner or a Taxation Officer under the sections mentioned therein. Section 170, inter alia, is one of the sections provided in the section 127, therefore, a person aggrieved of an order or of omission to pass order under subsection (4) of section 170 can prefer an appeal before the Commissioner (Appeals) under section 127. It is urged by Learned AR, during the arguments, that language used in subsection (1) to section 127 is "any person dissatisfied with any order passed by the Commissioner or a Taxation Officer " since no order is passed under subsection (4), therefore, the appeal would not lie under section 127. If the contention the learned AR is accepted, it would render clause (2) of subsection (5) to section 170 as redundant. We are guided, in this situation, by the judgment of Lahore High Court in case Messrs Flow petrol International, SA, Islamabad and 51 others v. The C.B.R. And 2 others (1994 PTD 1370), wherein it was laid down:- "(9) The contention of the learned standing counsel that if the Schedule is in conflict with the provisions of the Act itself, the Schedule must yield to the main provision, is correct but on proper analysis of the Act and the Schedule it becomes apparent that there is no conflict between the two.
It is well established principle of law that various provisions in an enactment must be harmoniously construed with a view to avoid any repugnancy. It also cannot be disputed that the Schedule is as much a part of the enactment as any other provision. (See Bindra's Interpretation of Statutes, 7th Edition page 89)."
(the underlining is ours to highlight)
The principle of causa omissus, to supply the words omitted by Legislature, is rarely allowed by August Supreme Court, therefore, even without supply any word in section 127 to cover the omission under section 170(4), we still hold that the inaction/default by the Commissioner under subsection
(4) amounts to refusal of refund and the Commissioner (Appeals) should treat such inaction as refusal order passed by the Commissioner. After entertaining the appeal on inaction within 45 days, the CIT(A) may proceed on to determine the refund, if any amount is found in excess of the amount chargeable to tax as per law and as provided under section 170.
7. Regarding other ground emphasized by the learned AR we feel that this Tribunal has already given guidelines in number of cases including ITA No, 30/KB of 2006, reported as 2007 PTD (Trib.)
1780. The relevant portion of the order is reproduced hereunder:-- "12. ... ... 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."
8. Appeal is allowed, order dated 20-5-2008 is set aside to the extent of interpretation of section 170(4) on limitation. The case is remanded to CIT(A) with direction to decide the appeal for the tax year 2006 on merits and in accordance with the law laid down by this Tribunal in number of judgments including the one reported as 2007 PTD (Trib.) 1780 if so agitated by the taxpayer.
' The appeal is disposed of in the manner and to the extent indicated above.