' This appeal is filed by the department impugning order dated -16-10-2008 passed by the Commissioner (Appeals), Gujranwala (Camp at Faisalabad).
2. The taxpayer having status of individual filed tax return for the tax year 2005 declaring net income of ks.4,90,000 and showing nature of business to be a manufacturing concern. The taxpayer filed an application for refund of Rs,7,24,644 on 16-3-2006. The Taxation Officer, while proceeding under section 170, embarked on an inquiry A into the commercial status of the taxpayer by issuing Letter No,510 dated 5-4-2006 and requesting to provide certain information to verify the status of manufacturer. On not receiving any information/reply from the taxpayer, the Taxation Officer went on to reject the claim of refund vide its order dated 13-4-2006, by determining the commercial status of the taxpayer as supplier instead of manufacturer. As per order under section 170(4), in Taxation Officer's opinion, it was mandatory to verify the claimed status of being a manufacturer by the taxpayer.
3. Being aggrieved, the taxpayer filed first appeal. Since the appeal was time barred an application .For condonation of delay was enclosed. The taxpayer agitated the ex parte proceedings by the Taxation Officer by pointing out certain defects in the notice dated 15-8-2005. The taxpayer also challenged the jurisdiction of the Taxation Officer under section 170 asserting that the status of the taxpayer could-not have been changed/determined under these proceedings and the order under section 120 of Income Tax Ordinance, 2001 could not have been disturbed. The CIT(A), in the -order impugned before us, has condoned the limitation due to confusion of dates in the notice/letter dated 5-4-2006 about date of hearing and due to the time consumed before the FTO and President of Pakistan in representation. The Commissioner (Appeals) annulled the order dated 13- 4-2006 by the Taxation Officer of rejecting the claim of refund declaring the same as illegal and defective. For this decision, he mainly relied on the judgment of this Tribunal reported as (2007) 96 Tax 108 (Trib.) (sic)
4. The DR has assailed the order of Commissioner (Appeal's), while supporting the order of Taxation Officer contending that. The taxpayer has been filing return under the commercial status of supplier and was filing statement under section 115, therefore, the claim of refund was rightly rejected by the Taxation Officer.
5. None is present on behalf of the taxpayer despite notices, therefore, is proceeded ex parte. The case is heard and record perused.
6. On first. Ground of department regarding jurisdiction of the Taxation Officer to enter into the enquiry about taxpayer's commercial status while exercising jurisdiction under section 170, we would like to appraise the law, as applicable for tax year 2005, relating to claim and issuance of refund. Part IV of Chapter X of the Income Tax Ordinance, 2001 is carrying the provisions relating to refund. Section 170 deals with conditions, procedure and powers for issuing or refusing the refund, whereas section 171 deals with the additional payments for delayed refunds. Rule 71 of the Income Tax Rules, 2002, provides that an application for a refund of tax shall be in the Performa specified in Part VI of the First Schedule to the Rules of 2002'.
7. Perusal of the relevant. Provisions reveals the taxpayer is required to make an application for refund as per the Performa specified in Part VI of the First Schedule to the Rules of 2002. Wherein, the taxpayer is to disclose (i) the total income computed accordance with the provisions of the Ordinance of 2001 in relevant tax year, (ii) the total tax chargeable in respect of such total income and (iii) total amount of tax paid. On the basis of these declarations he claims the overpaid tax as refund. When applied for issuance of refund by any taxpayer, the Commissioner or Taxation Officer (being his delegate) while exercising jurisdiction under section 170 is required to see First; whether requirements of subsection (2) are met i,e,, the appellation should be in prescribed form, verified in prescribed manner and that the same is made within two years of the date when 'the Commissioner has issued the assessment order' or 'the date on which the tax was paid' . Secondly, under subsection (3), he has to satisfy himself to the extent that the tax has been overpaid. For this purpose only, he can probe to verify the supportive document etc., proving that the tax is overpaid.
After being satisfied to this extent, the Commissioner or his delegate can adjust. The overpaid amount against any other tax due from the taxpayer under this Ordinance. He can also adjust in an outstanding liability of the taxpayer to pay other taxes, as is authorized under subsection (3). Lastly, remaining portion of the overpaid tax is to be refunded by the Commissioner 45 days as stipulated under subsection (4). If the Commissioner or his delegate is not satisfied, after inquiring into the correctness of overpaid tax, he shall pass a written order of reducing or refusing the refund claimed, after giving the taxpayer an opportunity of being heard.
8. Examination of the provisions, do not suggest that the Commissioner or his delegate shall look into the income computed or tax chargeable under the Ordinance of 2001. Clause (b) to subsection (2) of section 170, while providing a condition of filing an application for refund, says that the application shall be made within two years of "the date on which the Commissioner has issued the assessm ent order". Whereas, clause (b) to subsection (1) of section 120 reads, "the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the return was furnished." Comparative reading of both the provisions has revealed that no room of authority is mailable to the Commissioner to go behind `the assessm ent order issued to the taxpayer. By the Commissioner' and we hold accordingly.
9. We, therefore, are inclined to follow the consistent view of this Tribunal that the Taxation Officer/Commissioner has no jurisdiction to probe an issue which had attained the status of an assessm ent order by operation of law under section 120 or 115 read with section 169(3). The Commissioner can neither disturb an assessment taken to have been made D under section 120 nor can he withhold/reject the refund on the basis of his opinion that such assessment is defective or needs amendment under the relevant provision of this Ordinance.. Therefore, the order of the Taxation Officer of determining the commercial status of the taxpayer as Supplier in place of Manufacturer, being without lawful authority is held to be void. Refusal of refund on the basis of a without jurisdiction determination is also held to be unlawful.
10. Though the Commissioner in his wisdom has already dealt with the issue of limitation while accepting the application for condonation of delay. We, however, reject the objection of the department on the issue of limitation for a different reason that limitation cannot run against a void order. We are supported for the decision by the judgment of the - Apex Court in case of Rahmnatullah and others v. Saleh Khan and others 2007 SCM R 729, Relevant portion from the judgment is reproduced:-- "(4) It is settled law when the basic order is without lawful authority then all the super structure shall fall on the ground automatically as law laid down by this Court in Yousaf Ali's case PLD 1958 SC 104 and Crescent Sugar Mills' case PLD 1982 Lah.
1. It is by now settled law that limitation cannot run against void order Pakistan Post Office's case 1987 SCM R 1119, Raja Muhammad Fazil Khan's case PLD 1975 SC 331 and Muhammad Masihuzzaman's case PLD 1992 SC 825."
11. For the foregoing reasons the appeal filed by the Department is dismissed and the order of CIT(A) is upheld.
' Order accordingly.