' Inayat Ullah petitioner who runs business under the name of Awami Traders is assesseed by the Income Tax Department as an "Individual". His assessment for the assessment year 1987-88 was completed by the respondent I.T.O. Under section 59 (1-B) of the Income Tax Ordinance by his order dated 31-12-1987 Annex. A'). Earlier, in pursuance of section 50 tax was deducted from him at source. As such deduction was much more than the tax actually due from him under the assessm ent order. The petitioner was found entitled to refund of s.38,457. He applied to the department for issuance of the refund voucher. However, instead of refunding the amount paid in excess by the petitioner, the I.T.O. Proceeded to launch an inquiry aginst him and served him with a letter Annex. 'D' reproduced below: 'Please refer to your refund application. Perusal of the record indicates he following discrepancies in your case:- "As per deduction certificates provided with the return an amount of Rs,135,851 was deducted under the head of securities and Income Tax deduction, but as per record your total assets as on 30-6- 1987 stand at Rs,84,571. Please explain the source of investment of Rs,135,851 with the meagre capital of Rs,84,571. The claim of your refund will be considered after the receipt of this query."
' The inquiry set afoot by the respondent in pursuance of Annex. 'D', is, under challenge in this writ petition.
2. Both the sides have been heard and the available record perused. Precisely put, the petitioner's case is that the assessm ent made vide Annexure 'A" attained finality; once an assessment has been completed it cannot be re-opened in the strength of a miscellaneous letter like Annex. 'D'. The submission is that after the completion of the assessment no jurisdiction is vested in the I.T.O. To require the petitioner to furnish the information asked for under Annex. 'D', which has also been dubbed as mala fide and merely a device to deprive the petitioner of the refund due to him.
3. On the other hand the learned counsel for the department contends that he respondent I.T.O.
Under section 65 has the authority to embark upon reassessment; it was merely for the benefit of the assessee that instead of serving him with a notice under the said provision of law, he was issued letter Annex. 'D'.It is argued that the department could have straightaway proceeded under section 65 on the foundation of definite information possessed by them but they provided an opportunity to the petitioner to clarify the position, qua the facts stated in Annex. 'D' so that if the explanation was satisfactory, he might not be burdened the commencement of re-assessment proceedings.
4. The first point emerging for consideration in this case is that when a refund becomes due to an assessee, under section 100 the I.T.O.Is bound to refund the amount irrespective of the fact whether he has or has not made any claim in that behalf. It is to be noticed that the amount of the refund is clearly mentioned in the Assessm ent Form I.T.30-A. There should be thus, no doubt that this amount was due to the petitioner but the I.T.O failed to discharge his statutory obligation. In this respect the other cognate issue deserving attention of the Bench is that the I.T.O. Thought of holding the inquiry after the petitioner had moved an application for refund. These premises seemingly lent a basis for the petitioner's argument that the I.T.O. Endeavored to coin some justification to refuse the refund.
5. As regards section 65 some conditions precedent are required to be fulfilled before the I.T.O can proceed against an assessee under this provision. The salient pre-requisites are that the assessee's income has escaped assessment or is under assessed or assessed at a low rate and in this behalf the' I.T.O. Is possessed of definite information and has obtained the proper approval of the Inspecting Assistant Commissioner to re-open the case. If these conditions are satisfied, the Income Tax Officer can issue notice to the assessee expressing his intention to re-open the case. It is admitted before me that such a notice was not issued to the petitioner. The learned counsel's contention that letter Annex. 'D' was for the benefit of the petitioner can hardly be given any weight.
As a statutory functionary the Income Tax Officer had to act according to law. It is clear to me that upon the facts of the case Annex. 'D and the inquiry sought to be instituted thereunder against the petitioner cannot be sustained under any provision of the Income Tax Ordinance. The letter Annex.
'D, therefore, has to be struck down.
6. For all these reasons this writ petition is accepted with costs. The letter Annex. 'D' and the contemplated action sought to be taken thereunder, are declared to be without lawful authority and as of no legal effect.