Law: Income Tax Ordinance, 2001

Section: 133,170,170(1),170(4),170(5)(b),122(5A)

Income Tax Ordinance (XLIX of 2001)---Ss.133, 170--Tax return--Limitation--Inaction of authorities-- Effect--Question was with regard to limitation of tax refund-- Validity--Taxpayer was estopped from asserting a favourable refund order by default where it had statutory recourse against inaction of authorities, which it opted not to pursue--Taxpayer not filing an appeal under S.170(5)(b) of Income Tax Ordinance, 2001 was apparently not pushed for an early resolution of its refund claim-- Taxpayer could not turn around to hold tax officer to his duty to pass refund order within 60 days, while absolving itself altogether of any responsibility for proactive action for refund claim to be decided as early as possible after expiry of 60 days--High Court answered Reference in favour of authorities and against the taxpayer, the question of law so formulated--Time frame under S. 170(4) of Income Tax Ordinance, 2001 to pass refund order was directory as long as right of appeal under S.170(5)(b) of Income Tax Ordinance, 2001 subsisted--Reference was allowed accordingly. Commissioner Inland Revenue, Zone-II and another v. Messrs Sarwaq Traders and another 3 (Civil Petition No.4599 of 2021); The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 SCMR 1427 and Mujahid Soap and Chemical Industries (Pvt.) Limited v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735 rel.JUDGMENT:SARDAR EJAZ ISHAQ KHAN, JUSTICE:---.---By this judgment we answer the following questions of law (infelicitously) framed in the instant reference applications by the Commissioner Inland Revenue (CIR) under section 133 of the Income Tax Ordinance, 2001 (ITO):�Whether limitation runs against not passing a refund order, where the refund was inadmissible due to unsubstantiated or unverifiable claim or illegality especially considering the provisions of subsection (5)(b) of section 170 the ITO;�Whether or not passing a refund order within 60 days would transform an inadmissible claim of refund into admissible refund which is patently against the law or unverifiable.�After hearing the submissions at the bar and perusing…