Law: Income Tax Ordinance, 2001

Section: 126A

ORDERM. M. AKRAM (Judicial Member): The titled appeals were transferred to this tribunal by the learned CIR (Appeals-IV), Islamabad, on August 27, 2024, under section 126A of the Income Tax Ordinance, 2001 (“the Ordinance”). These appeals challenge the refund orders issued under section 170(4) of the Ordinance by the Deputy Commissioner Inland Revenue (Zone-IV), CTO, Islamabad, for the tax years 2016 to 2020 and 2022, based on the grounds stated in the memo of appeals. As the facts and issues in all these appeals are similar, they are being addressed through this common order.Background of the Case2. The appellant filed income tax returns for the relevant tax years under consideration, claiming refunds for tax withheld under various provisions of the Ordinance. Refund applications were submitted via the IRIS system, along with supporting documentary evidence. The assessing officer examined and verified the record submitted by the appellant. However, the refund applications were rejected solely on the basis of outstanding tax demands for the relevant years. Aggrieved by these orders, the appellant filed appeals with the learned CIR (Appeals), who subsequently transferred the appeals to this tribunal under the newly introduced section 126A of the Ordinance.Proceedings and Analysis3. The case was heard on December 17, 2024. After reviewing the submissions and evidence, this tribunal focused on the interpretation of section 170 of the Ordinance. It was determined that the Commissioner/Assessing Officer cannot reject a refund application solely due to the existence of an outstanding tax liability. The reasoning is as follows:1. Relevant Legal Provisions o Section 170(3) plans the procedure for handling overpaid taxes:â–ª    Excess tax must first be applied to offset any tax due under the Ordinance.â–ª    Any remaining amount must then be applied to other outstanding tax liabilities.â–ª    If there is a balance after these adjustments, it must be…

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