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Constitutional Petition No. D‑337 of 1985, decided on 17th May, 1985.

‑‑‑Ss. 65, 99 & 103‑‑Deduction of source‑‑Application for refund‑‑Re opening of assessment‑‑Notice under S.65 of Ordinance‑‑Order giving rise to a refund being subject‑matter of appeal or further proceedings in Ordinance, Income‑tax Officer, held, with prior approval of Inspecting Assistant Commissioner, could withhold refund till such time as he might determine.

‑‑‑S. 65‑‑Re‑opening of assessment‑‑For re‑opening of assessment under S.65(1) & (b) of Ordinance, Income‑tax Officer issuing notice to assessee within time and with prior approval of Inspecting Assistant Commissioner and allowing 50% refund and withholding balance amount‑‑Assessee unable to show any illegality with regard thereto‑‑Action of respondent authorities, held, in consonance with law and notice issued by Income‑tai Officer to assessee was valid and withholding of 50% of refunds was within jurisdiction of respondent authorities who could continue proceedings pursuant thereto.

Burhan Engineering Co. Ltd. v. I.T. Officer Circle 11 1985 PTD 465 ref.

Mazharul Hassan for Petitioner.

Waheed Farooqui for Respondent.

The petitioner is an individual carrying on business of supply of steel and its allied product conducting the business under the name and style of 'Steel Sales'. His accounting period is from July to 30th June. It is the case of the petitioner that assessment upto 1984‑85 finalized under the self assessment. It is the case of the petitioner that he is a supplier of steel products and on his supplies the tax was deducted by Messrs Consolidated Sugar Limited under section 50(4) of the Income‑tax Ordinance. 1979 and after charging the amounts the following amount was refundable.

In terms of section 99 read with Rule 199 of Income‑tax Rules, the petitioner filed an application for the refund of an excess amount on 14‑01‑1984 and 30‑3‑1985 respectively. The respondent No. 3 issued an enquiry letter, dated 5‑4‑1985 and he was directed to submit an explanation by 7‑5‑1985. It is the case of the petitioner that instead of granting any extension or refusing the request of the petitioner, the respondent No. 3 issued notice under section 65 of the Ordinance for re‑opening of the assessments for the years 1983‑84 and 1984‑85 treating the assessment being escaped or under assessed. On receipt of the notice the petitioner approached the respondent No. 1 on 21‑8‑1985 who directed to refund the entire amount by 25‑9‑1985. The respondents 2 and 3 withheld 50% refund under section 105 of the Ordinance. After the receipt of the reply, the petitioner filed the present petition on the ground that the notice under section 65 was without jurisdiction. 'Promise comments has been filed by the Income‑tax Officer justifying the issue of notice. It was also averred that the action under section 65 was taken with the approval of I.A.C., as required under section 65 of the Ordinance.

The notice under section 65 of the Ordinance were issued on 3‑6‑1985 and were within time f9r the assessment both under clauses (a) and (b) of section 65 of the Ordinance as they had been issued within ten‑years from the end of the relevant assessment years. In the notices it was clearly mentioned of clauses (a) and (b). Therefore, in pursuance of that notices assessments could be made by the Income tax Officer under the two clauses. It is not disputed by learned counsel for the petitioner that the notices were perfectly valid and within the jurisdiction of the Income‑tax Officer clauses (a) and (b) of section 65 of the Ordinance as the Income‑tax Officer took the action under section 65 with the approval of Inspecting Assistant Commissioner of Income‑tax in writing. But he vehemently asserts that the action could be taken after allowing refunds to the petitioner as the petitioner is entitled to the same and all the material facts were disclosed in the returns.

Strong reliance has been placed by the learned counsel for the petitioner on judgment of this Court to which one of us (Syed Haider Ali, J) was a member in the case of Burhan Engineering Co. Ltd., v. .T. Officer Circle II 1985 P T D 465. While dismissing the petition it was observed that on the basis of the materia a reasonable honest officer could issue notice under section 34(1‑A) of I.T. Act, 1922 which is para. material to section 65 and it was also observed that whether the material placed before the officer is sufficient to reopen the assessment cannot be gone into the Constitutional Petition at that stage.

The judgment cited by the learned counsel is fully applicable to the facts of this case. It ay be observed that the respondents himself in parawise comments stated that while under section 65 was issued for further inquiry and it does not complete the action of reassessment.

A perusal of section 103 would show that an order giving rise to a refund is the subject‑matter of an appeal or further proceedings in the Ordinance, the Income‑tax Officer may with prior approval of the Commissioner withhold the refund till such time as may determine.

In the present case the Income‑tax Officer allowed him 50% of the refund and balance amount was withheld. The learned counsel for the petitioner was unable to show any illegality committed by the respondent. It seems that the action of the respondent is consonance with the law.

For the reasons given above, we hold that the notices issued by the Income‑tax officer to the petitioner on 3‑6‑1985 were valid and the action of the respondent in not allowing balance 50% of refunds was within the jurisdiction of the respondents and the respondent No. 3 can continue proceedings pursuant thereto. There is thus no merits in this petition, which is dismissed but in the circumstances of the case the parties will bear their own costs. The above are the reasons for the short order, dated 8‑5‑1986.

M. Y. H. Petition dismissed.

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