Law: Income Tax Ordinance, 1979

Section: 24(c),50(4),62(1),80CC(2),143B

ORDER As per Rasheed Ahmad Sheikh, Judicial Member. - This appeal at the behest of the assessee is directed against the order of learned CIT (A) Zone-III, Lahore dated 4-7-2001 in respect of the assessment year 1997-98. 2. First objection of the assessee relates to rejection of its declared trading version and in the alternative the additions made towards the declared sales, by way of estimation of sales and application of higher gross profit rates, as well as yieldage account have been contested on account of being unwarranted on the facts and in the circumstances of the case. Facts leading for disposal of this very appeal are that the appellant a Public Limited Company duly quoted on the Stock Exchange continues to derive income from operating a Spinning Unit. For the year under appeal, tax return was filed by it declaring net loss of Rs.4,30,17,611/-. Predominantly the yarn so manufactured is exported but local sale of yarn is also being made. After examining the account statements a notice dated "nil" was issued by the assessing officer requisitioning certain details from the assessee. Subject of this notice was "Finalization of assessment for the charge year 1997-98 -Notice u/s 62" and the case was fixed for hearing in 19-6-2000. This notice does not have any locus standi in the eye of law as this notice was issued prior to examination of books of accounts. Thereafter no notice in terms of section 62(1) was ever issued pointing out specific defects in the books of accounts. This section evisages that the DCIT shall give a notice to the assessee of the defeats noted in the books of account before disagreeing with such accounts. Anyhow, the assessment was completed by the assessing officer on 26-6-2000. However, prior to examination of books of accounts the appellant was confronted regarding declaring low profit rate viz a comparable case bearing NTN 30-02-0820773 whereby G.P. rate of 20.05% was declared. Also confronted on the point of disclosing low yieldage i.e. 80.03% and NTN of two cases, one existing at 30-820773 and the other at 30-02-1718316, were referred to in which yield of yarn @ 85% had either been assessed or declared in those cases. Sales have…

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