Law: Income Tax Ordinance, 1979

Section: 12(18)

ORDER The Order was passed by Naseer Ahmad, Accountant Member.--The titled appeal, arising out of order dated 2-11-2005 passed by the first appellate authority in respect of assessment year 2002-2003, relates to three real brother who are members and hold equal share in an AOP, operating under the name and style M/s Naqshbani Stores, Multan Road, Lahore. 2. Mr. Zulfiqar Ali Sheikh, ITP represented the appellants whereas Mr. Ashraf Ahmed Ali appeared on behalf of the Revenue. 3. Facts in brief are that the appellant received a sum of Rs.1,283,333 as gift from the mother which was made through a cross cheque No.211751 dated 22-1-2002 drawn on National Bank of Pakistan, Saidpur Branch, Lahore. The said cheque was deposited in the current account of the AOP. On an examination of the wealth statement filed by the appellant, where the receipt was shown as gift from mother, the assessing officer, in the course of finalizing the assessment proceedings, required the appellant to produce bank statement showing receipt of gift through cross cheque. While responding to the queries of the assessing officer, the appellant explained the above mode of receipt, however, the assessing officer feeling dissatisfied with the submission of the appellant, invoked the provisions of section 12(18) of the repealed Income Tax Ordinance, 1979 as in his view the individual gift was not received through cross cheque. In arriving at the above conclusion the assessing officer also formed a view that the gift should have been received in the bank account of the person to whom the gift is made. 4. Feeling aggrieved by the treatment given by the assessing officer the appellant filed appeal before the first appellant authority who, dismissed the appeal by agreeing with the contentions of the assessing officer. 5. The learned AR while opening the arguments submitted that both the authorities below have erred in drawing adverse inference against the appellant because the provisions of section 12(18) of the repealed Income Tax Ordinance, 1979 provided for only one condition i.e. receipt of gift by a crossed cheque drawn on a bank following provisions were quoted during the course of the appellate…

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