Law: Income Tax Ordinance, 2001

Section: 120,122(1),122(9),177,177(1)

ORDER SHAHID MASOOD MANZAR) Judicial Member:- The above tilted appeal has been filed by the Department against an Order No.38/2012 dated 28.09.2012 passed by the Commissioner Inland Revenue (Appeals-IV), Islamabad for tax year 2010 .The Department has contested the appeal on the following grounds:- 2. That the learned Commissioner Inland Revenue (Appeals) was not justified to annul the assessment making reliance upon the judgment of the Lahore High Court in W.P.No.393/2012 dated 10.05.2012 as the Writ Petition has been challenged by the department before Honourable Supreme Court of Pakistan. 3. That the learned Commissioner Inland Revenue (Appeals) was not justified to annul the assessment as the Commissioner is fully empowered to select the case for Audit under section 177 of the Income Tax Ordinance, 2001. 2. Brief facts of the case are that the taxpayer an individual derives income from legal practice. The taxpayer was filed return for tax year 2010 u/s 120 of the Income Tax Ordinance, 2001 declaring net income at Rs.264,268/-. The case of the taxpayer was selected for audit u/s 177(1) by the Commissioner Inland Revenue, RTO, Rawalpindi. Accordingly, the taxpayer intimated requiring him to file certain documents/books of accounts. After that a notice u/s 122(9) was served upon the taxpayer for compliance on 20.03.2012. The reply submitted by the taxpayer was considered unsatisfactory. Resultantly, assessment for tax year 2010 was amended u/s 122(1) by the Deputy Commissioner Inland Revenue and income of the taxpayer determined at Rs. 1,226,268/-. 3. Aggrieved of the above treatment, the taxpayer field appeal before learned Appeal Commissioner who vide Order No.38/2012 dated 28.09.2012 annulled the order passed u/s 122(1) by the Deputy Commissioner Inland Revenue in the following manner:- 4. The case was fixed for hearing on 26.09.2012 in response to which Mr. Atif Waheed (Advocate) AR of the taxpayer attended the office and case was discussed with him as per grounds of appeal. The AR of the appellant referred to a judgment passed by the Honourable Lahore high Court, Lahore in the case of M/s. Chenone Store Ltd vs the Federal Board of Revenue (W.P.…

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