Law: Income Tax Ordinance, 2001

Section: 2(37),7,11(2),21(2),33,3,6,7,8A,21(37),2 2,23,26,33,34,38,73

Law: Income Tax Rules, 2002

Section: 12

ORDER The appeal has been filed by the taxpayer against the order No. 2562 dated 20.06.2015 passed by the learned Commissioner Inland Revenue (Appeals-lll), Rawalpindi on the following grounds:- A. That the order passed by the Respondent No. 2 and upheld by the Respondent No. 3 is illegal, incorrect against the facts as well as against provisions of Section 7 of the Sales Tax Act, 1990. B. That appellant deposited the impugned amount under influence but with the impression that said amount will be adjusted against output tax which was stock-in-trade of the Appellant. C. That allegation of tax fraud has not been proved/established by Respondents as required under the law. The Respondent No. 2 has misconceived the acceptance/deposit of impugned amount by the Appellant regarding. The order passed by the Respondent is without establishing the ingredients of so called tax fraud. The allegation of tax fraud is not applicable in the said cash. D. That adjustment of input tax against the output tax is the vested right of the appellant as provided under Section 7 of Sales Tax Act 1990. Section 7 of the Sales Tax Act, 1990 given no any procedure regarding utilization of input tax if taxpayer supplied different goods and he holds sales tax invoices against some goods instead of all goods. E. That without prejudice, it is submitted that appellant claimed input tax of product A and supplied product B. The product A was stock at that time, which has been sold to un-registered persons. The said act is permissible under the Sales Tax Act 1990. F. That before invoking the Section 2(37), which is infact definition clause of tax fraud, it was the duty of Respondent No. 2 to establish that the Appellant was in the knowledge or has reasonable grounds to suspect that some or all of the tax payable is unpaid. In the instant case Respondent No. 2 failed to prove the same. G. The invoking of Section 2 (37) is not correct due to the reason that the ingredients of Section 2(37) are missing in this case. It is the duty of the department to establish that the Appellant knowingly, dishonestly or fraudulently and without any lawful excuse committing tax fraud. 2. Brief facts leading to this…

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