Law: Income Tax Ordinance, 2001

Section: 18(1)(b),81(b),18(1)(d),111(b),111(1)(b) ,120(1),122(1)(5)

ORDER This appeal has been instituted by the taxpayer against the appellate order dated 18.05.2015 recorded by the learned CIR(A) wherein the learned first appellate authority confirmed the treatment meted out by the taxation officer u/s 122(1)(5) of the Income Tax Ordinance, 2001. 2. Brief facts leading to the disposal of present appeal are that the taxpayer is a private limited company deriving income from manufacturing of wires. Return of income for the tax year 2011 was filed declaring loss at Rs.(13,530,583)/- which was treated to be a deemed assessment order u/s 120(1) of the Income Tax Ordinance, 2001. Later on, the taxation officer found as per definite information, that the taxpayer had got his loan/liability markup waived off from the Standard Chartered Bank Ltd for the year under appeal. Accordingly, the taxation officer initiated proceedings issuing show cause notice to the taxpayer, against which by the reply furnished by the taxpayer was found un-satisfactory. Resultantly, the proceedings culminated in passing order of assessment u/s 122(1)(5) of the Income Tax Ordinance, 2001 by computing the income at Rs.38,261,901/-. Being aggrieved, the taxpayer filed appeal before the learned CIR(A) who by virtue of his appellate order dated supra confirmed the treatment meted out by the taxation officer for the reasons and factors as given in the body of the same. This has caused the taxpayer to file appeal before this forum. 3. The learned AR of the taxpayer has strongly challenged the orders of the authorities below and has contended that the learned CIR(A) was not justified to confirm the order of the taxation officer which is illegal and without jurisdiction. He has further contended that the learned CIR(A) has failed to appreciate that the proceeding initiated u/s 122(1) were based on the alleged information already available with the department. The learned AR has argued that the learned CIR(A) was not justified to maintain the addition of Rs.51,792,484/- arbitrarily through invoking the provisions of section 18(1)(b) read with Section 111(1)(b) of the Income Tax Ordinance, 2001 on account of outstanding loans/markup written off by the "Standard…

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