Law: Income Tax Ordinance, 2001

Section: 111(1)(d),122(1),122(5),122(5)(i),122(9) ,176

Unexplained income or assets”Amendment of assessments”Mandatory show-cause notice and opportunity for taxpayer to file reply to same”Credit entries in Bank account(s) of taxpayer”Computation of net income / total income chargeable to tax”Obligation of Departmental officer to issue notice to taxpayer under S. 122(5) of Income Tax Ordinance, 2001 specifying relevant clause of S. 122(5) sought to be invoked with clarity”Scope”Section 111(1)(d) of Income Tax Ordinance, 2001 did not warrant taxation of whole of the credit entries/ deposits in a Bank account maintained by taxpayer by treating same to be net income chargeable to taxpayer; and only such part of total Bank deposits was chargeable to tax which could be termed as total income”Such credit entries represented sales which after defraying cost of sales gave rise to gross profit which after deductions of profit and loss account expenses, yielded net profit, which was the item of receipt liable to tax wholly or in part”When Departmental officer came across such undisclosed credit entries deposits in a Bank account, only course available to him was to confront taxpayer under S. 122(9) of the Ordinance, after ensuring that notice under same was duly served upon taxpayer”Said S. 122(9) made it obligatory upon tax officer to confront in sufficient detail all material facts which led him to take action thereunder”Non-issuance of such notice rendered whole superstructure of amended assessment as void ab initio and illegal and same also applied to mandatory notice to be issued under S. 122(5) the Ordinance”Departmental officer, after receiving reply under said S. 122(9) was duty bound to issue notice under S. 122(5) of the Ordinance, specifying the specific clause of S. 122(5) which he sought to invoke”Non-specification of relevant clause in notice under S. 122(5) of Income Tax Ordinance, 2001 was fatal for any amended assessment and any action to be taken under said S. 122(5) had be specified with clarity and such mistake by Departmental officer of non-issuance of notice under S. 122(5) without precisely specifying relevant clause thereof was incurable. Income Tax Ordinance (XLIX of 2001)-- Ss. 111 39”Income Tax…

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