Law: Income Tax Ordinance, 2001

Section: 111,111(1)(a),111(d)(i),121(1),122(9),21 4C

Law: Civil Procedure Code (V of 1908)

Section: O.VII,R.11

INCOME TAX ORDINANCE, 2001 (XLIX OF 2001) Sections: 111, 111(1)(a), 122(9) 214C - Gazette Notification No. F.2(1)/2015 dated 08.04.2018 - Unexplained income or assets - Selection of case for audit - Detection of transaction - Unexplained bank credit - Show Cause Notice - Amnesty scheme - Unexplained credit entries - Addition - Validity - FACTS Brief account to the instant case is that appellant M/s Sibtain Haider Brothers filed income tax return for tax year 2015 declaring net income of Rs.550,000. The case was selected for audit u/s 214C of the Ordinance 2001. During audit proceedings the assessing officer detected transaction of Rs. 11,746,527 in the appellants bank account maintained in MCB. Further that appellant being a distributor of M/s Unilever Pakistan Ltd has declared commission income at Rs.l.870.940 against sales of Rs.4,462,428 (Rs. 4 Million) made on behalf of the principal, leaving behind a differential amount of unexplained bank credit entries at Rs.73,002,843 (Rs. 73 Million). Therefore the assessing officer issued show cause notice u/s 122(9) of the Ordinance wherein appellant was confronted on unexplained peak credit entries amount of Rs.73,002,843 (Rs 73 Million) and proposed/intended addition of the same in terms of section 111(1)(a) of the Ordinance. In response the AR of the appellant submitted that he had declared undisclosed income at Rs. 1,000,000 (Rs 1 Million) u/s 5 of the Voluntary declaration of domestic assets Act 2018 (Tax Amnesty Scheme 2018) and also paid tax at Rs.50,000. He further disclosed that income under the Tax Amnesty Scheme 2018 covered the amount pointed out by the assessing officer in the show cause notice therefore requested him to drop proceedings. The assessing officer however, rejected the stance on the ground that amount of Rs. 1,000,000 disclosed under the tax amnesty scheme was too meager to explain the sources of bank credit entries amounting to Rs.73,002,843. Hence, the department passed impugned order on account of unexplained credit entries of Rs.73,002,843 that was added to the appellants income u/S 111(1)(a) of the Ordinance. ARGUMENTS Certain fundamental matters remain unresolved and the authorities…

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