Law: Income Tax Ordinance, 2001

Section: 111,111(1),120(1),122(5A),122(9)

Income Tax Ordinance (XLIX of 2001)---S. 111--Unexplained income or assets--Separate notice, non-issuance of--Effect--Show cause notice under S. 122(9) read with S. 122(5A) of Income Tax Ordinance, 2001, was issued for wrongly claiming exemption to agricultural income tax and for non-explanation of accretion in wealth--Contention of appellant was that no separate notice under S. 111 of Income Tax Ordinance, 2001, was issued-- Validity--Non-issuance of separate notice under S. 111 had caused prejudice to the taxpayer as substantial compliance of the provision of law was not made--Law had mandated issuance of separate notice/explanation within the contemplation of S. 111, therefore, the same could not be made redundant--Orders of authorities below were annulled--Appeals of the taxpayer were allowed. 2012 PTD 964 ref. Commissioner Inland Revenue v. Faqir Hussain and another 2019 PTD 1828 fol. ORDER: DR. SHAHID SADDIQ, ACCOUNTANT MEMBER:---.--- Titled appeals have been preferred at the instance of Appellant / taxpayer directed against the Separate Appellate Orders Nos. 1234 and 1235 even dated 30-12-2020, passed by the learned CIR(A), Faisalabad, pertaining to tax years 2017 and 2018. 2. Brief facts of the case are that the taxpayer filed his returns of income declaring FTR of Rs.5,584,583/- and Rs.5,625,227/- and agricultural income of Rs. 1,200,000/- and Rs.2,450,000/- respectively for tax years 2017 and 2018. The declared results constituted deemed assessment order under section 120(1) of the Income Tax Ordinance, 2001. The AGJR examined the assessment record and found that the taxpayer declared agricultural incomes for years under consideration and claimed as exempt from tax. As per proviso to section 111(1) of the Income Tax Ordinance, 2001, the exemption to the agricultural income is available only to the extent the agricultural income tax is paid to the relevant authorities and the proof regarding the payment is provided. No proof of agriculture income tax paid to the relevant provincial authorities was available on record which rendered the deemed assessment erroneous in so far as prejudicial to the revenue. Similarly, commission on petroleum products has…

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