Law: Income Tax Ordinance, 2001

Section: 111(1)(c),114(1),120,120(1)(b),122,122(1 ),122(5),122(9)

Law: Income Tax Ordinance, 1979

Section: 65,66A

O R D E R M. M. AKRAM (Judicial Member): The titled appeal has been filed by the Appellant/taxpayer an Order dated 01.10.2021 passed by the learned Commissioner Inland Revenue (Appeals), RTO, Sialkot for the Tax Year 2018 on the grounds as set forth in the memo of appeal. Subsequently, the appellant also filed the additional grounds. 2. The facts, in brief, are that the appellant taxpayer, in this case, is an individual who filed a return of income for the tax year 2018, declaring a net income of Rs.475,00/-. The return so filed by the appellant was treated to be an assessment order under section 120(1)(b) of the Income Tax Ordinance, 2001 (“the Ordinance”). Later on, definite information was received that the appellant had made purchases from M/s Shangrilla Foods. In consequence thereof, to ascertain the correct income and tax liability, an amendment of assessment was found indispensable in the case under consideration. Accordingly, a show cause notice under section 122(9) of the Ordinance was issued on 06.01.2021 for compliance on 21.01.2021, Which is reproduced as under: - "You have e-filed your return of income for the tax year 2018 declaring the following results. Other Revenue Rs.727,374/- Expenses Rs.252,374/- Accounting Profit Rs.475,000/- The said return constitutes an assessment order in terms of Section 120 of the Ordinance. The assessing officer, however, possesses “definite information” which shows that the income for the year under consideration has escaped assessment as envisaged in Clause (i) of sub-section (5) of Section 122 of the Ordinance. The same, therefore, warrant amendment u/s 122(1) of the Ordinance. As per information available with this office, the taxpayer has made purchases from M/S SHANGRILA FOODS for the tax year 2018. Keeping in view, the facts and circumstances of the case, the assessing officer is, therefore, convinced that the taxpayer does not possess the funds to make the expenditure of Rs.6,287,482/-. Hence, the taxpayer owned an explanation of why an amount of Rs.6,287,482/- may not be added towards your income as envisaged in Section 111(1)(c) of the Ordinance for the tax year under consideration and total income may be…

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