Law: Income Tax Ordinance, 2001

Section: 120(1),121(1)(d),177,214C,Clause (84) of Part IV of the Second Schedule

INCOME TAX ORDINANCE, 2001 (XLIX OF 2001)--Sections: 120(1), 121(1)(d), 177, 214C & Clause (84) to Part IV of the Second Schedule - Best judgment assessment - Deemed assessment - Audit - Filing of return by the taxpayer - Selection of case for audit by FBR through computer balloting - Case assigned to the DCIR for audit - Show Cause Notice - Nobody bothered to reply several letters - Letter issued and served by the DCIR - Passing of order u/s 121(1)(d) showing income of the taxpayer - Order annulled by the CIR(A) in appeal - Validity - Filing of appeal by the Deptt. before the Appellate Tribunal - FACTS The brief facts of the case as gathered from the available record are that the taxpayer is an Association of Persons (AOP) engaged in the business of Transport Services. Return of income was filed, declaring therein income of Rs.1,514,370 which instantly became an order under the deeming provision of section 120(1) of the Income Tax Ordinance, 2001. The case of the taxpayer was selected for audit by FBR u/s.214C of the Income Tax Ordinance, 2001 through computer balloting. The concerned Commissioner Inland Revenue, Zone-III, RTO-II, Karachi intimated about this to the taxpayer and assigned the case for audit U/s.177 of the Income Tax Ordinance, 2001 to the Deputy Commissioner Inland Revenue, Audit Unit- 06, Zone-III, RTO-II, Karachi. The DCIR issued information documents request thereby asking the taxpayer to file various details for conducting audit, but no one bothered to reply. Several letters were issued and served by the DCIR, but all efforts went in vain. Consequently, the DCIR started proceeding u/s.121(1)(d) of the Income Tax Ordinance, 2001 and he concluded the proceeding which culminated into an order u/s.121(1) (d) of the Income Tax Ordinance, 2001 showing an income of Rs.9,947,175/-. The taxpayer being dissatisfied with the treatment of DCIR, preferred an appeal before Learned CIR(A), who annulled the order. The Appellant/Department being aggrieved with the order of CIR(A), preferred this appeal before us. ARGUMENTS The Learned DR vehemently argued his case and contended that the CIR(A) was not justified in annulling the order of the DCIR. He…

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