Law: Income Tax Act, 1922

Section: 13

Law: Income Tax Ordinance, 1979

Section: 32

(a) Income tax Act (XI of 1922)---S.13, proviso (1) Interpretation of Rejection of account version of assessee by Department Oil yield and gross profits disclosed by assessee's book result low as compared with previous years Held, this by itself was not enough to reject system of accounts maintained by assessee Assessee having a method of accounting which it had been regularly employing in past, it was for Department to consider whether there was sufficient material for rejecting that method of accounting and computing profits on other basis and not for assessee to prove that his method of accounting ought not be rejected. Commissioner of Income tax v. S. Zoraster & Co. 1982 P T I 339; Nazir & Co. v. C.I.T. 1982 P T D 185 and Messrs Ibrahim Brothers v . C. I. T. Karachi 1979 P T D 1 distinguished. (b) Income tax Act (XI of 1922) S.13 Income tax Ordinance (XXXI of 1979), S.32 Rejection of accounts Section 13 of Act (and S.32 of Ordinance) which compels computation of assessee's income on basis of his accounts if regularly maintained, allows him choice of their pattern provided system selected properly reflects income Statutes do not authorise their exclusion which is permissible only if they do not assist such computations merely for reason that do not conform to a particular pattern. C.I.T. v. Sarangpur Cotton Manufacturing Company Ltd A I R 1938 P.C. 1 and Messrs Coronet Paints and Chemicals Ltd. 1984 P T D 355 rel. JUDGMENT SYED HAIDER ALI PIRZADA, J. The assessee Company, Messrs Pakistan Oil Mills Ltd., in the year ending August 31, 1968, relevant to assessment year 1969 70 disclosed gross profit rate of 3.8% on sales aggregating to Rs.18,78,415 in the "Crushing Section". During the preceding year the assessee had shown output of oil and Khal at 13.8% and 84% respectively. The output of wastage in the preceding year was 2.4% as against 3% for the assessment year under consideration. The Income tax Officer considered that, the yield of oil shown by the assessee Company was on the low side and, therefore, called upon the assessee Company to explain reasons for lowness in the yield of oil. The explanation of the assessee Company was that the main reason…

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