Law: Income Tax Ordinance, 1979

Section: 32

Income tax Ordinance (XXXI of 1979)---S.32 Application of net profit rate Justifiability Duty of assessing officer Assessee showing income from carriage contract with P ¬G.P Rate shown at 2.7% All receipts verifiable but expenses claimed unverifiable Assessee showing deductions from bills made by P on account of shortage of stores Such deductions shown as loss by assessee in his profit and loss account Income tax Officer discarding declared version of assessee subjected declared receipts to 8% net profit rate Loss in store deducted by P was also not allowed as same, according to Department, was covered by application of 8% net profit rate Order having been confirmed in appeal, matter came up before Tribunal in second appeal Held: It was not the case of department that assessee had hot sustained loss on account of damage of goods or that P had not deducted amount from bills Losses thus occurring were incidental to assessee's business and as such were allowable even if it was to be presumed that assessee had given a higher bid by visualizing such incidentals Application of net profit rate, held, was not justified as assessee had maintained accounts and claimed profit and loss account expenses separately Assessing Officer was expected to examine each item separately and pass appropriate order in respect thereof Order of assessing officer set aside with direction to pass fresh order. ORDER MUHAMMAD MAZHAR ALI (CHAIRMAN). We propose to decide these three appeals two in respect of assessment orders for the charge years 1979 80 and 1981 82 and the third against the order of penalty under section 91(1) of the Income tax Ordinance, 1979 for 1979 80. 2. We shall first take up the appeal against the assessment order for the charge year 1979 80. The assessee appellant is a registered firm, which, inter alia, derives income from carriage contracts from M/s. Packages Limited. It disclosed receipts from carriage contracts at Rs.21,06,830 with 2.7$ G.P. rate. The Income tax Officer found the receipts to be verifiable and accordingly accepted them. The disclosed G.P. rate, according to assessing officer, was low and the assessee was also unable to furnish periodical comparative…

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