Law: Income Tax Ordinance, 1979

Section: 32

Income-tax Ordinance (XXXI of 1979)---S. 32---Assessee, carrying a cold storage business--Year under assessment was distinguishable from assessee's past history--Major expenses of assessee were verifiable --Assessee, at the I.T.O's asking produced parties and furnished affidavits to establish the number of bags stored alongwith storage charges per bag in the year under assessment --Assessee had furnished evidence to establish his charging a fixed rate per bag for storage during the relevant year giving names and addresses of all the parties--Income-tax Officer discarded assessee's version, estimated his receipts and applied higher G.P. rate--Income-tax Officer failed to bring out any material on record to establish the attributed capacity of the assessee's cold storage and resorted only to a guesswork--Income-tax Officer could not make out any case for refixing the receipts--No such point having arisen in the preceding years no finding was recorded by the I.T.O.--Income-tax Officer, held, had no justification to reject trading results of the assessee, discard the assessee's declared capacity of cold storage and disbelieve the rate per bag as declared by the assessee in circumstances. ORDER These are two cross-appeals filed at the instance of an assessee and the Department against the order of the learned A.A.C. of Income-tax, Range-A, Multan dated 21-11-1987. 2. The facts of the case are that the assessee, a registered firm, derived income from running a cold storage having capacity of 17,000 bags: For the year under review the assessee filed return declaring net income at Rs.60,000 for storing 16,866 bags @ Rs.50 per bag., Weight of each bag was stated to be at 2 3/4 maunds or 110 kilos. The assessee had shown G.P: rate of 33% on declared receipts at Rs.8,43,212. The assessee had also furnished list of 65 parties whose goods were stored in the cold storage in this year. The I.T.O. discarded the assessee's version holding that declared G.P. rate was low and capacity of the assessee's cold storage appeared to be of 25,000 bags as against declared version of 17,000 bags. A comparison of the assessee's results of the preceding years was also made rate of 33% was…

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