Law: Income Tax Ordinance, 1979

Section: 22

Income Tax Ordinance (XXXI of 1979)---S.22 -Income from business ---Assessee, an individual, returned sales and income---Assessing Officer, disbelieving assessee's version and basing his estimation on local enquiry, estimated income at higher rate---First Appellate Authority, disagreeing with the conclusion of Assessing Officer gave relief to the assessee---Department, being aggrieved, went into appeal against the said order---Assessing Officer was not able to bring on record any material to support his action, his estimates were based on conjectures and surmises and as such revenue had not been able to advance plausible reasons for enhancement of income---Assessing Officer disbelieved the assessee's explanation without any cogent reason---Department had failed to establish its case, appeal was dismissed. ORDER SHARIQ MAHMOOD (ACCOUNTANT MEMBER).---In the assessment year 1989-90 return was filed by an individual declaring an income of Rs.39,300. The same had been derived as under:--- Income from business Rs.36,000 Income from property Rs.3,000 Total Rs.39,000 2. The I.T.O.A. observed that the above bore no comparison to the declared and assessed income for the immediately preceding year (shown at Rs.145,000 and agreed at Rs:200,000. He accordingly examined the case, conducted a spot enquiry and confronted the assessee with its contents. It was gathered that the assessee's explanation that the business of assembling-sale of sewing machines had been discontinued and the business premises had been given on lease at Rs.3,000 per month was not tenable. Based on the spot findings that the same business was being carried on at the same premises where the former employees of the assessee was running the shop with the same facilities of telephone, electricity connection etc. it was concluded that this arrangement had been made to "avoid proper incidence of taxation". The explanation of the assessee that he had been forced to discontinue business owing to heart trouble and had shifted to Islamabad was not accepted. The declared results having been discarded assessment was framed at an income of Rs.203,405 wherein income from business was determined at Rs.200,000. Appeal…

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