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 computed income at higher rate with higher G.P. rate on the grounds of the assessee having rich experience and good business location---First Appellate Authority gave some relief but assessee, still being dissatisfied, went for further appeal--¬Held, the Assessing Officer did not evolve any basis whatsoever to estimate sales and resorted to stock phrases like experience of the assessee and location of his business---While rejecting the declared version, Assessing Officer must support his estimates by cogent reasons failing which his substitution would hardly stand at a better footing against the declared version---Income of assessee was considerably reduced by Tribunal in circumstances. ORDER NASIM SIKANDAR, (JUDICIAL MEMBER).---The assessee in this further appeal for the year 1991-92 is an individual and derives income from sale of cloth on wholesale basis at Azam Cloth Market, Lahore. As against returned business income at Rs.80,250 total income for the year was computed at Rs.2,36,396. The returned results were discarded on account of the rich experience of the assessee as well as the location of his business. The returned sales on estimate basis at Rs.22,50,000 and the gross profit rate at 6% were disbelieved. These were, therefore, estimated at Rs.40,00,000 and subjected to a G. P. rate of 7% to make an addition of Rs.1,45,000 in the business income already declared. The expenses as claimed were allowed to compute total income as said above Before the First Appellate Authority it was stated that previously the assessee was engaged in doing same business as a registered firm with two other partners who withdrew their capital and, therefore, the returned results were quite reasonable keeping in view the left over capital. It was also submitted that the firm returned sales at Rs.42,00,000 in the year 1989-90 and after the dissolution of the firm and parting ways with the assessee other partners declared sales at Rs.19,50,000. According to the assessee this figure ought to have been…

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