Law: Income Tax Ordinance, 1979

Section: 62,32(3)

Income Tax Ordinance (XXXI of 1979)----Ss.62 & 32(3)---Assessment---Assessment on production of accounts evidence etc. ---Rejection of account---Estimation of income ---Principles--¬Case was proceeded under normal law---Assessing Officer, however, rejecting assessee version enhanced sales on the basis of Inspectors report which was upheld by the First Appellate Authority as reasonable---No inventory was made nor any other details of the business of the assessee was brought home---Assessing Officer was required to support his estimation and substitution of the returned version by some tangible evidence---No such exercise was undertaken---Mere observation that estimation of sales as made by Assessing Officer was reasonable hardly meant anything---Estimation of sales was, therefore, reduced by Income-tax Appellate Tribunal, in circumstances. Daud Corporation v. C.I.T. 1988 PTD 177 and Mangna Industries v. R.C.I.T., Rawalpindi 1980 PTD 35 ref. ORDER The assessee, an individual, deriving income from sale of cloth in Ichhra Bazar, Lahore returned an income of Rs.45,000. The sales were disclosed at Rs.950,000 and a rate of 14.95%. The return so filed was processed under normal law on account of short payment of tax. After plucking the return the Assessing Officer for various reasons detailed in the body of the assessment order, dated 24-4-1997, proceeded to estimate sales at Rs.24 lac and subjected them to a rate of 15%. Some profit and loss account disallowances were also made to frame an assessment for the year at Rs.272,000. 2. Learned First Appellate Authority. A.A.C., appeal range, Lahore by way of its order, dated 30-4-1998 maintained the estimation of sales after finding it to be reasonable in the circumstances of the case. This has brought the assessee in further appeal before us. 3. Parties have been heard. Learned counsel for the assessee, contends that estimation of sales is not only excessive it is also against the history of the case. He states that in the year 1994-95 the assessee disclosed sales at Rs.8 lac, which were enhanced to Rs.13 lac. The assessment in that year is claimed to have been framed under section 62 of the Ordinance. Also informs…

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