Law:

Section:

Income-tax Act (XI of 19221-------S.13, first proviso---Constitution of Pakistan (1973), Art.185(3)---Assessment made by Income-tax Officer under first proviso to S.13 of the Act was upheld by Income-tax Appellate Tribunal---High Court in reference, however, differed with the view taken by the Income-tax forums---Leave to appeal---Department's contention was that assessment made by Income-tax Officer was not arbitrary because it had been made after a careful scrutiny of accounts submitted in accordance with legal requirements, and that the view taken by the High Court was contrary to the view taken by Supreme Court in Miss Assi's case reported as P L D 1979 S C 949 and the s of Privy Council reported as A I R 1937 P C 133---Leave to appeal was granted to consider contentions raised by Department. Miss Assi v. Income-tax Appellate Tribunal P L D 1979 S C 949 and Commissioner of Income-tax, United and Central Provinces v. Badridas Ramrai, Shop. Akola, Owner Laxminarayan Badridas Shrawagi A I R 1937 P C 133 rel. ORDER DORAB PATEL, J.---The dispute in this petition for leave relates to the accounts submitted by the respondent for the assessment year 1966-67. The Income-tax Officer scrutinised the accounts submitted in the light of the purchases of raw material by the respondent, the ratio of profits shown by the respondent in earlier years, etc., and on what appears to be a careful examination of the material he reached the conclusion that the accounts submitted were not fit to be accepted, therefore, he added Rs.50,000 to the respondent's trading account by his order dated 30-6-1971. The respondent challenged this order in a direct appeal before the Income-tax Appellate Tribunal but as the appeal was dismissed it filed an application under section 66(1) of the Income-tax Act in the Lahore High Court in which it raised two questions. The first question was whether the assessment made by the Income-tax Officer was "violative of the first proviso to section 13 of the Income-tax Act 1922 for want of…

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