Law: Income Tax Ordinance, 1979

Section: 66A,136,32

Law: Income Tax Act, 1961

Section: 145

(a) Income Tax Ordinance (XXXI of 1979)--- ---S.32---Accounting, system of---Cash system and mercantile system---Distinction. According to the cash system, the income of an assessee is calculated on the basis of the amount actually received from debtors/ customers and the amount actually paid by way of disbursement during a particular assessment year. In the mercantile system, profits are calculated on the basis of accrual of debts and rights to receive irrespective of the date when the amounts are actually received or paid. Dhakeswar Persad Narain Singh v. Commissioner of Income Tax 1936 4 ITR 72 rel. (b) Income Tax Ordinance (XXXI of 1979)--- ---S. 136---Findings of fact by Appellate Tribunal---Validity---Such findings would be immune from interference by High Court. (c) Income Tax Ordinance (XXXI of 1979)--- ----Ss. 32 & 136---Finding of Appellate Tribunal regarding maintenance of two systems of accounting by assessee i.e. cash as well as mercantile system---Validity---Question as to whether on basis of such admitted fact, assessee was legally justified in applying cash system to some of its account, while keeping its normal accounts under mercantile system---such question was a pure question of law, which was not immune from interference under S.136 of Income Tax Ordinance, 1979. (d) Income Tax Ordinance (XXXI of 1979)--- ---Ss. 32 & 66-A---Assessee maintaining two systems of accounting simultaneously---Reopening of assessment by Inspecting Additional Commissioner---Validity---Where assessment. was made on a basis, which was wrong in law and tax liability of assessee could be higher than what was determined by Assessing Officer, then Commissioner could always reopen the assessment---Revenue, in the present case found that assessee was not legally entitled to benefit of two systems of accounting and could be made liable to pay tax on interest credited to suspense account on accrual basis---Power to reopen assessment in such circumstances could not be denied to the Commissioner. (e) Income Tax Ordinance (XXXI of 1979)--- ----S.32---Accounting, system of---Right of assessee to keep accounts according to any system they pleased---Assessee under law…

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