Law: Income Tax Ordinance, 1979

Section: 62,23(1)(vii)

(a) Income Tax Ordinance (XXXI of 1979)----S.62---Assessment on production of accounts etc.---Addition was made without issuing notice under S.62 of the Income Tax Ordinance, 1979 which was a mandatory condition---First Appellate Authority set aside and remanded back the matter after holding that mandatory provision of law had been violated and add backs were not sustainable in law---Validity---Since Assessing Officer had not issued notice under S.62 of the Income Tax Ordinance, 1979 which was mandatory and condition precedent for making additions in the total income of an assessee, the correct legal course for the First Appellate Authority was to delete the additions instead of setting it aside---Addition was deleted by the Appellate Tribunal. 2005 PTD (Trib) 534 rel. (b) Income Tax Ordinance (XXXI of 1979)--- ----S.23(1)(vii)---Deduction---Financial charges---Disallowance of financial charges on the ground that since there was introduction of fresh capital there appears to be no justification for the claim---Validity---Action of disallowance of financial charges for the reasons assigned by the Assessing Officer was not sustainable in law and the same was deleted. 1992 PLD 954 and 1987 PTD 149 rel. ORDER S. HASAN IMAM (JUDICIAL MEMBER).---This is an appeal filed by the Appellant/assessee inter alia challenging the order of learned Commissioner of Income Tax (Appeals) Zone I. Karachi for the assessment years 2002-03. 2. The brief facts of the case are that for the year under appeal, following expenses were added in the total income of the appellant:--- Financial Charges Rs. 1,825,176 Travelling and Conveyance Rs. 73,292 Repair and Maintenance Rs. 39,547 Communication Expenses Rs. 18,500 Entertainment Expenses Rs. 18,302 Other Expenses Rs. 6,016 Computer Expenses Rs. 28,675 Utilities Expenses Rs. 116,594 3. The Assessing Office made the above additions except Financial Charges, without issuing any notice under section 62 which is a mandatory condition. The Appellant, therefore, assailed the additions before the learned Commissioner of Income Tax (Appeal) No. I. Karachi, who after considering the arguments held that mandatory provisions of law have been violated…

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