Law: Income Tax Ordinance, 1979

Section: 62,111,116

(a) Income Tax Ordinance (XXXI of 1979)---S.62, Explanation---Additions on the basis of general reasons and stock phrases in stereotyped manner---Validity---Assessee was maintaining proper accounts which were produced before the Assessing Officer at the time of assessment---Assessing Officer without pointing out defects in the accounts had made the additions on the basis of general reasons and stock phrases in stereotyped manner which was disapproved. 2003 PTD (Trib.) 2668; 1997 PTD (Trib) 2190; 1989 PTD (Trib.) 39 and I.T.As. Nos. 4081, 4085 and 4086/LB of 2001 rel. (b) Income-tax--- ----Rejection of accounts---Improper for the Assessing Officer to base his order only on mere guess, there should be something more than suspicion to justify the rejection of the book version of the assessee's business---Account books could not be rejected merely because some of the sales and. expenses were not vouched and were not verifiable. Civil Reference No.28 of 1960 rel. (c) Income-tax--- ----Method of accounting---Assessing Officer should have material to lead him to the conclusion that the method employed was defective or that the case required consideration and a new computation must be made. (1954) 26 ITR p.159 rel. (d) Income-tax--- ----Certificate of Chartered Accountant---Rejection of, in a summary manner---Validity---Certificate issued by the Chartered Accountant should not simply be rejected in a summary manner. 1998 PTD (Trib.) 86Q rel. (e) Income-tax-- ----Rejection of accounts---Method of accounting---"Accounts" must be distinguished from "method of accounting", there may be a regular method of accounting and yet for defects the accounts may be rejected but it does not lead to automatic rejection of system and method of accounting employed by assessee---Occasion may also arise where although the profit shown in the accounts is not true or correct---Assessing Officer can deduce correct figures from the accounts---If the accounts books are found to be false and manipulated with a view to suppress the income and profit and the same cannot be deduced correctly, then the declared version can be rejected. C.I.T, Companies-II Karachi v. Krudd. Sons Limited 1994 SCMR…

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