Law: Income Tax Ordinance, 2001

Section: 122,29(1)(a)(i),122(5A),20(1)

[Income Tax Ordinance (XLIX of 2001)].....Section 122(5A)---Amendment of assessment---Show-cause notice---Issuance of Show-cause notice was on presumption as Revising Authority out-rightly taken the Income Tax returns/statements documents as erroneous as well as prejudicial to the interest of revenue and confronted issues needing further investigation. (b) Income Tax Ordinance (XLIX of 2001) S. 122(5A)---Amendment of assessment---Erroneous and prejudicial to revenue---Scope---Taking as being erroneous and prejudicial to revenue should not be based on surmises and unsupported assertions. (c) Income Tax Ordinance (XLIX of 2001) S. 122 (5A)---Income Tax Ordinance (XXXI of 1979), S.66A---Amendment of assessment---Holding of inquiries---Contents of the provisions of S.122(5A) of the Income Tax Ordinance, 2001 did not empower the holding of inquiries, which was unlike the provisions of S.66A of the repealed Income Tax Ordinance, 1979. (d) Income Tax Ordinance (XLIX of 2001) Ss. 29(1)(a)(i) & 122(5A)---Bad debts---Written off---Deletion of addition---Advance was made for down stream integration of business---On failure of that company to run project, some amount was recovered and balance irrecoverable amount was written off by the assessee---Amending Authority did not challenge the sustaining of losses by the said company and also the short/lesser amount recovered by the assessee---Show-cause notice was confined to the sole ground that the amount written off was previously not included in the taxpayer's income from business chargeable to tax---Amending Authority did not advert to the pleadings of the taxpayer wherein it was specifically explained that assessee had incurred trading loss which was rightly claimed as expenditure against the profit chargeable to tax under the law---Instead of appreciating explanations, Amending Authority enlarged the allegations and tried to make out a new case regarding the purpose of the advance and its justification---Such observations could not be justified on unsupported assertions---Order of adjudication, based on grounds which were not mentioned in the show-cause notice, was void---Department had totally failed to dislodge the…

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