Law: Income Tax Ordinance, 1979

Section: 13(1)(d),13(1)(b),136

(a) Income Tax Ordinance (XXXI of 1979) S.13(1)(d) Unexplained investment Addition Scope If the source of investment was not explained, only then the provisions of S.13(1)(d) of Income Tax Ordinance, 1979 could come into play. (b) Income Tax Ordinance (XXXI of 1979) Ss.13(1)(b)(d) & 136 Appeal Unexplained investment of assessee, a company Addition Allegation against the assessee company was that the return filed, showed nil while in the same assessment year, the assessee had purchased a valuable property Notice was issued to the assessee to explain the investment Assessee made it clear that the investment was made by the directors of the company Authorities instead of confronting the directors with the statement of the assessee, included the investment so made in the income of the assessee for that period Validity Addition under S.13(1)(b) of Income Tax Ordinance, 1979, was not possible at the hands of the assesses Addition of such kind was possible only after the directors, of the assessee company had either controverted the claim of the company to have contributed the advance payment or were otherwise found to be lacking in possession of sufficient funds to make the payment Where a person or a company was not in any business and had no assets to justify the investment, then before making of addition of the kind, the Assessing Officer must have pointed out and identified the source wherefrom the funds emanated and to follow the source where it was possible Addition in the hands of the assessee company, held, was illegal and unjustified Addition made by the Authorities was deleted and appeal was allowed in circumstances. JUDGMENT NASIM SIKANDAR, J. This further appeal under, section 136 of the late Income Tax Ordinance, 1979 impugns an order, dated 27 4 1998 recorded by a Division Bench of the Income Tax Appellate Tribunal, Lahore. 2. The appellant assessee is a company limited by shares incorporated at Lahore on 27 10 1992. For the assessment year 1994 95 in response to a notice under section 56 of the late Income Tax Ordinance, 1979 the assessee returned nil income on the ground of having done no business in the period relevant to the assessment year 1994…

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