Law: Income Tax Ordinance, 2001

Section: 21,40,67,122(5A),122(9),21(e),21(f)

Law: Income Tax Rules, 2002

Section: 13

Law: Corporate Assets Tax

Section: 122

(a) Income Tax Ordinance (XLIX of 2001)--- ----S.122(5A)---Amendment of assessment---Fishing enquiries--Issuance of three repeated notices---Validity---Taxation Officer through second notice had claimed to have elaborately highlighted errors that caused prejudice to the Revenue---Second notice was an admission on the part of Taxation Officer that he could not point out any error in his first notice under S.122(9) to invoke S.122(5A) of the Income Tax Ordinance, 2001 and it had also not been mentioned as to under what legal provision the second notice was issued---Third notice under S.122(9) of the Income Tax Ordinance, 2001 was again sent to the taxpayer which showed that first two notices were deficient on legal grounds---Taxation Officer had repeatedly issued notices on the same issues which showed that he was not sure on the issues which were confronted to the assessee through first notice---Such type of fishy inquiries could not be approved to make basis for invocation of S.122(5A) of the Income Tax Ordinance, 2001 as such an approach, if allowed, would result in gross misuse of provision of law---Mere suspicion could not be allowed to be a basis to invoke S.122(5A) of the Income Tax Ordinance, 2001. (b) Income Tax Ordinance (XLIX of 2001)--- ----S.21(f) & (e)---Deduction not allowed---Payment of gratuity---Ascertained liability---Disallowance of deduction on the ground that expense was to be allowed when it was incurred and not when paid---Validity---Taxpayer had actually paid the gratuity during the year and had deducted tax thereon fulfilling the condition of S.21(f) of the Income Tax Ordinance, 2001---Claim of expense on account of gratuity paid was an admissible expense being a lawful business expense---Argument of the Department that being an ascertained liability the gratuity expense was to. be allowed when it was incurred and not when Paid was repelled as the provision of gratuity was admissible expenditure for the reason that it pertained to ascertained liability---Department could not be allowed to use a…