Law: Income Tax Ordinance, 2001

Section: 122

(a) Income Tax Ordinance (XLIX of 2001)----S. 122(5)---Amendment of assessment---Valuation of plot---Addition---Assessee filed wealth statement along with affidavit of her husband, who was an existing assessee stating that he had sufficient funds to purchase the said plot in her name---Evidence of payment to seller through a pay order was also provided along with agreement to sell stating the facts---After lapse of six and a half months, taxation officer issued notice under S.176 of the Income Tax Ordinance, 2001 to seller for cross verification---Seller stated the higher price of the plot than the taxpayer(purchaser)---However, neither evidence for the said payment received from the taxpayer or an agreement between the seller and the taxpayer was placed on record nor affidavit in support thereof was filed---Validity---No corroborative evidence had been produced to substantiate that the consideration paid by the taxpayer was more than as stated by the seller---There was no nexus between the statement of the seller and the evidence produced by the taxpayer---Addition was held to be illegal and without justification and penalty levied was also deleted being levied in a haste and also without substantiating mens rea which was an integral ingredient for initiation of penalty proceedings. 2006 PTD (Trib.) 2662 and 2005 PTD 1 ref. (b) Income Tax Ordinance (XLIX of 2001)--- ----S. 111(2)---Unexplained income or assets---Date of discovery as envisaged in S.111(2) of the Income Tax Ordinance, 2001 clearly meant that the date on which it was confronted to the person against whom the said information was going to be used---Discovery was made on 4-3-2009 which fell into tax year 2008 and not tax year 2007. I.T.As. Nos.756 and 757/LB/2009 rel. ORDER SYED NADEEM SAQLAIN (JUDICIAL MEMBER).---The instant two appeals pertaining to the tax year 2007 have been filed by the assessee against the order dated 11-6-2009 passed by the learned CIT (Appeals-II), RTO, Lahore. The confirmation of order passed under section 122(5) has been contested to be unjustified. 2. Facts giving rise to the present appeals are that return for the tax year 2007 was filed declaring NIL income which was…

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