Law: Income Tax Ordinance, 1979

Section: 12(18),136(1)

Income Tax Ordinance (XXXI of 1979)----Ss. 12(18) & 136(1)---C.B.R. Circular No. 3 of 1992, dated 27-1-1992---Bearer cheques---Effect---Assessee claimed to have obtained loan from his company through two bearer cheques---Although genuineness of both the cheques was beyond doubt, yet Assessing Officer declined to give any benefit to the assessee for, the reason that the cheques were not crossed, as required under S.12 (18) of Income Tax Ordinance, 1979---Plea raised by assessee was that subsection (18) had been introduced with a specific purpose which was to check fictitious loans and to discourage introduction of back dated cash credits to meet financial liabilities---Validity---Central Board of Revenue committed no excess of jurisdiction in issuing Circular No. 3 of 1992, dated 27-1-1992---As the assessee had obtained loan through bearer cheques, which fact was verified by the concerned bank, therefore, order passed by Income Tax Appellate Tribunal was set aside---High Court declared that the Assessing Officer could not make addition under S.12(18) of Income Tax Ordinance, 1979, of the amount received by assessee through bearer cheques---Appeal was allowed in circumstances. 1997 PTD (Trib.) 276; Central Insurance Company and others v. C.B.R. and others 1993 PTD 766 and Utman Ghee Industries v. Commissioner of Income Tax 2002 PTD 63 ref. JUDGMENT SYED HAMID ALI SHAH, J.---This is an appeal under section 136(1) of the repealed Income Tax Ordinance, 1979 (hereinafter "the Ordinance") as it stood at the relevant time. Through this appeal the appellant/assessee has sought setting aside of the judgment passed by the Income Tax Appellate Tribunal (ITAT) in I.T.A. No.6453/LB of 1995 dated 15-12-1998 and deletion of the addition made in the income of the appellant of Rs.4,80,000 under section 12(18) of the Ordinance. 2. The appellant, who is director of Messrs Surgeon Surgical (Pvt.) Ltd., filed his Income Tax Return for the assessment year 1992-93 declaring income of Rs.51,716 from salary. During the relevant Income Year the appellant had obtained loan from his company through two bearer cheques for Rs.3,00,000 and Rs.1,80,000 dated 18-4-1992 and 28-4-1992…

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