Law: Income Tax Ordinance, 2001

Section: 120,122,123,39,131

[Income Tax Ordinance (XLIX of 2001)]......Sections 120, 122 & 123---F.B.R. Circular No. 4(78)ITP/2009, dated 16-1-2009---Assessment---Powers of Assessing Officer/Commissioner to audit case---Representative for the taxpayer had contended that Assessing Officer had no jurisdiction to audit the case in view of F. B. R's. decision to drop audit proceedings in all cases selected for Tax Year 2008 which was properly advertised in the press and circulated through circular dated 16-1-2009---Validity---Record had shown that the impugned case was decided earlier than the issuance of said Circular---Such case would lie outside the purview of the Circular---Such ground raised by the taxpayer in appeal therefore, failed---Assessment proceedings, in circumstances, were legally correct and did not suffer from any procedural infirmity. (b) Income Tax Ordinance (XLIX of 2001) Ss. 39 & 131--Direct, administrative and general expenses---Issues with regard to direct, administrative and general expenses, related to add-back of direct expenses which had been agitated by taxpayer as well as the department---Commissioner (Appeals) in his order had observed that add-back 30% each out of direct expenses, administrative and general expenses, was not the case of taxpayer and that non-business involving personal element or unverifiability of the claim could be ruled out totally---Action of the officer Inland Revenue was upheld in principle; however the disallowances out of direct expenses would not be restricted under the head miscellaneous expenses at 25%--Such treatment meted out was a bit harsh---Directions of the Commissioner (Appeals) were not in consonance with the factual position of the case---Expenses were restricted accordingly in order to be rational. (c) Income Tax Ordinance (XLIX of 2001) Ss. 122 & 131---Amendment of assessment---Department had objected that Commissioner (Appeals) was not justified to hold that Taxation Officer concluded the amendment proceeding in haste---Record had revealed that sufficient opportunities were provided to the taxpayer---Commissioner (Appeals) was not justified to entertain the material evidence/reconciliation of credit entries…