Law: Income Tax Ordinance, 2001

Section: 131,184,205

Income Tax Ordinance (XLIX of 2001)----Ss.184, 205 & 131---Making additions on account of unexplained business capital gain---Imposition of penalty---Appeal to Appellate Tribunal---Appellant/assessee filed returns showing income of Rs.108,000, which were assessed by the Taxation Officer at Rs.3,288,100 by making addition on account of unexplained business capital gain on sale of shop---Taxation Officer also made additions on account of construction on plot and on account of deemed rental income---On filing appeal by the assessee, Commissioner Income Tax (Appeal) set aside assessment made by the Taxation Officer, with specific direction to the Taxation Officer to verify from the purchaser of shop---Re-assessment was framed after original order being set aside without following instructions given by the First Appellate Authority while setting aside the assessment regarding purchase of shop---Taxation Officer had neither exhausted the means to verify the actual amount of sale nor the date of transaction---Transaction of the property had taken place in financial year 1999-2000, capital gain of which was shown in wealth reconciliation statement in the year 2000-2001, but the Taxation Officer had added gain in the assessment year 2001-2002---Main activity of the assessee was of selling cloth and he was not involved in trading activity of selling and purchasing of shop or property---Commissioner Income Tax (Appeals), had upheld the treatment meted out by the Taxation Officer without any reason---No justification existed for making the addition, holding that the solitary transaction was adventure in the nature of trade---Addition Made in that respect, was deleted, in circumstances---Regarding the addition on account of construction on plot, Taxation Officer had made addition without any basis, as the plot was acquired in 1996 by the assessee and to protect the same from encroachment and the non-utilization fee, boundary wall and temporary room was built in the year 1997; but the Taxation Officer had assumed the construction on said plot in the year 2000; and without any basis had estimated the cost of construction at Rs.400,000, without bringing any material…

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