Law: Income Tax Ordinance, 1979

Section: 62,62(1)

Income Tax Ordinance (XXXI of 1979)---S. 62(1)---Assessment on production of accounts, evidence etc.---Profit and loss expenses---Disallowance by using- stock phrases and in generalized 'terms that expenses involved were personal in nature and unverifiable--Validity---If some expenses were unverifiable and un­vouched the Assessing Officer should keep in his mind the volume and nature of the business and proportion of the expenses claimed by the assessee---Taxation Officer failed to find out any item in which personal element of expenditure was involved---Matter was an account case and the assessee was maintaining day to day account books---Audited books of accounts were produced before the Assessing Officer, consisting of all the details, explanations, vouchers and ledgers of the respective heads---Law cast a legal obligation upon the Assessing Officer before disallowing expenses where books of accounts were being produced---Taxation Officer, in terms of proviso to subsection (1) of S.62 of the Income Tax Ordinance, 1979 should have confronted the assessee with the defects found in the books of accounts; it was a mandatory provision which, was required to be followed---Mandatory notice under S.62(1) of the Income Tax Ordinance, 1979 was prerequisite condition which was added in income tax law just enabling taxpayer to know the allegation against him and give a proper reply and detail thereof so that the taxpayer be saved from the arbitrary action of the Assessing Officer---Assessing Officer having failed to do so he had no legal authority to make any disallowance---Such disallowances were ab initio void and illegal which were rightly deleted by the First Appellate Authority. 1991 PTD (Trib.) 531; 1992 PTD (Trib.) 1176; .ITA No. 176/KB of 1998-99; ITA No. 2519/KB of 1992-93 in I.T.A. No. 314/KB of 1981-82; 1989 PTD (Trib.) 39 and I.T.A. No. 922, 923, 1595/KB/84-85 ref. (b) Income Tax Ordinance (XXXI of 1979)--- ----S. 62(1)---Assessment on production accounts, evidence etc.---Profit and loss expenses---Principles/position regarding deduction of expenditure set out by the Tribunal and High Courts recorded. (c) Income Tax Ordinance (XXXI of 1979)--- ----S.…

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