| Case ID |
14f7dff6-9c2d-49b9-b95d-365fbf18065f |
| Body |
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| Case Number |
Income-tax Reference No. 188 of 1974 |
| Decision Date |
Sep 30, 1984 |
| Hearing Date |
Sep 05, 1984 |
| Decision |
The High Court ruled that the Income Tax Appellate Tribunal erred in affirming the assessment made by the Income Tax Officer under the proviso to section 13 of the Income Tax Act, 1922. The court emphasized that merely low gross profits or variations in yields were not sufficient grounds for rejecting the accounts maintained by the assessee. The assessee had regularly employed a method of accounting, and it was the responsibility of the Income Tax authorities to provide sufficient material to justify rejecting that method. The court concluded that the Income Tax Officer's decision was arbitrary and lacked a judicial basis, ultimately ruling in favor of the assessee. |
| Summary |
This case revolves around the assessment of Messrs Pakistan Oil Mills Ltd. under the Income Tax Act of 1922, where the Income Tax Officer rejected the company's maintained accounts based on perceived low yields of oil. The case highlights the importance of maintaining proper accounting methods and the obligations of tax authorities to provide clear justifications for rejecting such accounts. The High Court's decision underscores the principle that low gross profits alone cannot lead to the rejection of a taxpayer's accounts, stressing that the burden of proof lies with the tax authorities to demonstrate the inadequacy of the accounting method employed by the taxpayer. The ruling has significant implications for future tax assessments, reinforcing the need for sound reasoning and proper evidence in tax-related disputes. |
| Court |
Sindh High Court
|
| Entities Involved |
Not available
|
| Judges |
AJMAL MIAN,
HYDER ALI PIRZADA
|
| Lawyers |
Iqbal Naeem Pasha,
Shaikh Haider
|
| Petitioners |
Messrs PAKISTAN OIL MILLS Ltd., HYDERABAD
|
| Respondents |
THE COMMISSIONER OF Income Tax (WEST), KARACHI
|
| Citations |
1985 SLD 144,
1985 PTD 320
|
| Other Citations |
C.I.T. v. Sarangpur Cotton Manufacturing Company Ltd. A I R 1938 P.C. 1,
Commissioner of Income tax v. S. Zoraster & Co. 1982 P T I 339,
Nazir & Co. v. C.I.T. 1982 P T D 185,
Messrs Ibrahim Brothers v. C. I. T. Karachi 1979 P T D 1,
Messers Coronet Paints & Chemicals Ltd. 1984 P T D 355
|
| Laws Involved |
Income Tax Act, 1922,
Income Tax Ordinance, 1979
|
| Sections |
13,
32
|