TRIB Mehboob Hussain concealment of sales, Section 111, 122 of Income Tax Ordinance, 2001

TRIB Mehboob Hussain concealment of sales, Section 111, 122 of Income Tax Ordinance, 2001

In a case involving taxpayer Mehboob Hussain, the taxpayer supplied sugarcane to a sugar mill and received sugar in consideration instead of cash. This transaction was not declared in the taxpayer's return of income. The tax department treated the sale of sugar as concealment and added it to the taxpayer's income without allowing for the cost of sales.

The Hon'ble Court held that Section 111 is not punitive in nature. Therefore, the lack of verifiable credit given to the appellant was deemed highly misconceived and misdirected. The Assessing Officer (AO) had wrongly added the total amount of the sugar sale to the taxpayer's income without subtracting the purchase price from the sales price. This purchase price should have been considered when making additions under Section 111 of the Ordinance 2001.

The case has been remanded back to the AO for a fresh decision, which must be made strictly in accordance with the law laid down by the Hon'ble Supreme Court in case 2023 SCMR 534.

Source: http://imranghazi.com/mtba/updates/direct/caselaws/default.aspx