Income Tax Ordinance (XXXIX of 1979)---

----S.13---Additions---Information on basis of which the stocks of assessee were estimated and addition made was the report of Inspector which was received on much later date than the date of assessment---Addition on account of furniture and fixtures was based an estimate without any supporting evidence- -Held, reliance of Income Tax Officer on Inspector's report could not be made the basis of stocks and addition on account of furniture and fixtures without any supporting evidence could not be maintained.

Abdul Tahir for Appellant.

Ali Nasir Bukhari, D.R. for Respondent.

Date of hearing: 7th December, 1993.

ORDER

ABDUL MALIK (ACCOUNTANT MEMBER): --In this case the assessee is a dealer in electronics and also works for Pakistan Railway on contract basis. Original assessment was made under section 59(1) on an income of Rs.18,500. Subsequently, the I.T.O. reopened the assessment on receipt of certain information. The assessment was set aside by the learned CIT(A), Hyderabad vide his order, dated 5-9-1988 and denovo proceedings were taken. The assessee was provided opportunity to present his case and notice under section 13 was also issued to the assessee.

2. During the course of proceedings the- I.T.O. also found bank statement of the assessee of account No.3317 of U.B.L. Mach Bazar, Sukkur which showed a balance of Rs.29,655. The I.T.O. found that the assessee had declared nil cash balance in his wealth statement. The I.T.O. ultimately made addition on account of the following facts:

3. The learned A.R. of the assessee argued that so far as the issue of stocks is concerned a survey was conducted on 19-9-1984 which happened to be the first year of the business of the assessee in which stocks were estimated at Rs.40,000. This information was available to the ITO while making assessment at Rs.18,500, therefore, action of the ITO in estimating stocks at Rs.1,00,000 is not in accordance with law. It has been found that the ITO estimated his stock at Rs.1,00,000 on the basis of report of Inspector and that report is dated 2-3-1986 and of much later date and, therefore, cannot be relevant for assessment year 1985-86. Under these circumstances the reliance of the ITO on Inspector's report cannot be made the basis of stock for 1985-86. The addition, therefore, cannot be maintained.

4. The next addition is on account of furniture and fixtures. This is obviously an estimate without any supporting evidence, therefore, cannot be maintained.

5. Addition on account of undeclared cash balance at bank, however, is well supported and, therefore, it is upheld.

6. The appeal under consideration is disposed of in the manner indicated as above.

M.B.A./17/T.T. Order accordingly,