Appellant above-named, being aggrieved by judgment dates: 11th March, 1976, of the learned Special judge (Customs and Taxation), Karachi, in case No. 14611974 by which he has been convicted under subsection (2) of section 51 of Income-tax Act anti sentenced to suffer R.
1. For three months and to pay a fine of Rs. 5.000 (Five thousand:) or in default to suffer further R. I. For one yea:. Has preferred the above appeal, on the following facts and grounds:-
2. According to prosecution, appellant Hakimullah is a businessman and is Proprietor) of Messrs Home & Hearth. He submitted his Return of Income-tax for the year 1971-72 to the concerned Income-tax Officer, wherein he showed not income of Rs. 14,016. On getting the Return from the appellant for 1971-72, the Assistant Income-tax Officer, `Q' Division, Karachi, issued notice to the appellant, who deputed his Accountant D. W. Rafiq Ahmed with books of accounts and vouchers of sales and purchases for the period of 1-7-1970 to 16-4-1971. During said Assessment Year, appellant had changed his businessfrom furniture to electrical goods and did trading from 17-4-1971 to 30-6- 1971. The Assessing Authority visited shop of the appellant on 5-4-1972, when it was found, that day- to-day books of accounts were not being maintained. The Assistant Income-tax Officer, however, passed an order of assessm ent (Exh. 2-H), under which total income of the appellant was assessed at Rs. 28,588. Subsequently, the Assessing Authority received information, that the appellant had congealed particulars of income. Consequently, shop of the appellant was raided and the books of accounts were seized and brought to the office. After examination of said books, the assessment of the tax for the year 1971-2 in respect of the appellant was raided and the books, the opened and he was given notice under section 34 of the Income-tax Act. It was alleged, that appellant had sold on; Philip Refrigerator on 8-4-1971 forRs. 2,650 and one Suzy Combine on 9-4-197: for Rs. 295, but had not mentioned these sales in the books of accounts, maintained for the purpose of production before Income-tax Department. In this way, the appellant was alleged to have maintained a ledger for production before Income-tax Depart--ment and a stock register for his personal use. A fair cash book was maintained for the Income-tax Department and a rough cash book was maintained for personal use. The appellant showed total purchase in April, 1971 to be of Rs. 40,700 in the stock register and to beof Rs. 25,456 in the ledger. The appellant showed sale of the articles in April, 1971 to be of Rs. 15,700 in stock register and to be of Rs. 9,487 in his ledger. In view of all this, the Asstt. Income-tax Officer (Intelligence), East Zone, Karachi, passed a fresh assessment order on 21- 6-1974, under which income of the appellant was assessed to be Rs. 77,8,80. It was alleged, that there were several cash purchases, for which the appellant had not made any entry to the duplicate cash book, on which the return of income is based. It was alleged that the appellant, in his books of accounts, had suppressed purchases and sales and that he had deliberately concealed the particulars of his income and bad falsely verified the Return of Income, filed for the year 1971-72. Such complaint was lodged against the appellant, after obtaining of approval from tae Commissioner of Income-tax, East Zone, Karachi.
3. Prosecution examined complainant Maqsood A.I Exh.2 and closed side under Exh. 3,
4. In his statement Exh. 4, the appellant stated, that he filed his Return of Income Exh. 2-A for 1971-72, that the Income-tax Department seized his books of accounts Exhs.2/B-1 to 2/B-8. In respect of suppression of purchases, the appellant explained, that there were certain items of goods, which the people kept for sale at his shop and that if those articles were not sold, the same were returned to their respective owners and that such goods were not mentioned in the accounts books.
Appellant alleged, that certain 1Lcome-tax Officer had purchased from him a refrigerator, which belonged to some body else, for Rs. 7,000. That he demanded price of the same from the I T. O., who gave him threats for implication in a false case. In his defence, the appellant examined D. Ws. Rafiq Ahmad Exh. 5 an Abrar Hussain Exh. 6 and closed his side vide Exh. 7.
5. The learned trial Court taking into consideration the evidence adduced before it convicted and sentenced the appellant above-named, as hereinbefore mentioned and consequently the appellant has filed the above appeal,
6. The learned Advocate for the appellant in support of the above appeal submitted as under:-
(a) That this is a case of no evidence at all and consequently the accounts books produced in evidence cannot be made bass of the conviction of the appellant, as the said accounts books could only be used for purposes of corroboration.
1969 SCMR 898, PLD 1967 Dacca 1049, PLD 1968 Kar. 36 and 1969 SCMR 898.
(b) That P. W. Maqsood was not scribe of the accounts books in question and in the absence of such scribe being examined, the accounts books in question cannot be used as substantive evidence.
(c) The offence alleged to have been committed by the appellant could result in penal punishment and as such law laid down in 1971 PTD 457 and 1970 PTD 576 are applicable to the appellant's case and con--sequently the conviction of the appellant cannot be maintained.
(d) That the method of accounting under section 13 of the Income-tax Act has not been prescribed for private individuals doing business and as such the manner in which the appellant maintained the accounts books could not be formed as basis for his conviction.
(e) That non-discloser of certain purchases or sales by itself does not prove concealment of profits, as conception of income under the Income-tax Law is completely different, as it is just possible, that the sales affected by the appellant could be at loss and as such unless prosecution actually establishes concealed profits no offence at all could be made out under the provision of section 51 of the Income-tax Act and in the present case the prosecution has failed to lead any evidence specifying the actual amount of profits alleged to have been concealed by the appellant and as such has failed to establish the alleged offence against the appellant, beyond reasonable doubt.
7. The learned Advocate appearing for the State on the other hand submitted, that in view of the law laid down in the cases reported in 1971 PTD 457 and 1970 PTD 576, and in view of the fact, that the section 34 of the Evidence Act is applicable to the proceedings against the appellant, he does not support the impugned judgment.
8. I have carefully considered the above submissions made by the learned Advocates before me and I have also gone through the R & P of the learned trial Court as well as the impugned judgment and the cases cited by the learned Advocates before me.
9. I find great force in the contentions raised before me by the learned Advocate for the appellant, as in present case prosecution did not produce any evidence to establish the exact alleged income concealed by the appellant and/or inaccurate particulars of such income, so as to attract the provision of section 51(2) of the Income-tax Act, 1922. Mere production of account books and mere absence of certain entries therein, does not establish, that appellant in fact concealed airy income and/or gave inaccurate particulars in respect thereof. This conclusion of mine is fully supported by the cases cited by the learned Advocate for the appellant as well as by the State counsel. It may further be noted, that no method for accounting in respect of the business of appellant has been prescribed under section 13 of the Income-tax Act, 1922, and consequently the method adopted by the appellant, in view of his statement under section 342, Cr. P. C., it was not acceptable to Income Tax officer, the said Officer had authority to compute the income of appellant as it may tic deemed fit by the said Income-tax Officer. I find that income tax Offices rejected appellants account books and proceeded to assess him under section 13, Proviso 1. Mere rejection of account books, in the absence of positive and direct evidence to establish the exact income concealed by the appellant, in my opinion would not attract provisions of section 51(2) of the, income-tax Act, 1922. This view of mine is supported by the cases reported in 1971 PTD 457 and 1970 PTD 576, with which I am in respectful agreement, for reasons given in the said judgments.
10. In view of my above conclusions and observations prosecution ha failed to establish its case against the appellant beyond reasonable doubt.
11. Therefore I allow the above appeal and set aside conviction of the appellant and sentences awarded to him, and acquit him by giving him benefit of doubt and discharge the bail bonds executed by the appellant.