ORDER SHAFIQ MAHMOOD, ACCOUNTANT MEMBER.- The appellant is an individual, who for the year under appeal 1992-93 called a return declaring nil income. The same not substantiated by any evidence or proof. The Department conducted spot enquiries, confronted the appellant with the same, issued notices under sections 62 and 58 of the Income Tax Ordinance, 1979 wherein the appellant was asked to explain not only the reasons for declaration of nil income but also the proposal for estimation of income on the following lines:- Income from brokerage. Estimated sales of gray cloth Rs. 60,000 Rs. 10,00,000/- G.P. @ 6% Rs. 60,000 Total G.P. Rs. 120,000 Less: Expenses on estimate. Rs. 20,000 Net income Rs. 100,000
2. The assessee reply was that he did mot conduct any business during the year under revised as his arm had been fractured. The explanation was not accepted and assessment was framed on the basis of estimate communicated vide notice issued u/s. 62.
3. In appeal before first forum, the learned CIT(A) found that the assessee did not comply with the notice issued inspite of proper service. The appeal was, therefore, disposed of ex parte based on the merit of the case. The treatment meted out by the assessing officer was confirmed as, according to the CIT(A), "there is no evidence to contradict the findings of the assessing officer".
4. In appeal before us the learned counsel of the appellant was of the view that reasonable opportunity had been denied at the first forum and the assessed income was neither based on "sound footings or goods reasons". Objection was also taken to the basis of assessment ie. The Inspector's report which was said to be without any substantive material, evidence and proof.
5. The learned D.R. Supported the action of the authorities below and was of the opinion that the assessee had no way been able to substantiate his own submission that no business been conducted and as such nil income was derived during the year under appeal.
6. Both the parties have been heard and the issues raised considered and examined with reference to the facts on record.
7. The appellant has not been able to justify the noncompliance to the notice issued by the CIT(A); his findings are explicit and clear. Notice for hearing had been served properly upon the appellant.
The opportunity afforded to the assessee for redress of grievance before the first forum have not been availed of. No cause for grievance or interference on this issue arises.
8. The plea that no business was conducted during the year under appeal and subsequently no income arose has not been substantiated or proved at any stage. The reason given that the assessee has fractured his arm which did not allow him to do any business. This plea, in the first instances, is not supported by any evidence. Secondly, even if an arm is fractured the incapacitation or hindrance in work is not to that extent which would continuously confine a person to bed for a full year. Thirdly, the appellant's source of income is not from any physical work or labour where a fractured arm hampers him from earning his livelihood. The appellant's claim that he did not carry out any business and had discontinued as a Director of Tanzed Industries (Pvt.)
Ltd., Faisalabad (from wherein he was deriving salary) is a response after the Department had required him to substantiate his plea that there was no business. Prior to it there was no information/intimation with the Department. The appellant's involvement in cloth business has been verified from a spot inquiry contents of which were brought to his knowledge through a notice u/s. 62.
9. The assessee had a capital of Rs. 2,02,790/- as on 30.6.1992. Out of this he is said to have spent Rs.24,000/- on his house-hold expenses for the year under appeal (1992-93). Subsequently, the remaining capital was invested in M/s. Al- Noor Fabrics (Pvt.) Limited, Faisalabad from wherein he was in receipt of interest income; accordingly declared for the assessment year 1993-94 and a statement u/s. 143-B filed.
10. From the above going narration we are of the view and opinion that the appellant has not been able to substantiate the submission that there was no income during the year under appeal.
Similarly, expenditure of Rs. 24,000/- for the full year specially when the assessee clams to have been under medical treatment is insufficient. Qn the other hand the basis of estimate i. e. The Inspector's report is not supported by sufficient evidence and proof. Keeping in view the capital available to the assessee during the year under appeal and income assessed at Rs. 46,000/- in 1991-92 we would deem it reasonable to reduce the income to Rs. 50,000/-.
11. The appeal succeeds to the extent indicated above.z