High Court Division · Special Statutory Jurisdiction
Alltex Industries Limited v Commissioner of Taxes, Large Taxpayers Unit (LTU), Dhaka
Income Tax Reference 258/2015 · Decided 16 July 2026
Alltex Industries Limited, a listed cloth manufacturer for back-to-back export, returned a loss for the 2012-2013 assessment year. The Deputy Commissioner of Taxes disallowed expenses for lack of verifiable evidence, adopted the previous year's gross profit rate to make a trading addition of Tk.2,21,66,155, and dealt with duty drawback of Tk.4,51,46,498 in the computation. The Commissioner of Taxes (Appeals) and the Taxes Appellate Tribunal upheld these items. On the company's reference, the High Court Division found that the duty drawback had been first deducted from and then added back to income, so its effect was neutralised; it was neither taxed as income directly nor integrated with sales, and had been added to cost of goods sold only to find the true gross profit rate. The disallowances and trading addition rested on the company's failure to produce primary evidence, a purely factual matter not amenable to reference. Chartered Accountant certification did not displace that requirement. Both questions were answered against the assessee and the reference failed.
- Q1
Whether the Tribunal was justified in maintaining a trading addition made by applying the past gross profit rate after disallowing unverified expenses in the manufacturing and trading account.
- Q2
Whether the duty drawback received by an exporter was taxed as income under section 28(1)(c) of the Income Tax Ordinance, 1984.
- Certification of accounts by a Chartered Accountant under section 35(3) does not dispense with the statutory requirement to produce primary, verifiable evidence supporting the claims made in them.
- Disallowance of expenses in the manufacturing and trading account for lack of verifiable evidence, and estimation of gross profit on the past record, are purely factual matters not amenable to a reference application.
- Where the assessment first deducted the duty drawback from income and later added it back, its effect was neutralised and it was not taxed as income under section 28(1)(c).
- Adding duty drawback back to cost of goods sold merely to determine the actual gross profit rate for comparison with the past record does not amount to double taxation.
such certification does not dispense with the statutory requirement to produce primary, verifiable evidence in support of the specific financial claims made therein.
In the court’s own words.
Income Tax Reference 258/2015, as published by the Supreme Court of Bangladesh. 16 pages, with paragraph numbers for citing.
1IN THE SUPREME COURT OF BANGLADESH
HIGH COURT DIVISION
2(SPECIAL STATUTORY JURISDICTION) INCOME TAX REFERENCE APPLICATION NO. 258 OF 2015
In the matter of:
An application under section 160 of the Income
Tax Ordinance, 1984.
In the matter of:
Alltex Industries Limited.
…….Applicant
-V E R S U S –
The Commissioner of Taxes, Large Taxpayers
Unit (LTU), Dhaka
…….Respondent.
Mr. Sarder Jinnat Ali, Advocate with
Mr. Md. Delowar Hossain, Advocate
……… For the Applicant
Mr. Akhtar Farhad Zaman, D.A.G. with
Mr. Md. Obaidur Rahman Tarek, D.A.G with
Ms. Shadia Afrin Shapla, D.A.G. with
Mr. Sovan Mahmud, A. A. G. with
Mr. Md. Faridul Islam, A. A. G. with
Mr. Md. Sarwar Alam Chowdhury, A.A.G and
Mr. Shahinoor Alam, A.A.G
………. For the Respondent.
Heard on 21.05. 2026, 02.07.2026 &
Judgment on 16.07.2026
3Present: Mr. Justice S.M. Maniruzzaman
4And Mr. Justice Dihider Masum Kabir Dihider Masum Kabir J:
5This reference application, under section 160(1) of the Income Tax Ordinance, 1984 (in short, the Ordinance), is filed at the instance of the assessee-applicant against the order of the Taxes Appellate Tribunal, Division Bench-1, Dhaka (in short, the Tribunal) passed in I. T. A. No. 1022 of 2014-2015 (Assessment year 2012-2013) dated 29.01.2015 and
communicated to the applicant on 16.02.2015 arising out of the order in First Appeal No.781 of 2013-2021 passed on 31.05.2014 by the Commissioner of Taxes (Appeals), Taxes Appeal Zone-2, Dhaka [in short, the CT(A)] which had affirmed the assessment order dated 28.11.2012 passed by the Deputy Commissioner of Taxes, Audit Wing, Large Taxpayers Unit (LTU), Dhaka (in short, the DCT).
6Facts, relevant for the disposal of the reference application, in short, are that the applicant is a public limited company listed with Stock Exchanges and engaged in the production of cloth for back to back export. The applicant filed its income tax return (in short, return) alongside an audited statement of accounts showing a total loss of Tk.11,89,307/- which was assessed by the DCT under section 83(2), following the issuance of statutory notices under sections 83(1) and 79 of the Ordinance, assessing total income Tk.10,89,07,322/- and determining tax @ 15% amounting to Tk.1,63,36,098/-. After adjusting for tax deducted at source of Tk.1,61,60,614/-, the DCT issued a demand notice for remaining tax due of Tk.1,75,484/-.
7Challenging the assessment order of the DCT, the applicant preferred an appeal before the CT(A) which was recorded as Income Tax Appeal No.781 of 2013-2014. By an order dated 31.05.2014, the CT(A) affirmed the order of the DCT.
8Aggrieved by the appellate order dated 31.05.2014, the applicant preferred a second appeal being I.T.A. No.1022 of 2014-2015 before the Tribunal. After hearing both the parties, the Tribunal passed an order dated 29.01.2015 setting aside the orders of the DCT and CT(A) regarding the disallowances under the heads of “Agent commission of
Tk.66,73,647/- on export sales” and “Accounts payable of Tk.6,60,00,000/-’’ and directed the DCT to re-examine the mater after giving the applicant an opportunity of being heard and also directed to record the proceedings in writing in the assessment order. However, the Tribunal did not interfere with the remaining issues, upholding the rest of the CT(A)’s order.
9Under the facts and circumstances of the case, the assesseeapplicant filed the instant reference application before this Court under section 160(1) of the Ordinance for answering four questions. However, at the time of hearing, the learned Counsel on behalf of the applicant submits that question Nos. (II) and (III) are pressed for our determination, while the remaining are not pressed.
10Consequently, the following questions are formulated for answering:
11II. Whether, in the facts and on the circumstances of the case,
the Tribunal under section 159(2)/35(3)/35(4)(c)/83(2) of
the Ordinance was justified in maintaining excess trading
addition without any basis, that had been done by applying
excess rate of gross profit on conjecture and surmise in
ignorance of books of accounts and in violation of section
35(3) and 35(4) of the Ordinance and without finding
defects in the books of account and in the method of
accounting employed by the applicant regularly?
12III. Whether, in the facts and on the circumstances of the case,
the Tribunal under section 159(2)/35(3)/28(1)(c) of the
Ordinance was justified in maintaining duty drawback as an
income under section 28(1)(c) while it was/is an adjustment
of duty paid and received on import and export respectively
given reflection in the cost of goods sold accounts?
13The respondent, the Commissioner of Taxes, Large Taxpayer Unit, Dhaka (in short, the CT) contests this reference application by filing an affidavit-in-reply. The CT contends, inter alia, that the DCT added the duty drawback of Tk.4,51,46,498/- to the cost of goods sold (in short, the COGS) for calculating the actual gross profit of the applicant, and ultimately assessed the duty drawback amount as income in accordance with section 28(1)(c) of the Ordinance. As such, the respondent argues that the claim of the applicant is entirely misconceived. The CT further states that the DCT logically and legally exercised statutory powers in making disallowances from manufacturing and trading account as well as estimating gross profits upon verifying the documents produced by the applicant. The CT(A) and the Tribunal by applying a judicious mind, concurrently affirmed the order of the DCT in this regard. Consequently, the respondent contends that the impugned order is valid and lawful.
14Mr. Sarder Jinnat Ali, the learned Counsel appearing on behalf of the applicant, took us through the order passed by the income tax authorities. In this regard Mr. Ali submits that the Tribunal erred in law in treating duty drawback amount as income under section 28(1)(c) of the Ordinance while it was an adjustment of duty paid and subsequently received on import and export respectively given reflection in the COGS accounts. The applicant, in its audited financial statements, disclosed the COGS of Tk.188,49,46,874/-. During the relevant income year, the applicant received duty drawback amounting to Tk.4,51,46,498/- against export of goods and adjusted it by deducting this amount from the total COGS. Consequently, the net COGS stood at Tk.183,98,00,376/-. This
adjustment is explicitly reflected in note No. 25 of the audited financial statements.
15Mr. Ali further submits that since the duty paid on imported raw materials was subsequently received back, the entire transaction stood completely neutralized in the accounts. The accounting treatment adopted by the applicant conforms to accept accounting principles and accurately reflects the true trading results of the business. Based on these audited accounts, the applicant filed its return declaring a net loss of Tk.11,89,307/-. However, during the assessment proceedings, the DCT erroneously deducted the amount of duty drawback amount from the returned loss, which wrongly increased the business loss to Tk.4,63,35,805/-.
16Mr. Ali further submits that however, while dealing with the trading account, in the same assessment order, the DCT added the identical amount of duty drawback to the COGS, increased the COGS to Tk.188,49,46,874/- and reduced the trading results. Accordingly, the initial error stood adjusted within the assessment itself.
17The learned Counsel finally submits that the duty drawback had no further application in the assessment proceeding because it did not alter the trading version of the business. Despite such neutralization, the DCT proceeded to assess the very same duty drawback as an independent taxable income under section 28(1)(c) of the Ordinance. He contends that this treatment constitutes a clear duplication of the same amount, as the duty drawback had already been adjusted through the COGS in the trading account. The same receipt cannot, in law or in
accounting principles, be brought to tax twice under two different computations.
18Countering the contentions advanced by the applicant-assessee, Ms. Shadia Afrin Shapla, the learned Deputy Attorney General appearing on behalf of the respondent-Government, submits that the Tribunal disposed of the appeal. Regarding the treatment of the duty draw back amount, it upheld the order of the CT(A), who had affirmed the assessment order of the DCT in accordance with the provisions of the Ordinance. The learned DAG argues that when filing the appeal before the Tribunal, the applicant raised no ground objecting to the narrative of duty back amount within the trading account. Ground No. (b) of the memorandum of appeal was submitted as “For that the ld. Commissioner of Taxes (Appeal) was not justified in confirming the trading addition of Tk.2,21,66,155/- which is deletable”. This issue was confined to the disallowance of expenses from manufacturing and trading accounts based on the past record of the case, leading to an addition of Tk.2,21,66,155/- due to a lack of verifiable evidence.
19The learned DAG fortifies her submissions by referencing the decision reported in 58 DLR (HCD) 531, wherein it was held that
“Accounts audited by a firm of Chartered Accountants
cannot be said to be sacrosanct. When the tax authority
indicates that any claims are disallowed on account of lack
of verifiable evidence, it is incumbent upon the assessee to
satisfy the tax authority by providing necessary supporting
evidence.”
The learned DAG also relies on the decision in Civil Appeal
20No.279 of 2002, where the Hon’ble Appellate Division of the Supreme Court of Bangladesh held:
“The determination of gross profit is a question of fact and
no question of law arises in the estimation of gross profit.
As there is no question of law involved in the case of the
applicant, the questions are liable to be rejected in the eye
of law”
21In the assessment order, the DCT categorically stated that ten heads of manufacturing and trading accounts were not fully vouched or supported by detailed evidence. The applicant failed to produce such evidence before the CT(A) or the Tribunal. Consequently, the CT(A) and the Tribunal rightly upheld the order of the DCT in this regard. A matter which was not properly agitated as a ground before the Tribunal cannot be claimed afresh in a reference application before this Court.
22The learned DAG further submits that the applicant raised ground No (d) in the appeal memorandum before the Tribunal regarding the treatment of the duty drawback amount as income under section 28(1)(c) of the Ordinance. In the assessment order, the DCT did not add the drawback amount as an additional item of income; rather the DCT first deducted the duty drawback amount from the disclosed total income [Income (-) 11,89,307] and subsequently added it back to the total income, resulting in a completely neutralized position. There is no scope to argue that the amount was double-taxed or actually added to the total income to the detriment of the assessee.
23The learned DAG next submits that on 28.11.2012, the DCT assessed total income at Tk.10,89,07,322/- under section 83(2) of the
Ordinance, where the duty drawback amount was mathematically neutralized, and issued a demand notice for Tk.1,75,484/- (after adjusting of TDS of Tk.1,61,60,614/-). Pursuant to the direction in the Tribunal’s order dated 29.01.2015, the DCT subsequently revised the assessment order on 17.01.2016. This revised order determined the total income at Tk.3,62,33,675/- under sections 83(2)/156/159/120/159/156 of the Ordinance, completely omitting the duty drawback amount, and issued a revised demand notice for tax amounting to Tk.62,50,309/- (without adjusting the TDS of Tk.1,61,60,614/-).
24The learned DAG finally urges that the grounds set forth in the reference application are defective, misleading, and entirely untenable in the eye of law. Consequently, she contends that the questions raised in the reference application are liable to be answered in the affirmative that is, against the applicant-assessee and in favour of the respondent.
25We have considered the submissions of the learned Counsel for the applicant and the learned Deputy Attorney General for the respondent-Government, and have minutely perused the reference application, the affidavit-in-reply, and all other materials available on record.
26The main thrust of the argument on behalf of the applicant before this Court is whether the Tribunal was justified in maintaining the duty drawback amount as income under section 28(1)(c) of the Ordinance, while the applicant claims it was a neutralized adjustment of duty paid and received, given reflection in the cost of goods sold accounts.
27For clarity and a proper understanding of the matter, the relevant accounting portion of the assessment order regarding the duty drawback amount is quoted below for ready reference:
28Av‡qi Drm t 1| e¨emv (Kvco Drcv`b I ißvbx weµq nB‡Z Avq)|
29wbixwÿZ wnmve weeiYxi jvf-‡jvKmvb wnmve Abyhvqx Ki c~e©
cÖ`wk©Z bxU †jvKmvb Uvt (11,89,307)
30ev`t wiKfvixR (wWDwU Wª-e¨vK) c„_Kfv‡e we‡ePbvi Rb¨ Uvt (4,51,46,498)
e¨emvwqK †jvKmvb Uvt (4,63,35,805)
31‡hvM-cieZ©x‡Z we‡ePbvi Rb¨t
32(K) AePq fvZv t Uvt 7,21,20,944
33(L) Avc¨vqb LiP-Awdm wU GÛ wi‡d«k‡g›U Uvt 6,58,507
34(M) m¨v¤új LiP Uvt 25,18,637
†gvU Uvt 7,52,98,088
Avq Uvt 2,89,62,283
35‡hvM-Abby‡gv`b‡hvM¨ LiP mg~n t
36jvf-ÿwZ wnmv‡e ‡eZb I fvZvw` mn †gvU 15 wU Lv‡Z †gvU
AMÖvn¨K…Z AsK Uvt 2,95,63,077
AvMZ Avq Uvt 58,525,360
37Drcv`b I evwYwR¨K wnmve t
38cÖ`wk©Z gybvdvi nvi 15.29%
39Ki`vZv †Kv¤úvbxi cÖ`wk©Z †gvU weµq m¤ú~Y©B ißvbx hvnv ißvbxi
40KvMRcÎ, Bbf‡qm I e¨vsK weeiYx Øviv mgw_©Z I hvPvB‡hvM¨ weavq
41MÖnY Kiv nBj|
42Ki`vZv †Kv¤úvbx K÷ Ae ¸Wm †mvì Lv‡Z LiP `vex Kwiqv‡Qb
43183,98,00,376/- UvKv hvnv weeiYx I cÖgvYvw` Øviv m¤ú~Y©iƒ‡c
44mgw_©Z I hvPvB‡hvM¨ b‡n|
45Dciš‘ Ki`vZv †Kv¤úvbxi cÖ`wk©Z wRwc nvi cªKZ
… wRwc nvi b‡n,
46†Kbbv Ki`vZv †Kv¤úvbx K÷ Ae ¸Wm †mvì Lv‡Z wiKfvixR
47(wWDwU-Wª e¨vK) eve` cÖvß AsK 4,51,46,498/= UvKv hvnv
4828(1)(wm) avivq e¨emvwqK Avq wnmv‡e MY¨ mgš^q Kwiqv‡Qb| D³
49mgš^q ev` w`‡j Ki`vZvi cybM©wVZ cÖKZ
… wRwc nvi `vuovq wb¤œiƒct
5013.21%
Ki`vZv †Kv¤úvbx K÷ Ae ¸Wm †mvì Lv‡Z LiP `vex Kwiqv‡Qb
51183,98,00,376/- UvKv hvnvi mg_©‡b weeiYx `vwLj Kiv
52nBqv‡Q| `vexi g‡a¨ M¨vm wej 3,62,93,344/- UvKv nB‡Z Dr‡m
53Ki 20,14,335/- UvKv Dr‡m Ki KZ©b Kwiqv miKvix †KvlvMv‡i
54Rgv cÖ`vb Kiv nBqv‡Q|
55Ki`vZv †Kv¤úvbx mivmwi µq, mieivn ev †mevi wecix‡Z me©‡gvU
56179,40,46,805/- UvKv LiP `vex Kwiqv‡Qb|
57Ki`vZv †Kv¤úvbxi Dc‡iv³ e¨q `vexmg~n we¯ÍvwiZ weeiYx I
58cÖgvYvw` Øviv m¤ú~Y©iæ‡c mgw_©Z I hvPvB‡hvM¨ b‡n| GB‡ÿ‡Î
59AhvPvB‡hvM¨ I ùxZvs‡Ki LiP `vex Kiv nBqv‡Q ewjqv cÖZxqgvb
60nq|
61c~e©eZ©x Kie‡l© M„nxZ wRwc nvi 14.23%
62GgZve¯’vq, 14.23% nv‡i wRwc M„nxZ nBj|
63cv_©K¨ †UªwWs GwWkb wnmv‡e Av‡qi mwnZ †hvM Kiv nBj Uvt 22,166,155
Avq Uvt 80,691,515
64ev`t AePq fvZvt mshy³ ZvwjKv Abyhvqx Aby‡gv`b Kiv nBj Uvt 80,412,054
Avq Uvt 279,461
65ev`t m¨v¤új LiPt `vex AvqKi wewa -65 Abyhvqx
Aby‡gv`b Kiv nBj Uvt 25,18,637
Avq Uvt (2,239,176)
66‡hvM: wiKfvixR/wWDwU Wª e¨vKt Uvt 4,51,46,498
Avq Uvt 4,29,07,322
67‡hvM: w¯’wZcÎ ch©v‡jvPbvq 19(1)/33 avivi t Uvt 6,60,00,000
‡gvU Avq Uvt 10,89,07,322
68Thereafter the CT(A), in his appellate order dated 31.05.2014, disallowed (bvKP) the ground against the trading addition of Tk.2,21,66,155/- and upheld the assessment order of the DCT which is quoted below for ready reference:
69“3bs `vex- evwYwR¨K wnmv‡e 2,21,66,155/- UvKv Avq wnmv‡e †hvM Kivi weiæ‡×|
70bw_ cixÿvq †`Lv hvq †h, Ki`vZv †Kv¤úvbx Kvco Drcv`b I ißvbx Kwiqv Avq cÖvß
71nq| cÖ`wk©Z ißvbx weµq 217,18,32,481/- UvKv Ges MÖm gybvdv
32,20,32,105/- UvKv hvnv †gvU weµ‡qi 15.29%| cÖ`wk©Z ißvbx weµq cÖgvY
72Øviv mgw_©Z nIqvq gvwbqv †bIqv nBqv‡Q| K÷ Ae ¸Wm †mvì
73183,98,00,376/- UvKv cÖgvY Øviv hvPvB‡hvM¨ b‡n| Ki`vZvi cÖ`wk©Z wR,wc
74cÖKZ
75… wR,wc b‡n| KviY K÷ Ae ¸Wm †mvì Lv‡Z wWDwU Wª e¨vK 4,51,46,498/-
76UvKv e¨emvwqK Avq wnmv‡e mgš^q Kwiqv‡Q| D³ mgš^‡qi Kvi‡Y mwVK wR wc Gi nvi
77Kg nBqv‡Q| Cost of goods sold Gi mwnZ wWDwU-Wª e¨vK 4,51,46,498/-
78UvKv †hvM Kwi‡j cÖKZ
… wR,wc Gi nvi Av‡m 13.21%| A_P wWDwU-Wª e¨vK mgš^‡qi
79Kvi‡Y wR,wc nvi cÖ`wk©Z 15.29%| Ab¨w`‡K 2011-2012 Ki erm‡i UªvBeybvj
80KZ©K
81„ wb‡`©wkZ wR,wc Gi nvi 14.23% hvnv Avcxjvaxb erm‡i cÖ‡qvM c~e©K
82evwYwR¨K wnmv‡e 2,21,66,155/-UvKv Avq wnmv‡e †hvM Kiv nBqv‡Q| DcKi
83Kwgkbvi KZ©„K M„nxZ Kvh©µg cÖgvY wfwËK I AZxZ †iK‡W© D”PZi Av`vj‡Zi
84wb‡`©wkZ nv‡i wR,wc cÖ‡qvMK…Z weavq Ki`vZvi AvcwË bvKP Kiv nBj|
85AwZwi³ AvcwËt
86wWDwU Wª e¨vK 4,51,46,498/- UvKv 28(1)wm avivq †ewbwdU I cviKzBwRU wnmv‡e
87†gvU Av‡q †hvM Kivi weiæ‡×|
88GB cÖms‡M 3bs AvcwˇZ ivq cÖ`vb Kiv nBqv‡Q weavq Av‡jvPbv wb¯úª‡qvRb”
89On the basis of the second appeal preferred by the applicant, the Tribunal in its order dated 29.01.2015 upheld the order of the CT(A) which is quoted below for ready reference:
90“Ground No.2
In this ground, the appellant agitates against the order of the
91learned C.T. (Appeal) in confirming the D.C.T’s trading addition
92of Tk. 2,21,66,155/-.
We have heard the ld. A.R. & D.R. and perused the record.
93We have also examined the issue. We hold that the impugned
94appeal order of the learned C.T. (Appeal) is fair & reasonable as
95the same is based on past record of the case. Hence, we uphold the
order of the learned C.T. (Appeal) in this regard. The ground
96taken by the assessee-appellant fails.
97Ground No.4
In this ground it has been agitated against considering the
98duty draw back as income u/s 28(1)(c) of the Income Tax
99Ordinance, 1984.
It appears that the D.C.T treated duty draw back as income
100u/s 28(1)(c) of the Income Tax Ordinance, 1984. The learned C.T.
101(Appeal), after discussion upheld it.
We have heard the learned A.R & D.R and gone through
102the records. We have also examined the issue. The impugned
103appeal order of the learned C.T. (Appeal) is fair & reasonable.
104Hence, we uphold the order of the learned C.T. (Appeal) in this
105regard. The ground taken by the assessee-appellant fails.”
106We have minutely examined the relevant portions of the assessment order, as well as the final determination of total income, and find that the duty drawback amount was ultimately neither treated as income directly nor integrated with sales. In the assessment order, the duty drawback amount was first deducted from the disclosed income and subsequently added back to the total income. This sequential deduction and addition effectively neutralized the impact of that amount within the assessment order. Consequently, the applicant has raised this question pointlessly and argued it before this Court unnecessarily.
107It is crystal clear that the total income of Tk.10,89,07,322/- was determined by the DCT through the following adjustments:
108(i) Disallowing Tk.2,95,63,077/- from the profit and loss
109account and Tk.2,21,66,155/- from the manufacturing and
110trading account (totaling a disallowance of Tk.5,17,29,232/-);
111(ii) Disallowing entertainment expenses of Tk.6,58,507/-
112pursuant to Rule 65 of the Income Tax Rules, 1984;
113(iii) Allowing depreciation of Tk.8,04,12,054/- under the Third
114Schedule of the Ordinance (whereas the applicant claimed
115depreciation of Tk.7,21,20,944/-, resulting in an excess
116allowed amount of Tk. 82,91,110/-); and
117(iv) Disallowing disclosed liabilities from the balance sheet,
118which were treated as income under section 19(1)/33 of the
119Ordinance, amounting to Tk. 6,60,00,000/-.
The mathematical calculation is straightforward:
120Total disallowed amount (5,17,29,232 + 6,58,507) = 5,23,87,739
121Less: Excess depreciation allowed (82,91,110) = 4,40,96,629
122Less: Disclosed loss (11,89,307) = 4,29,07,322
123Add: Income under section 19(1)/33 of the
124Ordinance (6,60,00,000) Total Income = Tk. 10,89,07,322/-
125Upon a plain examination of the assessment order, appellate order, and second appellate order, we are of the view that the duty drawback amount was ultimately not treated as income directly, nor was it integrated with sales. Consequently, the CT(A) and the Tribunal rightly upheld the assessment order of the DCT in this regard. We are of the view that there is no merit in the applicant's contentions.
126Both the CT in his affidavit-in-reply and the applicant were silent regarding the subsequent developments in the case for the assessment
year 2012–2013. Specifically, pursuant to the directions in the Tribunal's order dated 29.01.2015, the DCT finally revised the assessment order on 17.01.2016, determining the revised total income of Tk.3,62,33,675/under sections 83(2)/156/159/120/159/156 of the Ordinance, in place of Tk.10,89,07,322/-. In the revised order, there was no reflection of the duty drawback amount. Consequently, a fresh demand notice was issued for tax amounting to Tk.62,50,309/- (without adjusting for TDS of Tk.1,61,60,614/-), down from the initial demand of Tk.1,63,36,098/-.
127Therefore, save for the specific issues currently pending before this Court, the remainder of the matter has still not been effectively finalized, despite the applicant having agitated these issues before various tiers of authorities. On the other hand, the Government has not yet realized any revenue through this assessment process, Moreover, the tax deducted at source remains to be refunded or adjusted against the tax liabilities of other assessment years.
128It appears from the record that the DCT added Tk.2,21,66,155/- to the total income by disallowing expenses across ten heads in the manufacturing and trading account due to a lack of verifiable evidence resulting in an adopted gross profit @ 14.23% following the past record of the case. In the instant case duty drawback amount was added with the COGS solely to determine the actual rate of gross profit, which was then compared with the past record of the case under the established principle that “past record is the best record”. When the tax authority indicates that claims are disallowed due to a lack of verifiable evidence, it is incumbent upon the applicant-assessee to satisfy the tax authority by providing necessary supporting evidence. The applicant failed to
produce such evidence before the lower authorities or the Tribunal. Consequently, the CT(A) and the Tribunal rightly upheld the order of the DCT in this regard.
129The learned DAG correctly submits that the disallowance of expenses from the manufacturing and trading account for the lack of verifiable evidence is a purely factual matter involving no question of law. Consequently, this point is not amenable to a reference application. In support of her submissions, she rightly relied upon the decisions reported in 58 DLR (HCD) 531, Civil Appeal No.279 of 2002 and Civil Appeal No.101 of 2013. We find substantial merit in the contentions of the learned DAG.
130In the case of Commissioner of Taxes -vs- Conference and Exhibition Management Service Ltd., reported in 25 BLC (AD) 15, the Appellate Division held:
131”When the tax authority indicates that any claims are
132disallowed on account of lack of verifiable evidence, it is
133incumbent upon the assessee to satisfy the tax authority by
134providing necessary supporting evidence. The provision in
135section 35(3) of the Ordinance does not exonerate the
136assessee from supplying evidence in support of the claims
137for allowances/deductions.”
138The same view has been consistently maintained by this Court in Hatil Complex Limited, Dhaka -vs- The Commissioner of Taxes (ITRA No.48 of 2018, judgment dated 22.06.2026), The Commissioner of Taxes -vs- Confidence Cement Ltd. (ITRA No.123 of 2019, judgment dated 20.05.2026), BBC Bangladesh Limited -vs- The Commissioner of Taxes,
(ITRA No.316 of 2018, judgment dated 11.06.2026) (in which we were parties to the judgments).
139It is our considered view that while section 35(3) of the Ordinance directs the applicant company to furnish a trading account, a profit and loss account, and a balance sheet certified by a Chartered Accountant, such certification does not dispense with the statutory requirement to produce primary, verifiable evidence in support of the specific financial claims made therein.
140For the reasons and discussions set forth above, and upon considering the relevant legal provisions and binding judicial precedents regarding the disallowance of unverifiable expenses and the mathematical neutralization of the duty drawback amount, we find no merit in the applicant's contentions.
141Therefore, the questions formulated in the income tax reference application are answered in the affirmative that is, against the assesseeapplicant and in favour of the respondent.
142Accordingly, the income tax reference application fails.
143However, there shall be no order as to costs.
144The Registrar of the High Court Division of the Supreme Court of Bangladesh is directed to take necessary statutory steps in accordance with section 161(2) of the Income Tax Ordinance, 1984, read with section 294(2) of the Income Tax Act, 2023. S.M. Maniruzzaman, J
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