1996 P T D (Trib.) 1154
[Income-tax Appellate Tribunal Pakistan]
Present: Muhammad Mujibullah Siddiqui, Chairman
I.T.A. No. 81/KB of 1994-95, decided on 07/05/1996.
Income Tax Ordinance (XXXI of 1979)---
----Ss.62 & 63---C.B.R. Circular No. 12 of 1991---"Sales"---Meaning-- Expression ,"sales" does not mean the declared sales but the sales estimated by the Assessing Officer---Estimated sales are taken to be the real sales but it is not imaginary figure and when it is taken to be real sales on the basis of which the total income of an assessee is determined, the assessee is entitled to the expenses on the basis of sales estimated by the Assessing Officer.
Farogh Nasim for Appellant.
Shaheen Aziz Niazi, D.R. for Respondent.
Date of hearing: 7th May, 1996.
ORDER
This appeal is directed against the order dated 18-2-1995 by the learned C.I.T.(A), Zone-VI, Karachi in I.T.A. No. 978/A-VI, relating to the assessment year 1993-94.
2. Mr. Farogh Nasim, Advocate form the appellant partly argued the appeal and during the course of arguments he stated that the appeal of the appellant relating to the assessment year 1990-91 is also pending in the Tribunal. The notice of hearing was served on the Advocate for appellant on 14-4-1996 but no such intimation was given to the office so that if any such appeal is pending the same may also be fixed for hearing today. However, Mr. Farogh Nasim was directed to get the appeal for assessment year 1990-91 located from the Appellate Branch of the Tribunal. Mr. Farogh Nasim deputed one of his juniors namely Mr. lkram Farouqui to the Appellate Branch who did not furnish any particulars of the alleged appeal for the assessment year 1990-91 and left the office saying that the particulars of the appeal were not available with him. Mr. Farogh Nasirn was informed that the appeal shall be taken again for hearing after tea break. Mr. Farogh Nasim did not turn uptil 4.00 p.m. The appeal is, therefore, being disposed of on the basis of material available on record and the facts given by Mi. Farogh Nasim during his arguments in the morning.
3. The appellant is an individual running fresh fruit shop' at Empress Market Saddar Karachi. The appellant has not maintained any books of accounts. The appellant is deriving income from supplies to Hotel Pearl Continental wholesale and retail sale (shop sale). The appellant declared total sales at Rs.41,71,799 out of which supplies were to the extent of Rs.26,51,299 which stand covered under the presumptive tax regime to which section 80-C of the Income Tax Ordinance is applicable. The remaining sales were declared at Rs.15,20,500. During the course of assessment proceedings the appellant furnished bifurcation of the retail sales and wholesale at Rs.5,20,500 and ids- 10,00,000respectively. The assessing officer observed that in the assessment year 1990-91 when the regular assessment was made under section 62 the retail sales declared at Rs.5,25,500 were estimated at Rs. 10.80,000 and the wholesales declared at Rs.5,26,000 were estimated at Rs.8,00,000 and the said estimate, were conformed by the learned C.I.T.(A). The assessing officer had confront the appellant vide notice under section 62, dated 20-12-1993 for estimating ret, sales at Rs. 13,50,000 and wholesales at Rs.12,00,000. The assessing office estimated the whole sale and retail sales accordingly which have been confirmed by the learned C.I.T.(A). The assessee is aggrieved with these estimates. The learned D.R. has submitted that in the assessment year 1990-91 the retail sale, were estimated at Rs.10,80,000 and looking to the inflation the sales estimated at Rs.13,50,000 in the assessment year 1993-94 appear to be reasonable. He further submitted that the wholesales were estimated in the assessment year 1990-91 at Rs.10,00,000 and in the assessment year 1993-94 it has been estimated at Rs.12,00,000 which also appear to be reasonable. 1 am persuaded agree with the submission of learned D.R. and, therefore, the sales as estimated by the assessing officer stand confirmed.
4. The appellant has objected to the application of G.P. rate in the wholesale account at 4% a perusal of assessment order shows that the appellant was duly confronted for application of G.P. rate at 4% and no material was brought on record for application of lesser G.P. rate. The application of G.P rate at 4 % on the wholesales is, therefore, confirmed.
5. The last objection is to the disallowance of shop expenses. According to the ground of appeal the total shop expenses claimed at Rs.1,05,250 were disallowed. However, a perusal of record shows that the contention is not correct because the assessing officer has allowed the proportionate expenses taking into consideration the supplies covered under section 80-C and the sales not covered under section 80-C. So far the application of formula is concerned, I am of the opinion that it has been rightly applied but I feel that in the application of formula the assessing officer was not justified in working out the proportionate expenses on the basis of declared sales not covered by 80-C. C.B.R. Circular No. 12 of 1991 contains that the expenses debit able to the profit and loss account shall be admissible only against income not covered by 80-C in the same ratio as sales not covered by 80-C bear to the total sales. I am of the opinion that the expression sales does not mean the declared sales but the sales estimated by the Assessing Officer. The reason being that the estimated sales are taken to be the real sales. It is not an imaginary figure and when it is taken to be real sale on the basis of which the total income of an assessee is determined, the assessee is entitled to the expenses on the basis of sales estimated by the assessing officer. The Assessing Officer while working out proportionate expenses has taken the figure of other sales at Rs.15,20,500 (as declared by the appellant) and the figure of total sales at Rs.41,71,799 (as declared by the assessee) while in fact after the estimation of sales by the assessing officer the other sales, Le, shop sale and the wholesale is worked out to Rs.25,50,000 and the total sales come to Rs.52,01,299. Thus, the proportionate expenses worked out by the assessing officer at Rs.38,361 is not in accordance with the sales estimated by him and therefore, the assessing officer is directed to work out the proportionate sales on the basis of total sales (including supplies) at Rs.52,01,299 and taking the other sales at Rs.25,50,000. The proportionate expenses so worked out should be allowed while working out the total income in respect of the other sales.
6. The appeal stands disposed of as above.
M.B.A./214/Trib.Order accordingly.