I.T.A. NO.398/LB/1 OF 1992-93 VS I.T.A. NO.398/LB/1 OF 1992-93
1997 P T D (Trib.) 1892
[Income-tax Appellate Tribunal Pakistan]
Before Iftikhar Ahmad Bajwa, Accountant Member and Nasim Sikandar, Judicial Member
I.T.A. No.398/LB/1 of 1992-93, decided on 17/04/1994.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.22---P & L Account---Add backs---Original assessment was set aside by Tribunal with directions for verification of declared sales as well as re- examination of income from repairs---Assessing Officer estimated sales at higher side and add backs were repeated as per original assessment-- C.I.P.(A) upheld estimate of sales and reduced P&L add back---Held, issue of P&L add backs was unnecessarily taken up by revenue as Tribunal remanded case to I.T.O. for verification of sales and income from repair only.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.32(3)---Estimate of sales---Appellant returned estimate of sales---I.T.O. rejecting same estimated at high figure---C.I.T.(A) confirmed---Tribunal remanded for verification---Appellant furnished complete details---I.T.O. without mentioning results of verification estimated the sales as had been done by C.I.T.(A) while disposing of appeal regarding original assessment-- Held, I.T.O's. assumption that capital and other circumstances being same declared in turn over was not understandable as business had declined to such extent that it had statedly come to standstill- --Thus, facts on record did not justify rejection of declared sales and estimate.
Nazir Ch., F.C.A. for Appellant,
Mirza Ghazanfar Baig, D.R. for Respondent.
Date of hearing: 17th April, 1994.
ORDER
IFTIKHAR AHMAD BAJWA (ACCOUNTANT MEMBER).-- Appellant registered firm deriving income from manufacture and sale of owner Presses is contesting CIT (Appeal's) order dated 27-5-1992 relating to assessment year 1.988-89.
2. For the year under appeal income had been disclosed at Rs.33.167 Originally assessment was made on an income of Rs.4.1,588 which was ultimately set aside by the Tribunal with specific directions for verification of the declared sales/supplies which were claimed to have been made to verifiable parties and also for re-examination of income from repairs. In the order under section 62/135, against the declared sales of Rs.6,49,304 sales have been estimated at Rs.12,00,000 as against Rs.15,00,000 in the original assessment and P & L add backs amounting to Rs.40,200 as per original assessment have beet repeated. The CIT (Appeals) upheld the estimate of sales but reduced P & L add back from Rs.40,200. Appellant has raised objection against estimate of sales as well as the P & L add backs.
3. So far as the question of P & L add backs is concerned, this issue was unnecessarily taken up by the revenue authority as the Tribunal vide its, order in I.T.A. No.187/LB/1990-91, dated 15-1-1991 had remanded the order to the I.T.O. for verification of sales/supplies and income from repairs only. Thus the treatment meted out by the CIT(Appeals) against the original assessment stood confirmed. The I.T.O. will accordingly about the P & L add backs as confirmed in the order of the first appellate authority in appeal against the original assessment.
4. So far as the sales are concerned, appellant had furnished complete details or total sales amounting to Rs.6,49,304. The I.T.O. issued notices to the 11 parties to whom the sales had been made and subsequently informed the assessee that notice to M/s. Star Oil & General Mills Sakkhar had been returned undelivered whereas no response had been made by M/s. Ulbrients Pakistan Ltd. Karachi, M/s. Azma Ghee Mills Ltd. Kabir Wala and Messrs Delite Industries Gulberg, Lahore. In response to I.T.O's. letter, dated 15-12-1991 appellant vide its letter dated 21-12-1991 furnished a copy of reply by M/s. Ulbrients Pakistan Ltd. Karachi and also a certificate from Messrs Control Company wherein sales as shown by the appellant company were confirmed. Appellant also intimated that confirmation from the other two parties would be provided as soon as available. In the order aforementioned the I.T.O. has not mentioned the results of his verification and after mentioning the absence of accounts and back statement, estimated the sales at Rs.12,00,000 as had been done by the CIT (Appeals) which disposing of the appeal in respect of original assessment with the following observations;---
The assessee specifically contended before the learned Tribunal that all the transactions were made through cheques. But as per list of customers produced by the assessee fifty per cent of the parties were not admittedly made payments through cheques. The customers who made payments in cash are as under:---
(1) Allied Packages, 2249 Nishatabad Road, Multan. Rs.20,000
(2) Allied Packages, 2249 Nishatabad 4oad, Multan. Rs.30,000
(3) State Bank of Pakistan, Shahrah-e-Qauid-e-Azam, Lahore Rs.9,025
(4) Allied Packages, 2249 Nishatabad Road, Multan. Rs.3,50,000
(5) State Bank of Pakistan, Lahore Rs.42,350
(6) Uni Tech, Green Town, 23, Ahmad Street, Lahore Rs.6,250
(7) M.BI. Industrial A 51 SITE, Karachi. Rs.20,000
(8) Azmat Ghee Mills Limited, Kabir Wala Rs.50,000
The assessee has also not been able to explain the decrease in declared versions as observed in the original assessment order dated 26-10-1989 in spite of the fact there was not decrease in the availability of capital as compared to the earlier years. Moreover, most of the customers to whom sales were statedly made did not make any reply to the notices issued by this office and thus the sales remained mostly unverifiable. It is also important to point out that the business place of the assessee is situated in a market which is well-known all over Punjab for the sale of such goods which the assessee deals. The declared version under all the heads in fact are not believable at all. It is grossly understated in view of the past history. Taking into consideration all those facts the sales fixed by the learned CIT(A) are assessed accordingly."
The cited assessment order cannot possibly justify rejection of the declared sales as the 8 parties mentioned by the I.T.O. are Government Organizations or Limited Companies. He asserts that sales were unverifiable as most of the customers did not make any reply is contrary to the facts on record as most of the customers did acknowledge the sanctions and the parties unquestionably were verifiable. So far as the history is concerned, the Tribunal had specifically taken note of the fact that during this year the sales were claimed to have been made to Government Organizations and Industries and the position for this year was distinguishable from the past. I.T.O's: assumption that capital and other circumstances being the same, decrease in turn over was not understandable as the business had declined to such an extent that it had statedly come to a complete stand still at the end of this year. Thus, the facts on record did not justify rejection of the declared sales and estimate of the same at Rs.12,00,000 the declared sales would accordingly be accepted and assessment modified accordingly.
5. The appeal succeeds as above.
M.S./236/Trib.Appeals accepted.