I T AS. NOS.1291/LB OF 1992-93, 174/LB OF 1994 AND 844/LB OF 1995 VS I T AS. NOS.1291/LB OF 1992-93, 174/LB OF 1994 AND 844/LB OF 1995
1997 P T D (Trib.) 2205
[Income-tax Appellate Tribunal Pakistan]
Before M. Saleem Shad Qureshi, Judicial Member and Sarfraz Ahmad, Accountant Member
I.T.As. Nos. 1291/LB of 1992-93, 174/LB of 1994 and 844/LB of 1995, decided on 25/01/1996.
Income Tax Ordinance (XXXI of 1979)---
----S. 22---Income from business---Estimate of sales---Addition---History of case ---Assessee returned sales---Assessing Officer, being dissatisfied, rejected declared version and adopted sales on his own---Commissioner of Income Tax (Appeal) gave a little relief keeping in view history of the case-- Assessee aggrieved, agitated against findings of Authorities below---Position of trading accounts was same as was in previous years rather assessee had shown better results---Assessing Officer basing his finding on surmises and conjectures---Even C.I.T.(A) could not show any substantial material from record in support of his findings---Tribunal felt additions to be uncalled for and deleted same in circumstances.
Masha Allah Khan, C.A. for Appellant.
Mobeen Malik, D.R. for Respondent.
Date of hearing: 29th August, 1995
ORDER
M. SALEEM SHAD QURESHI (JUDICIAL MEMBER).---The assessee/appellant has come into appeals against the orders of learned CIT(A), Lahore vide his A.O., No.294/CC-21 dated 14-7-1972, A.O. No.143/CC-21, dated 14-11-1993 and A.O. No.1558, dated 25-1-1995 pertaining to assessment years 1991-92, 1992-93 and 1993-94 respectively.
2. Since all these appeals involved similar type of facts and issues which are identical in nature and requires a consolidated consideration. We, therefore, propose to dispose of all these appeals through one combined order.
3. Brief facts of the case are that the appellant, a Private Limited Company, deriving income from steel re-rolling Mills. In the assessment year under consideration. i.e., 1991-92 the assessee appellant has agitated mainly on the ground that the orders below are contrary to explanations offered and in sheer ignorance of material placed on record. It is further agitated that various assertions taken by the I.T.O., and C.I.T.(A)in arriving at their findings are based upon erroneous appraisal of the documentary proof and that the officers below have contradicted their own findings by their subsequent observations in the impugned order. The estimation of sales has also been contested to be unjustified and also that neither the declared sales rates were doubted nor the quantities sold. Various add-backs i.e., salaries selling and distribution expenses are contested to be unfair and unjustified.
4. Similarly in the assessment year 1992-93 the assessee/appellant has agitated the same way as in previous assessments years that the orders passed by the authorities below are contrary to the explanation offered and certain add-backs i.e., salaries, advertisement and publicity have been agitated to be incorrect and erroneous. In the assessment year 1993-94 the assessee/appellant has mainly objected that the assessment orders were passed in utter disregard to the explanations offered and that the department has departed from the near-to-the accepted history of the case and has erroneously determined sales on the basis of notional quantities calculated with reference to the consumption of electricity units. It was also objected that the relief granted by the learned CIT(A) in the first appellate course was neither adequate nor proper, rather full relief should have been allowed. It was further objected than in the presence of proper books of accounts and verifiable nature of purchases the formula adopted by the authorities below is miscarriages of justice. In this assessment year under appeal only add back out of salaries has been contested to be unfair and unjustified. The A.R. of the assessee/appellant has vehemently stressed and argued that ,complete books of accounts have been maintained and as such the declared trading results should have been accepted. To depict a ,.clear picture and to draw a competitive comprehensive analysis the facts of the case for the years under appeal and two preceding years are given as under:---
| Asstt: Year | Declared Sales | Estimated Sales | G. P. rate Declared | G. P. rate Applied |
| 1989-90 | 1,16,45,666 | 1,60,00,000 | 6.19 % | 6.25 % |
| 1990-91 | 1,66,38,545 | 1,80,00,000 | 6.15 % | 6.25 % |
| 1991-92 | 1,90,15,630 | 2,00,00,000 | 6.35% | as declared |
| 1992-93 | 2,57,45,880 | 2,65,00,000 | 6.15 % | 6.35 % |
| 1993-94 | 2,99,26,620 | 4,54,71,303 | 6.48% | 5.35% |
5. After hearing both the parties and going through all the aspects of the case as well as the orders of the authorities below we find that the assessee/appellant himself declared his sales in assessment year 1991-92 at Rs.1,90,15,630 which was estimated by the assessing officer at Rs.2,00,00,000. The learned CIT(A) reduced the estimate of sales to the tune of Rs.1,95,00,000. After considering all the facts and circumstances of the case, we find that the treatment meted out at the first appellate stage is quite reasonable and justified and also in consonance with the past history of the case. Therefore, the order of the learned CIT(A) does not call for any interference. We uphold the same. Similarly in the assessment year 1992-93 we find that the assessee/appellant himself declared his sales at Rs.2,75,45,880 which was estimated by the assessing officer at Rs.2,65,00,000 which resulted into an addition at Rs.7,56,112 whereas in the immediately preceding/assessment year i.e., 1991-92 an addition of Rs.5,00,000 was made which are upheld being reasonable., The addition made to the sales in the assessment year 1992-93 is in the same range as made in the preceding year and some how match with the past history of the case. It is, therefore, confirmed. Similarly in the assessment year 1993-94 the assessee/appellant declared his sales at Rs.2,99,26,620 which was estimated by the assessing officer at Rs.4,54,71,303 which had been agitated by the assessee/appellant before us as to be quite unreasonable and justified especially keep in view the past history of the cage. It is also further vehemently argued that the assessee/appellant showed an improvement in production record himself viz-a-viz preceding year, but still he is being punished without any fault on his part. After considering all the aspects of the case we feel that the assessee/appellant has a point in his argument. We also find that there was declared production for the year under appeal at 2518.500 M. Ton as against 2216.500 Ton for the assessment year 1992-93. The assessing officer has adopted production per unit of electricity consumed on average at 4.00 kg, per unit. The assessee has declared average sales rate at Rs.11,875 per M. Ton which was adopted at Rs.12,200 per M. Ton. The assessing officer has worked out 3727,156 M. Ton for the assessment year under consideration which was further reduced by the learned C.I.T.(A) to the tune of 2850,000 M. Ton and also directed the assessing officer to work out addition accordingly by applying sales rate at Rs.12200 per M. Ton against this treatment meted out the assessee/appellant has come into second appeal before us.
6. After hearing both the parties at length we have gone through the record of the previous assessment years alongwith files of the assessment years under consideration. We find that the position of the trading account is almost the same as it was in the previous assessment years rather the assessee has shown much better results in sales and profits. On the other hand the assessing officer has passed his finding just in surmises and conjectures. He failed to point out any material defect from the record which could support` his conviction nor the learned D.R. was in a position to justify the action of the I.T.O., even the learned C.I.T.(A) could not show any substantial material from the record to support his action, while reducing the estimate of sales the learned C.I.T.(A) also totally lost sight of the fact that before imposing such heavy burden on an assessee there must be some substantial material or evidence which could be made basis of such a heavy estimate though it was reduced to some extent even then could not justify his action. After considering all the aspects of the case we fix the production at 2600.000 M. Ton for the assessment year 1993-94. The sales rate adopted at Rs.12,200 per M. Ton is quite in order, and the assessing officer is directed to work out addition accordingly.
7. Add Backs of Salaries in the assessment years 1991-92, 1992-93 and 1993-94.---Salaries add-backs out of P & L has been challenged vigorously on behalf of the appellant as to be unreasonable and unjustified. Under the head of salaries total claim was made at Rs.2,93,496 out of which an addition of Rs.90,000 was made by the assessing officer. The learned CIT(A) found the same to be excessive and reduced to the tune of Rs.30,000 while all other add-backs were found proper and reasonable and were confirmed. The learned AR has also produced a copy of order of this Tribunal date 21-4-1992 pertaining to assessment years 1989-90 and 1990-91 in which assessee s claim regarding issue of salaries was accepted at the final appellate stage and disallowances made under the head of salaries were deleted in toto. It has been argued before us that the observation of the assessing officer regarding the production of documentary evidence in support of the claim of salaries based on misconception and erroneous assertions. It was also vehemently argued that the salary register has been produced before the assessing officer which has not properly been examined by the assessing officer. It was further contended that complete detail of staff and their position had been provided which was supported by their I.D. Cards, which has been totally ignored by the assessing officer. It was also vehemently argued that in the assessment year 1991-92 in ITA No.539,540/LB of 1991-92 dated 21-4-1992 the learned Tribunal deleted the additions maintained by the revenue authorities. It was further argued by the learned A.R. of the assessee that all the supporting evidence was produced before the I.T.O. who indifferently over-looked and did not examine the requisite documents in support of claim of salaries.
8. After hearing both the parties and going through the record of the previous assessment years alongwith, the record of the case under consideration, we find that the position of the trading accounts is almost same as it was in the previous assessment years. We observe that it was not fair on the part of the assessing officer to infer any conclusion therefrom in support of claim of salaries that the appellant duly maintained a register of salaries and complete detail of staff and their position had been provided which was further supported by their I.D. Cards. On one hand the assessing officer himself accepted the whole claim regarding salaries in the assessment year 1989-90. The observation of the assessing officer in respect of the assessment year 1990-91 that no salary register was produced itself supports the contention of the appellant that he was never required to produce the register. Considering all the aspects, we feel that the assessee/appellant has a point in this argument regarding the claim of salaries in all the assessment years., We have also gone through the order of the learned Bench of this Tribunal, who has deleted the addition after thorough probe into the matter. In these circumstances we feel that the additions under discussion for the assessment years under consideration were absolutely uncalled for. And keeping in view the history of the case the amount under the head of salaries for the assessment years under consideration is allowed in toto and the additions made by the assessing officer which were further reduced by the learned CIT(A) in all the assessment years under consideration are ordered to be deleted.
9. All other add-backs i.e., advertisement and publicity etc., contested in all the three assessment years under appeal are considered to the quite reason able and proper. We, therefore, upheld the same. No other ground of appeal has been agitated in all the assessment years under consideration. These appeals are disposed of in the manner as indicated above.
C.M.S./324/Trib Appeals disposed of.