I.T.AS. NOS.31,67/1,13 OF 1991-92 AND 982/1998/1,13 OF 1995 VS I.T.AS. NOS.31,67/1,13 OF 1991-92 AND 982/1998/1,13 OF 1995
1997 P T D (Trib.) 2266
[Income-tax Appellate Tribunal Pakistan]
Before Sarfraz Ahmad, Accountant Member and Sardar Muhammad Anwar Khan, Judicial Member
I.T.As. Nos.3167/LB of 1991-92 and 982/1998/LB of 1995, decided on 14/02/1996.
Income Tax Ordinance (XXXI of 1979)---
----Ss.16, 22 & 32(3)---Income from salary and business ---Assessee, an individual running a tailoring shop---Estimate and bifurcation of sales-- Assessing Officer, bifurcating sales under different heads, rejected declared version and assessed applying two higher G.P. rates to such bifurcated estimated sales---Validity---held, there was no justification with department to bifurcate sales under different heads and apply separate G.P. rates-- Assessee did no stitching work by himself at all, as such, to estimate sales under different heads and apply separate G.P. rates was not proper-- Combined sales were ordered to be estimated on which combined G.P. rate was to be applied.
Noor Muhammad Qureshi for Appellant.
Najam-ud-Din for Respondent.
Date of hearing: 14th February, 1996.
ORDER
SARFRAZ AHMAD (ACCOUNTANT MEMBER).---The appeals by the assessee/appellant are directed against the orders of the A.A.C Range-III. Lahore for the assessment years 1990-91 dated 10-10-1991, and Appellate Additional Commissioner of Income Tax, Appeal Range Lahore for the assessment year 1991-92 dated 25-1-1995 and for the assessment year1993-94 dated 13-1-1995.
The brief facts of the case are that the appellant an individual, statedly derives salary income from M/s. Jasco (Pvt.) Ltd. as well as business income on sale of garments and overall. The position of the declared and assessed income is as under:
| Assessment Years | Income declared | Income assessed |
| 1990-91 | Rs.40,000 | Rs.135,180 |
| 1991-92 | Rs.83,000 | Rs.153,500 |
| 1993-94 | Rs.88,000 | Rs.190,360 |
Assessment Year 1990-91
| Sales declared | Rs.6,00,000 |
Sales Estimated by the I.T.O.
| (i) Garments | Rs.5,75,000 |
| (ii) Overalls | Rs.1,75,000 |
| G. P. declared | 14.5 % |
| G.P. rate applied by I.T.O, |
| (i) Garments | 15 % |
| (ii) Overalls | 25% reduced by A.A.C to 20% |
Assessment Year 1991-92, Sales
| Declared | Rs.5,93,100 with G. P. rate 14.5% |
| Estimated (garments) | Rs.6,50,000 with G.P. rate 15% Confirmed by I.T.O. |
| (Overalls) | Rs.2,25,000 with G.P. rate 20% -do- |
Assessment Year 1993-94
Sales
| Declared | Rs.7,13.600 with G.P. rate 15'% |
Estimated by I.T.O.
| (i) Garments | Rs.9,00,000 with G.P. rate 15% |
| (ii) Overalls | Rs.3,00,000 with G.P. rate 20% |
Treatment by A.A. C.
| Sales of garments reduced to | Rs.8,50,000 with G.P. rate 15% |
| G.P. rate reduced to | 15% under the head Sale of Overalls. |
The main point agitated by the appellant in all the years is regarding the estimate of sales made by the Assessing Officer after bifurcating them under the head Garments and Overalls and the G.P. rate applied and confirmed in the assessment years 1990-91 and 1991-92 by the Appellate Authority. The disallowances made out of by the expenses claimed to have been agitated in the assessment year 1990-91. It is vehemently contended by the AR that no stitching business is done by the assessee/appellant himself and only ready made stitched garments are bought as such for sale. Therefore, there was no justification on the part of the Assessing Officer to bifurcate the sales under two heads i.e.. Garments and Overalls and apply a different G.P. rate which has been separately confirmed by the Appellate Authorities in the first two years. It is also contended that the business of the appellant was on a small scale with every little capital assessments made by the Assessing Officers by estimating the sales bifurcated under two different heads was not fair.
The learned D.R. on the other hand maintains the estimates made as well as the G.P. rate applied both by the Assessing Officer as well as the Appellate Authorities to be fair.
We have gone through the orders of the officers below and have also i perused the records of the case. On the facts obtaining, we do not find any justification with the Department to bifurcate the sales under two different heads and apply separate G.P. rates on the estimates so made. Even the Appellate Authorities failed to appreciate that the assessee/appellant does so additional work by himself at all, as such, to estimate the sales under different heads and apply separate G.P. rates, was not proper. On the facts obtaining we feel that there was no reason with the Assessing Officer to estimate the sales under different heads and apply separate G.P. rates as well as with the Appellate Authorities to maintain the bifurcation made and apply different G.P. rates. In the circumstances, we feel that for the assessment year 1990-91 the combined sales should be estimated at Rs.6,75,000 both the respect of Garments and Overalls on which a combined G.P. the sales are directed to be adopted both in respect of Garments and Overalls at Rs.6,75,000 on which a combined G.P. rate of 15% should be applied. A While for the assessment year 1993-94 the combined sales are directed to be adopted at Rs.8,00,000 on which a combined G.P. rate of 15% as declared be accepted.
The additions made out of the profit and loss account expenses being fair are confirmed for the assessment year 1990-91. The three appeals filed at the instance of the assessee/appellant succeed to the extent and in the manner as indicated above.
C.M.S./318/Trib. Appeals allowed.