I.T.A. NO.2662/LB OF 1992-93 VS I.T.A. NO.2662/LB OF 1992-93
1997 P T D (Trib.) 2366
[Income-tax Appellate Tribunal Pakistan]
Before Iftikhar Ahmad Bajwa, Accountant Member
I.T.A. No.2662/LB of 1992-93, decided on 17/12/1996.
(a) Income Tax Ordinance (XXXI of 1979)----
----S. 32(3)---Income from business---Estimate of sales ---Add-backs-- Revenue Authorities below, disbelieving declared sales, made their own estimate---Held, assessee himself had declared higher sales for the year under appeal but instead of giving any allowance, Assessing Officer pitched the estimate of sale at disproportionately higher figure---Such disproportionate estimate was allowed to be brought at par with the estimate of preceding year.
(b) Income Tax Ordinance (XXXI of 1979)----
----S. 22---Income from business ---Add-back---Assessee was denied salary and bonus amounts on the ground that he could not produce any evidence to establish his version---Held, it was a blatant mis-statement by the Assessing Officer that material evidence was not produced in response to query-- Commissioner of Income Tax (Appeal) also failed to take into account the facts on record and summarily dismissed assessee's objection and confirmed the add-backs---Treatment meted out to assessee being unfair and necessary evidence having been placed on record, additions were deleted.
Mian Zafar Iqbal for Appellant.
Shahid Nasim, D.R. for Respondent.
Date of hearing: 17th December, 1996.
ORDER
Appellant, an individual, deriving income from retail sale of 'cloth' is contesting the estimate of sales and certain P&L add backs in assessment for assessment year 1991-92.
2. For the year under appeal, sales declared at Rs.43,64,000 had been estimated at Rs.48,00,000 which were held to be reasonable and confirmed by the CIT(A). For the immediately preceding year. i.e., assessment year 1990-91, sales declared at Rs. 42,36,000 had been estimated at Rs.48,00,000 but were reduced in appeal to Rs.45,00,000. Appellant had himself declared higher sales for this year but instead of giving any allowance for this A fact, the I.T.O. pitched the estimate of sales at a disproportionately higher figure. In the absence of any justifying circumstances, the disproportionate estimate was unfair. The sales for this year are accordingly reduced to Rs.46,50,000.
3. Out of the P&L add backs, objection in respect of disallowance of Rs.65,000 under the heads salaries and Bonus' was pressed. The above addition had been made on the ground that a higher expenditure under this head in comparison with the preceding year was unjustified as the volume of business in the two years was more or less the same and payment of bonus to the tune of Rs.36,000 was contrary to appellant's history. In a notice under section 62, dated 9-8-1992, the I.T.O. had raised a number of objections. The objection relating to ' salaries and bonus' as reproduced in the assessment order, was as under:--
"You have paid bonus Rs. 36,000 to the employees with the contrary to your own history please furnish documentary evidence otherwise the same shall be disclosed. "
The assessing officer further observed "the assessee could not produce any material evidence in his support to this query. Keeping in view the facts discussed above salary amount of Rs.25,000 and bonus Rs. 36,000 is disallowed and added back which comes to total Rs.61,000. " The notice under section 62 had been responded by the appellant in his letter dated 23-8-1992. Not only the details of 'salaries and bonus' but also copies of I.D. Cards of the employees had also been furnished alongwith this letter. The assessing officer's observation that material evidence in response to his query had not been produced was a blatant misstatement. It is interesting that the CIT (Appeals) had referred to assessee's reply dated 27-8-1992 while dealing with the question of rate of gross profit which was reduced by him from 10 % to 8.5 % but in the matter of P&L add backs he did not bother to take into account the facts on record and summarily dismissed appellant's objection holding that "the additions look reasonable and are confirmed The treatment meted out by both the authorities was unwarranted by the facts on record. Necessary evidence regarding payment of 'salaries and bonus', having been placed on record, the addition under this head was apparently l unjustified and is hereby deleted.
4. The appeal succeeds as above.
C.M.S./380/Trib. Appeals allowed.