I.T.AS. NOS. 4020, 4021, 5417 AND 5418/1,13 OF 1991-92 VS I.T.AS. NOS. 4020, 4021, 5417 AND 5418/1,13 OF 1991-92
1997 P T D (Trib.) 809
[Income-tax Appellate Tribunal Pakistan]
Before Sardar Muhammad Anwar A. Khan, Judicial Member and Saleem Asghar Mian, Accountant Member
As Nos. 4020, 4021, 5417 and 5418/LB of 1991-92, decided on /01/.
th
December, 1995. Income-tax-
--Rejection of accounts---Estimation of sale ---Validity---Assessing Officer Mile framing the assessment order was impressed by the past history of the lessee and had observed that "estimation of books of accounts revealed that these are defective as before, therefore, merit rejection" ---Reduction in estimate of sales by First Appellate Authority was not interfered with by Tribunal being reasonable, in circumstances.
M. Tahir Javed, I.T.P. for Appellant (in I.T.As. Nos, 4020/LB and ,.)21/LB of 1991-92).
Muhammad Akram Tahir, D.R. for Respondent (in I.T.As. Nos. ' J20/LB and 4021 / LB of 1991-92).
Muhammad Akram Tahir, D.R. for Appellant (in I.T.A. Nos. 417/LB and 5418/1-13 of 1991-92).
M. Tahir Javed, I.T.P. for Respondent (in I.T.A. Nos. 5417/LB and 5418/LB of 1991-92).
Date of hearing: 7th December, 1995
ORDER
SARDAR MUHAMMAD ANWAR KHAN (JUDICIAL MEMBER).---Cross Appeals for the Assessment years 1989-90 and 1990-91 !lave been filed to call in question the legality and correctness of the order, dated 15-10-1991 by the learned C.I.T.(A), Faisalabad, recorded in Income Fax Appeals Nos. 218 and 420.
2. The assessee, a private limited company, continued to derive income from sale of imported tyres during the years under consideration. The declared results for both the years under consideration are as under:---.
| | 1989-90 | 1990-91 |
| Declared sales | Rs.1,57,55,498 | Rs.2,16,80.,025 |
| G.P rate | 5.9% | 5.9% |
The Assessing Officer discarded the declared version for various defects mentioned in the body of the assessment orders and estimated the sales at Rs.1,70,00,000 and Rs.2,35,00,000 as against the declared sales of Rs.1,57,55,498 and Rs.2,16,80,025 and applied a G.P. rate at 6% as against the declared G.P. rate at 5.9%. Certain additions were also made out of tile P&L account expenses and net income was determined at Rs.1,82.304 and Rs.2,81,256 for the years under consideration.
3. Feeling aggrieved the assessee filed first appeals for both the years. The learned first appellate authority vide the impugned order, dated 15-10-1991 reduced the sales estimate to Rs.1,60,00,000 for assessment year 1989-90 and to Rs.1,20,00,000 for assessment years 1990-91 but confirmed the G.P rate. Partial relief under the head P&L account expenses was allowed for both the years under consideration.
4. The Department as well as the assessee have come up in second appeal before us on various grounds. The appeals arc decided as under:---
5. It was argued by the learned A.R. of the assessee that the disallowance maintained by the first appellate authority are unjustified, uncalled for and against the facts of the case. The order of the learned C.I.T.(A) was also contested to be illegal on the issue of addition of Rs.244,502. On the other hand, the learned D.R. argued that the first appellate authority erred in law and on facts on reducing the sales from Rs.2,35,00,000 to Rs.2,20,00,000 and the relief allowed under the heads; printing and stationary, travelling expenses, motor vehicles expenses are not justified as the same were un-vouched and unverifiable. The assessing officer while framing the assessment order was impressed by the past history of the assessee and held examination of books of accounts revealed that these are defective as before, therefore, merit rejection." After making these remarks, the sales were estimated at Rs.1,70,00,000 which were rescued in appeal to Rs.160,00,000 by the learned CIT(A) for the assessment year 1989-90 and from Rs.2,35,00,000 to Rs.2,20,00,000 for the assessment year 1990-91. The reduction in estimate of sales by the learned first appellate authority being reasonable and just is maintained. The application of G.P. rate at 6% by the assessing officer and confirmed by the learned CIT (Appeals) for both the years does not call for any interference as the assessee himself declared G.P. rate at 5.9% for both the year under consideration.
ADDITIONS OUT OF P&L ACCOUNT EXPENSES
6. The assessee claimed travelling expenses at Rs.107,655 for the assessment year 1989-90 out of which the I.T.O. disallowed Rs.30,000 due to lac of details and verification. The disallowance was restricted to Rs.20,000 by the C.I.T.(Appeals) keeping in view the volume of business of the assessee. The impugned curtailment is maintained. The telephone expenses were claimed at Rs.21,567, Due to non-business use Rs.5,000 were disallowed by the LT.O. The dis-allowance was restricted to Rs.3,000 by the learned C.I.T.(A). It is about 15% of the total claim of the assessee. The allowance needs no interference. Advertisement charges were claimed at Rs.43,800 out of which Rs.10,000 were disallowed by the I.T.O. due to lack of details and verification and part admissibility. The learned C.I.T.(A) confirmed the same. The impugned addition does not call for any interference on our behalf and is maintained. Rs.16,380 were claimed on account of entertainment expenses out of which Rs.8,000 were disallowed by the LT.O. which estimated was confirmed by the CIT(Appeals). After considering the facts of the case, we feel that this is slightly excessive and is reduced to Rs.4,000. The other additions are in line with the history of the assessee and are maintained.
7. The appeal of the assessee for the Assessment year 1989-90 succeeds only to the extent that the additions under the head, entertainment is reduced to Rs.4,000.
8. As far as the addition made in the P&L account expenses for the assessment year 1990-91 is concerned, the same are all maintained being reasonable except the addition made under the head "Entertainment" which is slightly excessive and is reduced to Rs.3,500.
9. The assessee's appeals succeeds to the extent and in the appeal indicated above while the departmental appeals being devoid of any merit are rejected.
M.B.A./185/(Trib.) ????????????????????????????????????????????????????????????????????????????? Order accordingly.