I.T.AS. NOS. 2732 AND 3342/LB OF 1991-92 VS I.T.AS. NOS. 2732 AND 3342/LB OF 1991-92
1997 P T D (Trib) 829
[Income-tax Appellate Tribunal Pakistan]
Before Ashfaq Ahmed, Accountant Member and Muhammad Zaman Khan, Judicial Member
I.T. As. Nos. 2732 and 3342/LB of 1991-92, decided on 22/11/1995.
Income-tax---
Application of gross profit rate---History of assessee's case ---Effect---- Rate of gross profit applied in the assessee's case in the previous years against which no appeal had been filed by the assessee became history of the assessee---Application of gross profit rate according to the history of the assessee, therefore, was justified.
Ghani Dad Khan for Appellant (in I.T.A. No. 2732/LB of 1991-92).
Sartaj Yousuf, D.R. for Respondent (in I.T.A. No. 2732/LB of 1991-92).
Sartaj Yousuf, D.R. for Appellant (in I.T.A. No. 3342/LB of 1991-92).
Ghani Dad Khan for Respondent (in I.T.A. No. 3342/LB of 1991-92).
Date of hearing: 22nd November, 1995.
ORDER
ASHFAQ AHMED (ACCOUNTANT MEMBER). ---These cross peals are directed against the order passed the CIT(A), Faisalabad, dated10-1991 in respect of the assessment year 1990-91. The appellant is 2 grieved on account of estimate of sales reduced by the C.I.T.(A) and certain add backs trade in the profit and loss account expenses whereas the department is aggrieved against the estimate of sales and reduction in the 1;1plied gross profit rate.
2. The brief facts of the case are that the assessee is an individual who derives income from manufacturing and sale of polythene bags. During the year under appeal the assessee had declared sales at Rs.18,00,000 yielding gross profit rate at 14.48%. The I.T.O. for the various reasons recorded in e body of the assessment order estimated the sale at Rs.32,00,000 and Plied a gross profit rate at 25 % .
3. The assessee being aggrieved preferred an appeal before the CIT(A) where he cited a case of M/s. Asghar Plastic in which the appellate authority had reduced the gross profit rate from 25 % to 15 % . The CIT(A) relying on the above case, reduced the gross profit rate in the case in hand to 15 %.The sales were also reduced to Rs.27,00,000. Certain add backs in respect of telephone, entertainment and miscellaneous expenses were made by the assessing officer which have been confirmed by the C.LT.(A).
4. During the course of hearing before us the learned A.R. of the assessee urged that the estimate of sales as fixed by the learned CIT(A) at Rs.27,00,000 was highly excessive as in the parallel case referred to above the receipts were estimated at Rs.13,00,000 against the electricity consumption worth Rs.324,449 whereas in the assessee's case electricity consumption was at Rs.459,214. Therefore, the estimate of sales should have been in proportion to the electricity consumed. However, the learned A.R. did not contest the add backs made by the assessing officer and subsequently confirmed by the C.I.T.(A) under various heads in the profit and loss account. The learned D.R. on the other hand agitated against the reduction of estimate of sales and stated that the LT.O. in the body of his order had cited a consumed and the sales in that case were declared at Rs.33,63,091. Therefore, the estimate of sales as arrived at by the I.T.O. was contended to be in order and the same did not call for any interference by the C.I.T.(A). The learned D.R. further urged that the reduction in gross profit rate from 25 % to 15 % was also arbitrary as the assessing officer had cited as many as five cases in the body of the assessment order wherein gross profit rate ranging between 25% to 40% has been applied. The learned D.R. further stated that the assessee has a history of application of gross profit rate of 20 %.
5. We have considered the arguments put forth by the learned A.R. for the assessee and find no merit in his contention. The reduction in sales by referring to only one solitary case of electricity consumption is not sufficient reason. Furthermore, it is relevant to state that the assessee made sales to the extent of Rs.17.00.000 to one group, namely, M/s. Crescent Textile Mills. Sargodha. In this view of the matter, the sales reduced by the C.I.T. (Appeals) to Rs.27,00,000 are by no means excessive and the same are accordingly maintained. As stated earlier, the learned A.R. of the assessee has not pressed the add backs made under various heads of account and the same are accordingly confirmed.
6. As regards the reduction allowed by the CIT(A) in gross profit rate 25 % to 15 % , we find merit in the contention of the learned D. R. The assessee has a history of application of gross profit rate of 20%. The gross profit rate of 20% had been applied in the assessee's own case in the assessment year 1977-78 against which no appeal had been filed by the assessee, therefore, this rate of 20% has become the history of the assessee. Taking into account all the factors in view and the cases as mentioned by the assessing officer in the body of his assessment order, it would be fair and' just if the gross profit rate of 20% is applied in the assessee's case. We order A accordingly.
7. As a result of the above discussion, the appeal filed by the assessee being devoid of any force is dismissed whereas the departmental appeal succeeds in the manner and to the extent as indicated above.
M.B.A./189/T Order accordingly.