BEFORE S. HASAN IMAM, JUDICIAL MEMBER AND MUHAMMAD MEHBOOB ALAM, ACCOUNTANT MEMBER VS BEFORE S. HASAN IMAM, JUDICIAL MEMBER AND MUHAMMAD MEHBOOB ALAM, ACCOUNTANT MEMBER
2002 P T D (Trib.) 183
[Income-tax Appellate Tribunal Pakistan]
Before S. Hasan Imam, Judicial Member and Muhammad Mehboob Alam, Accountant Member
I.T.A. No. 685/KB of 2000-2001, decided on /01/.
st
May, 2001. (a) Income Tax Ordinance (XXXI of 1979)---
----S. 65---Additional assessment--" Definite information"---Information received by the Assessing Officer about discount, after the original assessment is a "definite information".
(b) Income-tax---
----Gross profit rate---Glass business---4% G.P. rate assessed against 2.38 % declared was reduced to 3.5 % by the Appellate Tribunal.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss. 156 & 132---Rectification of mistake---Appeal before Appellate Tribunal---Argument in respect of rectification made by First Appellate Authority---Validity---Argument that original order passed under S.132 of the Income Tax Ordinance, 1979 had been rectified under S.156 of the Ordinance and the Assessing Officer did not file appeal against the same had no validity because the original order under S.132 had been vacated by the Appellate Tribunal and the matter was remanded to the First Appellate Authority to decide the matter on the grounds taken by the assessee.
Abdul Tahir, I.T.P. for Appellant.
Mahfooz-ur-Rehman Pasha, D.R. for Respondent.
Date of hearing: 13th April, 2001.
ORDER
S. HASAN IMAM (JUDICIAL MEMBER).---By this order we intend to decide appeal preferred by the assessee being aggrieved and dissatisfied with the impugned order, dated 14-10-2000 passed by the learned A.A.C. under section 132 of the Income Tax Ordinance, 1979.
2. The assessee has taken objection that the order of the learned A.A.C.(A) is bad in law, the discount disclosed by the assessee in the trading account as gross profit has not been considered and that the learned C.I.T(A) adopted the sales at Rs. 13,000,000 as against Rs. 12,400,000 taken by the DCIT with no reason thereof.
3. Further objection is taken to the order that the original order No. 204 under section 132 was rectified under section 156 against which no appeal was preferred whereby the department accepted the appellate order.
4. The facts reveal that the assessee an individual, deriving income from sale of glass on wholesale basis. The assessment for the assessment year 1996-97 was finalized under section 59(i) of the Income Tax Ordinance, 1979. Later on information collected from Messrs Shehra Sheet Glass Industries and Messrs Gunj Glass Works that the assessee has allowed discount of Rs. 299,470 on purchase of Rs. 74,09,308 made from these two companies. The scrutiny of the case further reveals that the assessee suppressed the opening balance amount by Rs. 50,000 by the charge year under consideration because the actual closing balance for the assessment year 1995-96 is at Rs. 1,00,000. An amount of Rs. 5,300 was also detected as over expense claimed in PEL Account.
5. A show-cause notice under section 65 of the Income Tax Ordinance, 1979 was issued. The case was reopened with the approval of the learned IAC, Sukkur Range. The assessee was called upon to submit revised return on or before 30-6-1998. Adjournments were allowed and the assessee failed to submit the revised return. However, in response to notice under section 61 the learned A.R. of the assessee contended that .the discount amount received from Messrs Shehra Glass Sheet and Messrs Gunj Class Works. has been passed on to the retailers. However, in the opinion of the Assessing Officer, the assessee failed to make out a case that discount has been passed on to the retailers. The assessee also changed his contention while contending that, the price list of the company. The Assessing Officer disagreed with the contention `company without any logic' and found that the evidence whatsoever finalized the assessment as under:---
| "Net Profit declared at ????.??????????????????????????????? Rs. 64,000 Addition on account of unexplained opening balance under section 13(1)(aa)?????????????????????? Rs. 2,99,470 Addition on account of suppressed opening balance under section 13(1)(aa).????????????????????? Rs. 50,000 Addition on account of excess claim of expenses in P & L Account.????????????????????????????????????????? Rs. 5,300 Add-Backs out of P & L Account 1/3rd out-of traveling??? ?????????????????????? Rs. 8,333 1/3rd out of Miscellaneous, ????????????????? Rs. 8,433 Rs. 16.766 Total income???????????????????????????????????????????????????????????????? Rs. 4,35,536 |
6. The learned A.A.C. cancelled the assessment order whereby restored the original order framed under section 59(i) observing hereunder:---
"Having given due consideration to facts, of the case, arguments advanced and law quoted by the learned counsel, I am inclined to agree with the contention that no new information was available with the Assessing Officer at the time of reopening the assessment to process under section, 65. Also the explanation offered by the appellant with regard to the discrepancies pointed out by the Assessing Officer appears to be reasonable. The action under section 65 having been prompted by a charge of opinion, is not tenable legally the light of various decisions of the higher Appellate Authorities quoted supra by A.R. of the appellant."
7. The learned A.A.C., however, on an application under section 156 rectified the order for the reason that in the last para of page 2 of the Order in review, it has been mentioned that the A.R. has filed written arguments in this context but the same have not been reproduced accordingly.
8. It is worth mentioning that the appellate order passed by the learned ACIT(A), dated 20-2-1999 has been vacated by the I.T.A.T. with the following findings/directions:---
"We find, on the facts and circumstances supra, that the learned A.A.C. is not justified in holding that no new information is available to the D.C.I.T. warranting action under section 65 of the Ordinance. We have no doubt in our mind that the information about discount supra is received by the D.C.I.T., after the original assessment and it is definite information. .
Accordingly, we vacate the impugned order of the learned A.A.C. and remand the appeal to whom for deciding it on other grounds taken by the assessee."
9. The learned A.A.C. took up the matter again for disposal in the light of the Tribunal's order and passed the order, dated 14-10-2000. The learned A.A.C. observed that the Assessing Officer rightly rejected the trading version and further observed hereunder:---
"However, considering that .the nature of trade involves allowance of discount as a matter of routine it would be appropriate to complete the assessment by way of estimating the sales at Rs. 13,000,000 and applying G.P. rate of 4 % thereon which is directed."
10. We have heard the learned representatives of the two parties and have gone through the record. So far as Ground No. 1 is concerned, we find that the argument that the order of the learned A.A.C. is bad in law is no more available to the assessee as the matter has been before the I.T.A.T. and the order, dated 20-9-1999 was vacated by the I.T.A.T. with the observation "that the learned A.A.C. is not justified in holding that no new information is available to the D.C.I.T. warranting action under section 65 of the Income Tax Ordinance. We have no doubt in our mind that the information about discount is received by the D.C.I.T., after the original assessment and it is definite information".
11. In the circumstances supra, legality, of the order cannot be challenged as the order has been passed under the specific directions of the I.T.A.T. and no reference or appeal has been preferred against the order of the I.T.A.Ts.
12. So far as Grounds Nos. 2 and 3 are concerned, we find that sufficient relief has already been allowed in respect of discount as the learned A.A.C. has lastly observed in his order that "however, considering that the nature of trade involves allowance of discount as the matter of routine, it would be appropriate to complete the assessment by way of estimating the sales at Rs. 13,000,000 and applying G.P. rate of 4% thereon". The learned counsel for the appellant while not much disputing the sales estimate still feels aggrieved with the G.P. rate which according to him is still excessive, against the declared G.P. rate of 2.38%. As no specific instance has been given by the officers below in support of the G.P. rate of 4% we consider it proper to reduce the same to 3.5% while maintaining the sales estimate of Rs. 1,30,00,000. The order of the learned A.A.C. will stand modified accordingly.
13. The next argument that the original order passed under section 132 has been rectified under section 156 and the D.C.I.T. did not file appeal against the same has no reason, because the original order under section 132 has been vacated by the I.T.A.T. and the matter was remanded to the learned A.A.C. to decide the matter on the grounds taken by the assessee.
14. The appeal is disposed of to the extent and in the manner indicated above.
C.M.A./M.A.K./127/Tax(Trib.)?????????????????????????????????????????????????????????? Order accordingly.