I.T.As. Nos.8114/LB, 8115/LB of 1996, 1782/LB, 1783/LB and 2181/LB of 1998, VS I.T.As. Nos.8114/LB, 8115/LB of 1996, 1782/LB, 1783/LB and 2181/LB of 1998,
2004 P T D (Trib.) 2287
[Income‑tax Appellate Tribunal Pakistan]
Before Muhammad Tauqir Afzal Malik, Judicial Member and Shariq Mahmood, Accountant Member
I.T.As. Nos.8114/LB, 8115/LB of 1996, 1782/LB, 1783/LB and 2181/LB of 1998, decided on /01/.
th
October, 1998. Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S. 62‑‑‑Assessment on production .of books of accounts, etc.‑‑Business of running an agency of Tractors Manufacturers and sale of its parts‑‑‑No‑account case‑‑‑Estimation of sales‑‑ ‑Add‑backs in profit and loss account‑‑‑Sales estimated by the First Appellate Authority was upheld by the Appellate Tribunal and Gross Profit Rate 7.5 % being as per history was confirmed‑‑‑Add‑backs under the heads "bonus to staff and printing and stationery" being unreasonable was deleted‑‑‑Add‑backs under the heads "entertainment, discount on tractors, ,booking and property tax" were set aside and case was remitted back to Assessing Officer for its decision afresh giving an opportunity to the assessee.
Aftab Ahmad Qazi for Appellant.
Sameera Yasin D.R. for Respondent.
Date of hearing: 22nd September, 1998.
ORDER
MUHAMMAD TAUQIR AFZAL MALIK (JUDICIAL MEMBER).‑-----------The assessee/appellant is a private limited company which is engaged in the business of running an agency of Millat Tractors and sale of its parts. It is in further appeal before us against the order of CIT(A)‑III, Lahore, dated 4‑11‑1996 for the assessment years, 1993‑94 and 1994‑95 and order, dated 4‑6‑1998 for the assessment year, 1995‑96 and order, dated 4‑6‑1998 for the assessment year, 1996‑97 and order, dated 29‑6‑1998 for the year, 1997‑98.
2. The grounds of appeals in all the appeals are nearly same. For all the assessment years it has called in question the rejection of declared version, estimated of sales and certain add‑backs under the P&L account.
3. For the year 1997‑98 it has further called, in question the application of G.P. rate at 7.5% against declared G.P. rate of 7.40%.
4. For the year 1993‑94, return was filed declaring a loss of Rs.56,288. No books of account were produced for examination. Facts on record revealed that sales were on cash basis which remained unverifiable. The assessee also had a history of rejection of account. In the absence of books of account and due to the fact that sales mostly on cash basis, the declared version of the assessee was rejected. Sales declared at Rs.18,16,623 were estimated at Rs.25 lac G. P. @ 7.5% was applied a per history of the case. There were certain add‑backs in the P&L account.
5. The CIT(A) confirmed the G.P. rate but reduced the sales to Rs.22 lac for the year, 1993‑94. The add‑backs made under the head sales promotion was deleted. In telephone it was confirmed. There was some relief in the other add‑backs.
6. For the charge year, 1994‑95 the income declared at Rs.2,05,124 was assessed at Rs.8,27,480. The sales declared at Rs.20,26,505 were estimated at Rs.30 lac and G.P. rate was applied as per history of the case at 7.5%. The CIT(A) reduced the sales to Rs.24 lac. The add‑backs under the heads Telephone, Repair and Maintenance and Printing and Stationery were confirmed. The add‑backs made under the heads sales promotion, advertisement and bonus to staff were deleted and the others were reduced.
7. For the charge year, 1995‑96 the declared income of Rs.1,48,366 was assessed at Rs. 6,58,808. Sales declared at Rs.22,89,012 were assessed at Rs.30 lac and G.P. rate at 7.5 % was applied as per history of the case. The CIT(A) reduced the sales to Rs.25 lac. In the case of add‑backs in the P&L a/c under the heads sales promotion, advertisement and bonus to staff were deleted. The add backs under the heads telephone, repair and maintenance' and printing and stationery were confirmed. There was also some relief in the other add‑backs.
8. For the charge year, 1996‑97 income declared at Rs.98,313 was assessed at Rs.3,64,908. Sales declared at Rs.36,89,137 were estimated at Rs.44 lac and G.P. @ 7.5% was applied as per history of the case. In appeal, the CIT(A) reduced the sales to Rs.40 lac and also gave relief in some add‑backs.
9. For the charge year, 1997‑98, the declared income at Rs.1,06,983 was assessed at Rs.4,48,932. Sales declared were at Rs.31,67,661 which were estimated at Rs. 5 lac. The G. P., rate was applied at Rs.7.5 % as per history of the case. The CIT(A) reduced the sales to Rs. 40 lac and also have some relief in the P&L add‑backs.
10. The contention of the counsel that the rejection of account is un called for, is not supported by record and as per assessment orders the discrepancies in the accounted version have been pinpointed and notice under section 62 have also been given. In this view of the matter, this contention of the counsel fails. Therefore, the estimates of sales was to be made.
11. As far as the estimate of sales are concerned, the relief given by the CIT(A) is quite reasonable and therefore, the sales estimated by the CIT(A) for all the years till, 1996‑97 are upheld For the year, 1997‑98 the assessee has shown decline in sales but has shown G.P. of 7.5%. They sale estimated at Rs.45 lac and reduced to Rs.40 lac seems to be on the higher side. Therefore, the same are reduced to Rs.38 lac. The G.P. of 7.5 % being as per history is confirmed.
12. As far as the add‑backs under the heads bonus to staff' and printing and stationery for the assessment years 1996‑97 and A 1997‑98 are concerned, the same seems to be unreasonable, therefore, deleted. Under the heads entertainment, discount on tractor booking and property tax are set aside and the cases are remitted back to the Assessing Officer for its decision afresh giving an opportunity to the assessee.
13. No interference is called for in the other add‑backs. Hence they are maintained.
14. The appeals of the asses see are disposed of in the manner indicated above.
C.M.A./147/Tax (Trib.)Order accordingly