VS, 2010 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 58 (2009)

(a) Income Tax ---

----Past history---Rejection of trading results---Assessee contended that Taxation Officer had rejected the books version on the basis of previous history which had already been modified by the High Court, the same treatment should be made for the year---Validity---Taxation Officer rejected declared trading results on the basis of history---First Appellate Authority had already mentioned the history of the case---Position of maintaining the amount and other relevant fact remained the same---Appellate Tribunal directed that trading version declared by the assessee be accepted as there was no justification for rejection of the same.

ITRA No. 580 of 2006 rel.

(b) Income Tax Ordinance (XXXI of 1979)---

----S.62---Assessment on production of accounts, evidence etc.---Non-confrontation on the issue---Addition on account of payment received from parent company---Assessee contended that he was not confronted on the issue and referred assessment order as well as notice sent by the Taxation Officer under S.62 of the Income Tax Ordinance, 1979 in that regard---Validity---Neither in the assessment order it had been mentioned that the assessee had been confronted in that regard nor in the notice under S.62 of the Income Tax Ordinance, 1979 the query had been made by the Taxation Officer from the assessee---Addition was deleted by the Appellate Tribunal in circumstances.

(c) Income Tax ---

----Addition---Other income---Assessee contended that similar addition made in the previous years had been deleted by the Appellate Tribunal--In view of settled position the addition on account of other income was deleted by the Appellate Tribunal.

(d) Income Tax---

----Disallowance out of repair and maintenance expenses---Following the decision of Appellate Tribunal and history of the case Appellate Tribunal directed that such expenses be restricted to 25% of the claim as in similar circumstances disallowance was reduced in the previous assessment year by the Appellate Tribunal---Disallowance out of other expenses was also set aside for fresh consideration as the similar disallowance made in the previous year was set aside---Taxation Officer was directed to pass fresh order in respect of other expenses in accordance with law affording reasonable opportunity of hearing to the assessee.

Irfan Saddat for Appellant.

Dr. Abdus Sattar Abbasi, D.R. for Respondent.

ORDER

The appellant through this appeal has objected to the impugned order of the learned CIT(A) dated 19-9-2005 on the following grounds:--

* "That the learned CIT(A) has erred in confirming the action of the learned Taxation Officer who discarded the trading results of your appellant and made an addition of Rs.20,027,436 by applying gross profit at the rate of 50% on estimated sale of Rs.50,000,000. It is contended that the action is arbitrary and without any lawful basis.

*That the learned CIT(A) has erred in confirming the action of the learned Taxation Officer who made an addition of Rs.12,549,414 to the total income of your appellant on account of payment received from parent company. It is contended, that the action is arbitrary and without any lawful basis.

* That the learned CIT(A) has erred in confirming the action of the learned Taxation Officer who made an addition of Rs.100,000 to the total income of your appellant on account of other income. It is contended that the action is arbitrary and without any lawful basis.

* That the learned CIT(A) has erred in confirming the. action of the learned Taxation Officer who disallowed the following expenses which were incurred wholly and exclusively for the purpose of the business and since these expenses, were incurred by your appellant in the usual and ordinary course of business, these should have been allowed as operating expenses under the applicable provisions of section 23(1) of the repealed Ordinance."

2. We have heard the learned representatives of both the sides and also perused the impugned order of learned CIT(A) and assessment order and relevant record available on file.

3. We have found that the Taxation Officer has rejected the declared version and the addition have been made to the total income of the assessee on account of payment received from parent company, the addition has also been made to the total income on account of other income and the disallowances have been made in the P&LA/c under the heads repair and maintenance expenses and out of other expenses. Learned counsel in this respect has contended that the assessee-Company is engaged in retails of food items. He has contended that the Taxation Officer has rejected the declared version on the flimsy reason that the party-wise detail with complete addresses of the sales and purchases have not been furnished. He has contendes that it is not possible to note the addresses of the parties as the assessee' is engaged in retail of food items. However, the month-wise detail of sales with copies of Sales Tax return along with tax record was furnished to the Taxation Officer. He has contended that detailed explanation regarding the decrease in sale has been explained, that as the company has stopped its business operation the sales have declined, but no heed in this regard was paid by the Taxation Officer. Learned counsel has contended that in the previous years also trading version of the assessee-Company was rejected by the department at the assessment stage in the appeal before this. Tribunal substantial relief was granted by reducing the sales and G.P. rate. However; the appellant filed reference application before the Honouable High Court agitating the rejection of trading version and the Honourable High Court vide order dated 27-3-2007 in ITRANo.580 of 2006 has directed this Tribunal to accept the trading results and book version of the assessee-Company in the previous year. Learned counsel has contended that as the Taxation Officer has rejected the book versions on the basis of previous history which has already been modified by the Honourable High Court, therefore, the `same treatment should be made for this year also. Learned D.R. is unable to rebut the above said position. He is however of the view that each year is independent. But we are of the view that as the Taxation Officer has rejected the declared trading results on the basis of history and the learned CIT(A) has already mentioned the history of the case, therefore, position of maintaining the amount and other relevant fact remaining the same, we find no justification for rejection Trading Result. Trading version declared by the assessee is, therefore, directed to be accepted.

4. Regarding the addition on account of payment received from the parent company, the learned counsel has contended that the appellant was not confronted on this issue. He has in this regard referred the assessment order as well as the notice sent by the Taxation Officer under section 62 of the Ordinance. We have found that neither in the assessment order it has been mentioned that the assessee has been confronted in this regard nor in the notice under section 62 the query has been made by the Taxation Officer from the assessee in this regard. The addition made in this regard is, therefore, deleted.

5. Regarding the addition on account of other income learned counsel has contended that the similar addition made in the previous year has been deleted by this Tribunal. In this regard the decision of this Tribunal dated 21-1-2006 inI.T.A. Nos.61 and 62/KB/2005 (assessment years 2000-2001 and 2001-2002) has been referred. In view of the above said settled position the addition on account of other income is, therefore, also deleted.

6. Regarding the disallowances out of repair and maintenance learned counsel has contended that the similar disallowance made in the previous years were reduced to 25% of the claim by this Tribunal through the above referred order dated 21-1-2006, while the disallowances made out of `other expenses' was set aside in the previous year.

Learned D.R. has however supported the impugned orders of the officers below.

The disallowance out of repair and maintenance expenses following the above referred decision of this Tribunal and history of the case is directed to be restricted to 25% of the claim as in the similar circumstances disallowance in this respect was reduced in the previous assessment year by this Tribunal. The disallowance out of other expenses is however, set aside for fresh consideration as the similar disallowance made in the previous year was set aside by this Tribunal and according to both the parties the Assessing Officer has still not passed order in this regard for the previous year. The Taxation Officer is, therefore, directed to pass fresh order in respect of other expenses in accordance with law affording reasonable opportunity of hearing to the assessee.

7. The appeal filed by the assessee is partially allowed to the extent and in the manner referred above.

C.M.A./124/Tax (Trib.)Order accordingly.