I.T.AS. NOS.2202, 2068, 2003/1,13, 2774, 2775 AND 2776 OF 1991-92 Versus I.T.AS. NOS.2202, 2068, 2003/1,13, 2774, 2775 AND 2776 OF 1991-92
ORDER
NASIM SIKANDAR (JUDICIAL MEMBER)-- Three cross-appeals for the assessment years 1988-89 to 1990-91 assail a consolidated order recorded by CIT(A) Faisalabad on 18-9-1991.
2. The appellant is a private limited company and derives income from a flour mills at Faisalabad. For the assessment years under review sales were returned at Rs.3,90,15,779, Rs.5,46,46,852 and Rs.5,36,56,610. The rates were returned respectively at 2.80 % ; 2.92 % and 2.98 % . The Assessing Officer rejected the returned version for a number of reasons including the fact that purchases of wheat were unverifiable; that rate of purchases varied from party to party on same date that declared milling gain was on the lower side, that cash sales were unvouched and unverifiable and that the returned G.P. rate was also on the lower side. It was further noted that production per unit of electricity was extremely low when compared with other parallel cases. Accordingly, he estimated the sales in the three years respectively at Rs.4,70,00,000. Rs.5,60,00,000 and Rs.6,00,00,000. These were subjected to a rate of 3 %. Also a number of profit and loss disallowances were made in various heads.
3. Learned first appellate authority by way of the impugned order reduced the estimated sales to Rs.4,50,00,000 in the year 1988-89 and to Rs.5,80,00,000 in the year 1990-91. The sales estimated in the year 1989-90 were, however, confirmed. In case of profit and loss additions partial relief was allowed. The assessee still feels dissatisfied with the reduction in sales as well as the relief allowed in profit and loss account. The Department on the other hand feels aggrieved of the reduction in estimate on of sales in the assessment years 1988-89 and 1990-91 while in the year 1989-90 profit and loss additions are pressed.
4. Parties have been heard. Learned counsel for the assessee contends that the relief allowed in case of sales as well as profit and loss additions is inadequate and not in accordance with the history of the case. However, he has not been able to convince us for a further relief as for the estimate of sales are concerned. Learned first appellate authority noted that in the immediate preceding year viz. 1987-88 the assessee returned sales at Rs.3,46,84,428 which were estimated at Rs.4,50,00,000. However, in appeal these were reduced to Rs.3,72,00,000 and that it was not certain that whether the Department had approached the Tribunal against such relief in the year 1987-88. Keeping in view the estimate of sales and these finally determined by the first appellate authority in the immediate preceding year, we find that the relief allowed by the first appellate authority in the years 1988-89 and 1990-91 is quite reasonable. Also he was quite justified in remarking that estimation of sales at Rs.5,60,00,000 against the declared at Rs.5,46,46,852 in the year 1989-90 were reasonable. In case of profit and loss additions as well no further relief is available to the assessee except in case of staff salaries. In this head in the year 1988-89 no addition appears to have been made while in the years 1989-90 and 1990-91 these expenses were disallowed at Rs.30,000 and Rs.50,000. In the year 1989-90 the addition was made on account of general observation while in the year 1990-91 the Assessing Officer attempted to connect the declared turnover with the claim of salaries in the year under review and its comparison in earlier years. This was clearly improper. He did not record any express findings as to the genuineness of the claim or otherwise. Mere fact that in the immediate preceding year a lesser amount was expended in this head cannot be made a ground for disallowing part of the same if the claim is otherwise genuine and is established on record. This having not been done the additions made in the head staff salaries in the years 1989-90 and 1990-91 shall be deleted.
5. The grievance of the Department against reduction in estimation of sales is per se unacceptable. Learned first appellate authority having taken into consideration all the attending facts no exception to the relief allowed in this regard can be taken. The estimated sales as finally reduced by the first Appellate Authority certainly appear in line with the history of the case. In case of profit and loss additions again we find that the Assessing Officer had not undertaken the required exercise to disallow expenses under various heads. In that aspect the order of the first Appellate Authority at best is one estimate against the other. In such like situation this Tribunal has never interfered for the Revenue.
6. Resultantly, all the three Departmental appeals shall fail in toto alongwith the one of the assessee in the year 1988-89. The appeal of the assessee in the years 1989-90 and 1990-91 shall succeed only to the extent of deletion of additions under the head staff salaries. Rest of the claim in these two years shall be refused.
C.M.S./314/Trib. Order accordingly.