1998 PLP (Trib (PTD)

This appeal has been filed by the appellant against the order of the CIT (A) for the assessment year 1992-93. The appellant feels aggrieved against selection of the case under para. 4(ii) of Circular No.16 of 1992, sales estimate and expenses.

2. The brief facts of the case are that the appellant derives income from manufacture and sale of sanitary goods etc. The return was filed to declare income at Rs.41,

000. The RCIT Islamabad set apart the case under para 4(ii) as the appellant was running two factories and the sales of these two factories have been declared only to the tune of Rs.3,02,

000. The sales were declared by the appellant at Rs.302,000 yielding a G.P. rate of 25%. Expenses were claimed at Rs.34,

500. The assessing Officer accordingly issued a notice under section

62. The reply tendered by the appellant did not find favour and consequently the assessment was framed under normal law. Sales from Marble unit were estimated at Rs.6 -lac to which G.P. rate at 25% was applied. Sales from sanitary unit were estimated at' Rs.5 lac to which G.P. rate at 25 % was applied. Some add-backs in the profit and loss account were also made under various heads. The appellant being aggrieved filed an appeal before the CIT (A) who reduced the sales from sanitary unit to Rs.350,000, expenses were allowed as claimed at Rs.34,500 whereas the sales from Marble unit were confirmed.

3. We have heard the parties arid gone through the orders passed by the authorities below. With regard to selection of the case under para.,4 (ii) the observations of the learned CIT (A) are reproduced below: "The contentions drawn at the time of original proceedings have also been perused and it is held that the facts listed above could not be totally controverted by the appellant. Only the degree of the same i.e., the installation of huge machinery or the covered area is contested. The income from two sources, the factory having two separate units spread over an area of 1 1/2 Kanals and maintenance of car are confirmed. As such the action of setting apart the return in terms of para. 4 (ii) stands vindicated and is confirmed." The learned A.R. was not able to controvert the findings of the learned CIT(A). We, therefore, feel that the case was rightly selected for detailed scrutiny.

4. The learned A.R. of the assessee has urged that during the year under appeal the assessee has consumed energy worth Rs.16,647 only. the details of which were also filed before us. It was further urged that it was not possible to produce the goods as assessed and reduced. Even the estimate of sales against the declared sales of Rs.302,000 is arbitrary and excessive. The learned A.R. urged that the question of electricity was brought before the assessing officer and the CIT(A), who have not discussed this matter in the body of the order.

5. In the light of the above submissions the impugned order is set aside and the case is remitted back to the ITO where he will examine the electricity bills and make further inquiry with regard to consumption of electricity, if necessary, and while estimating sales should give due consideration to the power consumed.

6. The appeal is allowed in the above manner. C.M.S./426/Trib. Appeal accepted.