2005 PLP (Trib (PTD)

These are appeals by the assessee-appellant against the order of the learned CIT (Appeals-II), Faisalabad, dated 2-6-2003 in respect of assessment years 2000-2001 and 2001-2002. The main grievances of the appellant for both the years under appeal are common and summarized as under: "That the Taxation Officer was not justified at all to exclude the appellant's return from the scope of Self-Assessment Scheme. That the estimated turnover vis-a-vis reduced turnover by the learned CIT (Appeals) is highly excessive and without any basis or jurisdiction." Brief facts of the case leading to these two appeals are that the appellant, an Individual, derives income from sales and purchases of Karyana goods as well as Pensari goods on retail basis. Returns were filed declaring net income at Rs.1,09,000 and Rs.50,000 accompanied by computation chart, information of electricity and a challan of Rs.3,

570. Statutory notices were issued, served and complied with. In response to these notices, the AR of the assessee duly appeared without books of accounts on the plea that none were maintained. During assessment years 2000-2001, computation chart furnished disclosed total sales of Rs.9,60,000, G P rate of 15% and total expenses were claimed at Rs.35,

000. The assessee failed to produce any documentary evidence to substantiate his declared version. Finally, the Assessing Officer rejected the declared version and computed the income as under: Sales estimated Rs.20,00,000 Gross Profit @ 15% Rs.3,00,000 Less Expenses Rs.35,000 Net Income: Rs.2,65,000 During assessment year 2001-2002, local as well spot enquires were conducted with the permission of the worthy IAC. In the light of the enquiry conducted, a show-cause notice under section 62 was issued as to why the daily average sales should not be adopted at Rs.10,000 along with GP rate of 15% of the assessee. In response to this notice, assessee furnished reply stating that size of his shop is 450 sq. ft. without mentioning storyes of shop. The assessee also explained that stock confronted was without any justification, similarly the sales were also without any justification. Finally, the Assessing Officer completed the assessment for assessment year 2001-2002 as under:-- Sales estimated Rs.30,00,000 Gross Profit @ 15% Rs.4,50,000 Less Expenses Rs.60,000 Net Income Rs.3,90,000 The assessee being aggrieved with the above treatment of the Assessing Officer, preferred an appeal before the learned AAC, Multan who vide his order cited supra, observed that during assessment year 2000-2001, Assessing Officer was justified in discarding the declared version of the assessee as no documentary evidence in support of declared results was furnished. However, the learned CIT(Appeals) reduced the sales to Rs.1.5(M) on the basis that sales adopted were without specifying the stock position and other solid material evidence on record. For assessment year 2001-2002 the learned CIT(Appeals) observed that Assessing Officer was justified in discarding the declared version and issuing specific notice after carrying out a local inquiry and bringing the facts to the knowledge of the' assessee. It was further observed by the CIT that business was discontinued on 30-6-2000 but it was not understandable when the business was closed on 30-6-2000, how return for the assessment year 2001-2002 was filed declaring income of Rs.50,

000. However, the learned CIT(Appeals) found the sales estimated were on the higher side keeping in view the facts and circumstances of the case and reduced the same to Rs.2 (M),. The assessee-appellant filed second appeal before the Income Tax Appellate Tribunal whereby the same was disposed off as under:

" .We are inclined to confirm the relief as accorded by the learned CIT (Appeals) for the reasons as cited by the learned CIT (Appeals) in his order for the assessment years 2000-2001 and 2001-2002, and we are not inclined to further interfere in the order of the learned CIT(Appeals) which is accordingly confirmed for .both the assessment years under appeal." Feeling aggrieved to this treatment, the assessee filed a miscellaneous application for the recall of the ITAT order and the same was done vide M.As. Nos. 15 & 16/LB/2004 on 21-8-2004 with the following remarks:-- " we are of the considered opinion that it is necessary to examine the relevant assessment record and all the other material evidence for a clear finding regarding the contentions of the assessee-applicant as raised in the main appeals for the assessment years 2000-2001 and 2001-2002. So, we hereby recall the ITAT order passed on 18-12-2003 vide I.T.As. Nos.4329 and 4328/LB of 2003 (Assessment years 2000-2001 and 2001-2002) with the direction that the relevant assessment record in this case is duly produced before the ITAT on the date of hearing of the main appeals so that the exact position in this case may be' adopted for the disposal of the main appeal on factual position of law and ground realities in view of the miscellaneous applications filed by the assessee-appellant are hereby accepted accordingly." We have heard the rival arguments of both the sides and the learned AR of the assessee-Company drew our attention to the fact that the return for the assessment year 2000-2001 was filed under SAS but processed under normal law due to late submission of documents. The AR further argued that ITO failed to pass any order for exclusion of applicant's return from the ambit of SAS hence was not justified to process the same under normal law. The AR further pleaded that ITI's report was based on belated inquiry and was not relevant to the same, so the ITO was inadvertently drawn inference for estimation of sales. The AR of the assessee-appellant has strengthened all these submissions by citing the following case-laws of superior Courts reported as: 1991 PTD 968, 2002 PTD 407 (2003) PTD (Trib.) 1948, 1995 PTD 1087, 1989 MLD 3215 and 1954 SC

191. After perusing the matter under consideration from all its pertinent. aspects and the case-laws cited (supra) furnished by the AR of the assessee-appellant at the time of hearing before us, we are of the considered view that the assessee filed the requisite documents with the Assessing Officer after six days delay from the date of compliance given by the Assessing Officer. The learned AR of the assessee drew our attention to the fact that the Assessing Officer is empowered to condone the delay in submission of the documents called for him from an assessee and in this context he referred to a decision reported as 1991 PTD 968 in which it was held that failure to submit the documents by an assessee within the prescribed period did not totally deprive the assessee from the benefit of the Self-Assessment Scheme. In fact, the ITO had the powers to condone the delay and had the discretion not to exclude the case from the benefit of the scheme. In view of the above, we are of the considered view that the explanation of the assessee for the delay in submission of required document with the Assessing Officer should be reconsidered by him so that the case is made eligible for the Self-Assessment Scheme for the relevant assessment year i.e. 2000-2001. The issue is set aside for reconsideration. As far as assessment year 2001-2002 is concerned, the sales were declared by the assessee at Rs.6,00,000 which were estimated at Rs.30,00,000 by the Assessing Officer after taking into consideration the report of the Circle Inspector. On being aggrieved, the assessee went in appeal before the learned CIT(A) who reduced the sales to Rs.2(M). These were still considered excessive as according to the learned AR the estimate of sales were made on the basis of the Inspector's Report which was strictly speaking not relevant to the income year of the assessee i.e. 2001-2002. In this context, the learned AR drew our attention on three reported cases i.e. 2003 PTD (Trib.) 1948, 2004 PTD 30 (H.C. Lah), and 2002 PTD 407 in which the learned Courts have held the Assessing Officer should not base his estimation of sales upon an enquiry report having been made more than 1 year after expiry of the relevant income year and more than six months after expiry of the next income year. It was further held that the enquiry report should be supported by documentary evidence in respect of availability of stock or capital employed by an assessee in this business. In case of any short-comings, the order is not a judicious one. In view of the preceding facts, we are of the view that the sales estimated are somewhat excessive and these are accordingly reduced to Rs.15,00,

000. The appeals of the assessee succeed in the manner as discussed above. H.B.T./452/Tax (Trib.) Appeals allowed.