1997 PLP (Trib (PTD)

19. In these circumstances we do not feel inclined to support the impugned order. Keeping all the facts in view we are of the considered opinion that it is a case of acceptance of the trading account. We, therefore, direct that the appellant's declared sales be accepted and 20% G.P. rate consistent with the history of case as well as parallel cases be supplied for this year. The assessment for the year 1987-88 be made accordingly.

20. Regarding the add-backs in respect of profit and loss account items, we are not convinced to allow any relief to the appellant on this score.

21. For the assessment year 1989-90 the appellant declared sales as under.:

Floor Area sold(sq.ft) Sale Price Average rate Ground 2346.42 20,54,750 856.62 Ist 2445.62 17,92,000 132.24 2nd 4497.00 9,34,000 211.93 3rd 5810.00 1,27,000 245.17 Total 15099.04 60,50,750 401.00

22. The learned D.A. stated that the sale rate was rejected by the I.T.O. on the ground that the agreement of sale executed by the appellant with the buyers did not give correct sale price. The assessing officer considered the price under stated as according to him, it was done to avoid Government dues. The learned D.A. for the Department further stated that in addition to old customers over couple of dozens sale-deeds were registered in favour of new buyers. Few other reasons were also advanced in the impugned order to justify the adoption of the sale rate. We do not feel it necessary to reproduce these reasons as the same are available in the order of assessment. 23 The following rates were applied:

Floor Area sold(sq.ft) Average rate Total sales Ground 2346.42 1500 3519930 Ist 2445.62 1000 2445620 2nd 4497.00 500 2248500 3rd 5810.00 400 2324000 Total 15099.04 69.8 10538050

24. The learned A.R. representing the appellant argued that since the sales have been made to the buyers on the basis of instalments, therefore there was no possibility for under statement. He further stated that the existence of agreements to sell is not denied and a copy of each of then agreements has been submitted. The learned A.R. strengthen his submission by reference to a case law with the title M/s. Bhandaras (Pvt.) Ltd. decide by this Tribunal. In this case the learned Bench had held that where sale were made through instalments under the written agreements, the declare sales be accepted. The learned A.R. further argued that no instances of un-verifiability or concealment were pointed out nor the existence of the agreements was denied. It is submitted that the appellant is regularly maintaining books of accounts which were duly presented for examination In such circumstances there was no question of any understatement. Reliance is placed on (1993) 68 Tax 41 (SC). As regards the observations about the sale to new customers, the learned A.R. stated that the observations at neither correct nor are based on the record. A detailed list of collection c advances received on yearly basis was placed on the record which was state to be self-explanatory. According to the learned. A.R. these documents clearly show the correct figures as regards the trading results. The department, it was submitted, had no basis for any suspicion. Moreover, suspicion cannot be made the basis for discarding the trading results.

25. On the other hand the learned Legal Advisor of the department was not able to rebut these contentions. However, the case of the department was supported on the basis of the observations made in the impugned order.

26. We are of the view that every assessee deserves to be treated in accordance with law. In the instant case the law has been spelt out in the case referred to above, by this Tribunal. The fact that the appellant entered into sale transactions as per agreements executed years before which laid down the mode of payment any instalments. This fact, as observed earlier stands proved on the record. Moreover, section 54 of Transfer of Property Act allows sales to be made for the price paid or promised or partly paid and partly promised. Since in this case sales have been effected mainly through agreements which envisaged payment through instalments, the case-law referred to above is fully attracted to the facts of this case. We may observe here that there have been a few transactions in which the appellant is stated to have negotiated fresh deals. May it be so, they are also recorded in the sales declared by the appellant. However, in case any of the sale transactions is discovered to have been made which is not duly recorded in the accounts of the assessee, there is nothing in law to stop the revenue for proceedings in accordance with law.

27. As per the submission of the appellant's A.R. the declared sale rate of Rs.401 per sq. ft. has been calculated by dividing the total sales at Rs.60,50,750 by the area sold at 15098 sq. ft., during this year. The learned A.R. argued that these were applied in identical cases by the department itself particularly so in cases of commercial building located on the Main Gulberg, Lahore. The Gulberg Centre and the Raja Centre were referred to in this context. In these cases the assessments were finalised at Rs.465 per sq. ft. during the year 1988-89. In the case of the appellant the average sale price in the years from 1987-88 to 1992-93 works out to be Rs.484 per sq. ft. This figure certainly is better than the rate applied by the department in the abovestated cases.

28. We notice that respondent-department has not set-forth any special reasons to refuse the treatment it stands entitled in the circumstances of this case. For us it is difficult to endorse the view that in such-like circumstances when two parties are placed nearly in the same situations, different treatment be given to them unless it is so warranted by support from the record. Certainly when there are two buildings erected by two different individuals it is not necessary that they would be absolutely identical for all intents and purposes. What is mainly required to be seen is the proximity of location coupled with the type of construction and the prevailing rate at that time. None of these factors have been ascertained to be variable in the case of the aforesaid references, when compared to the facts of the instant case.

29. Keeping all these facts in view we are not inclined to uphold the impugned order which is hereby set aside. The respondent/department is directed to calculate the liability of the assessee-appellant on the basis of the declared version for the year under review.

30. For the assessment years 1991-92 and 1992-93 the I.T.O. rejected the declared sales and made his own estimates: The learned C.I.T. (Appeals) confirmed this treatment. Learned A.R. submitted that the impugned order fails to touch the technical aspects of the case i.e., the location and the size of the shops, prevalent market price and slump in the plaza business. The fact that after a lapse of long time, many shops are still vacant has also been ignored. About the sale rate the learned A.R. stated that the impugned order ignored parallel cases which were offered for consideration on behalf of the assessee while for the figures adopted no such references were quoted. The learned A.R. further argued that no sanctity to the registered sale-deed was given although they were correct and genuine documents. This treatment of the department against the assessee/appellant was contrary to the declared law. In support of the contentions regarding the sanctity of the sale-deed (1992) 66 Tax 89 was referred. The learned A.R. further stated that the average sale rate declared at Rs.380 and Rs.660 was very favourable then the rate assessed by the department in parallel cases for the years 1991-92 and 1992-93. The learned A.R. submitted that under the circumstances when a better average sale rate, as compared to other parallel cases, is offered by the appellant, there was no justification left for the department to refuse to accept the declared rate particularly when the instant case has a history of the acceptance of the declared sales. The learned A.R. further stated that despite the maintenance of complete accounts which were duly shown to the assessing officer, no notice under section 62 was ever served to confront the appellant regarding any defect in the books of accounts.

31. The learned Legal Advisor for the department stated that the record did not indicate that the appellant had been confronted by the assessing officer and that any notice under section 62 was ever served on the appellant. It was admitted that there was a legal requirement for the respondent/department to seek appellant's explanation before drawing adverse inferences.

32. It is noticed that during these two years, under review, the appellant declared G.P. at 29.46% and 38% but the rate was applied at 30% and 35% for these years respectively. It is not understood that in the wake of the books of accounts what was the basis with the I.T.O. on which the rates were substituted by his own figures at the time of framing the assessment. In case it was required to be so done, proper opportunity to the appellant was required to be allowed. But the record is silent over this legal requirement. Despite the admission by the Legal Advisor for the department to this effect, his supports for the impugned order is not intelligible.

33. We have failed to ascertain reasons for the rejection of the registered sale-deeds merely on presumptions. On the point of acceptance of the value as mentioned in the sale-deed, the learned A.R. referred to a case 1995 PTD (Trib.)

1. Keeping in view the case-law, we may observe that there are no convincing reasons which may justify the rejection of the price of the registered sale-deeds. The arguments advanced by the learned A.R. are certainly weighty. The law pertaining to the acceptance of the sale price, as mentioned in the sale-deed, has amply been thrashed out. A reference thereof has already been made above. No cogent reasons have been advanced to rebut the prices mentioned in the sale-deeds. We are of the view that in such circumstances full sanctity be attached to the sale price recorded in the registered sale-deed. Questions pertaining to the application of G.P. rate also appear to tilt in favour of the appellant as the impugned order sets-forth no relevant and sound basis for recording a deviation. Moreover, in the absence of any defects in the declared version, even duly touched by confronting appellant as to its reliability, we decline to uphold the impugned order which is hereby set aside.

34. In view of these reasons, the respondent (I.T.O.) is directed to accept the declared trading results for both the years under review and calculate the appellant's tax liability accordingly.

35. As a result what has stated above, all the four appeals are allowed as indicated above. M.B.A./237/Trib. Appeal allowed.