1997 PLP 1130 (PTD)

S.13(1)(aa)

Addition

Validity

Assessee challenged addition as it was against method applied by him in course of business for calculation of income and further explained that at time of clearance of consignments, amount paid for, had been received through advances from parties

Assessing Officer brushed aside, explanation on plea of not furnishing names of parties

Assertion of Assessing Officer was belied as name of one party advancing amount, was available on record and Assessing , Officer did not call for that party for verification

Disbelieving explanation and discarding assessee's version was not justified in circumstances. Muhammad Anwar for Appellant. Muhammad Akram Tahir, D.R. for Respondent. Date of hearing: 6th February, 1996. This appeal for the assessment year 1987-88 has been preferred at the instance of the assessee. It calls in question the order dated 12-12-1988 -passed by the Commissioner of Income Tax, Appeals-IV Lahore., The learned counsel for the assessee has raised the contention that there was no justification for opening of the proceedings under section 65 of the Income Tax Ordinance, 1979. He submits that the lower Court had utterly failed to appreciate the method of accounts regularly employed by the petitioner in so far as making of imports of higher value than the capital available with the petitioner. The estimate of sales at Rs.40,00,000 as well as the application of G. P. rate at 8% is attacked as being contrary to the history of the case. It is further submitted that the learned first appellate authority should have cancelled the addition made under section 13(1) (aa) instead of setting aside the same as there was no justification for the remand of the case on this issue.

2. We have heard the learned counsel and the departmental representative. The record has been examined. The department has provided us with no justification for opening of the case under section 65 of the Ordinance. It is, however, on the record that the case was selected for total audit. Since sufficient facts are not available on the record, which may lead us to make a decision on the issue, the action taken by the department in this respect is, therefore, not interfered with.

3. Regarding the rejection of accounts, it is not the case of the assessee that he is maintaining regular accounts. In the past also, the history does not speak of the acceptance of the accounts. The rejection is, therefore, upheld.

4. The assessee vehemently contests that the estimate of sales and the subsequently confirmation to the learned C.I.T. (Appeals) is unjustified. There appears to be weight in the contention of the assessee. The Order of the learned C.I.T. (Appeals) fails to provide us sufficient basis to uphold the addition in the estimate of the sales. The sales, estimate therefore, is not supported. The version of the assessee to this effect, therefore, is directed to be considered as correct. Regarding the application of the G.P., rate, the assessing officer has entered into an elaborate analysis wherein it was discovered that once in the preceding year, the agreed rate was 6. 18 %. This being so, the same rate is directed to be applied for the year under appeal. The assessing officer shall calculate the income of the assessee on this basis. 5.Regarding the addition made by the two Forums below, the assessee challenges the same on the ground that it was done against the method applied by the assessee in the usual course of business for the calculation of his income. It is explained that the calculations made by the assessing officer for ascertaining the available amount at the time of imports are not justified The learned A. R. explained that the two consignments were received at different times and the amount paid for their clearance at different intervals had been received through advances obtained from the parties. The examination of the record shows that this contention was also raised by the appellant before the assessing officer. The assessment order at page 4 records this plea that about 90 % value of the consignment was discharged out of advances from the intended purchasers. The assessing officer brushed aside this explanation on the plea that the names of the parties were not furnished but the record belies this assertion as in the assessment order itself, the name of M/s. Zia Brother, Brandreth Road, Lahore is very much available.' The assessing officer did not call the party for the verification of the appellant's version. Therefore, in such circumstances, there was no occasion for the assessing officer to disbelieve the explanation and to discredit the assessee for the same.

6. Keeping the factual position in view, we are of the considered opinion that the addition made by the authorities below under section 13(1) (aa) is uncalled for. The same is, therefore, directed to be deleted.

7. In view of the aforestated reasons, the appeal succeeds to the extent and the manner indicated above. C.M.S./249/Trib ???????????????????????????????????????????????????????????????????????????????? Appeal accepted.