1997 PLP (Trib (PTD)

Sartai Yousuf, D.R. for Respondent. Date of hearing: 6th December, 1995. ASHFAQ AHMAD (ACCOUNTANT MEMBER).

The appeal has been field by the appellant against the order of the I.A.C. Range-II, Zone-A, Lahore, dated 9-1-1990 in respect of the assessment year 1988-89. The appellant is aggrieved on account of enhancement of gross profit rate from 25% to 35% by the I.A.C. under section 66-A of the Ordinance.

2. The brief facts of the case are-that in the order passed by the I.T.O. gross profit rate was applied at 25%. The I.A.C. reopened the case under section 66-A on the ground that the gross profit rate comes to 35 % . In response to notice under section 66-A the assessee explained to the I.A.C. that in earlier years the format of the computation of income was stately different in so far as commission allowed on sales was excluded from the turnover disclosed and on this basis application of gross profit rate of 35 was in order whereas in the assessment year 1988-89, sales figures being (allegedly) inclusive of commission allowed, application of gross profit rate of 25 % was appropriate The reply of the assessee was, however, not accepted by the I.A.C. as there was no formal agreement between the assessee and its sales agent regarding the commission to be allowed to them and he, therefore, proceeded to apply, gross profit rate of 35 % .

3. During the course of the hearing of this appeal before us, it was pleaded by the learned A.R. that separate discounts had been allowed to salesman and, therefore, application of gross profit rate at 25 % by the assessing officer was just and fair. In support of his contention (from the legal point of view) the learned A.R. of the assessee cited a case decided by this Tribunal reported as 1991 PTD (Trib.) 321 in which it has been stated as under:-- "(a) S. 66-A. Loss of revenue resulting from an assessment framed in strict compliance with law

Whether such loss renders the assessment to be erroneous in so far as it is prejudicial to the interest of revenue warranting action under section 66-A

Held, No. S. 66-A. Assessment though departing from the past history yet not suffering from any error of law

Whether such a departure from the past history renders the assessment erroneous in so far as it is prejudicial to the interest of revenue warranting action under section 66-A

Held, No."

4. We have considered the arguments put forth by the appellant and there appears to be some merit in his contention from the legal point of view. In the light of the reported judgment cited by him, we vacate the order passed by the I.A.C. and direct that gross profit rate of 25% should be applied in this case in this year. However, it is clarified here that this should not be made a precedent for application of gross profit rate for any of the subsequent assessment year where the gross profit rate is to be applied on the merits of the case. In the impugned year the application of 25 % gross profit rate has been for the reason that action under section 66-A was not warranted. 5, As a result of the above discussion, the appeal filed at the instance the assessee-appellant succeeds accordingly. M.B.A./180/T Order accordingly.