1997 PLP (Trib (PTD)

Date of hearing: 29th May, 1996. IFTIKHAR AHMAD BAJWA (ACCOUNTANT MEMBER).-- This appeal is directed against CIT (Appeal's) order dated 8-2-1995 relating to assessment year 1992-93.

2. Appellant, an A.O.P., was operating a 'steel mill' during the period under appeal. Income for this year had been declared at Rs. 40,150 which was subsequently shown at Rs. 85,450 in a revised return. The return was selected for total audit under para. 4(ii) of the Self-Assessment Scheme for assessment year 1992-93. For default of the statutory notices assessment was completed under section 63 and income was determined at Rs.8,01,

237. On appeal, the CIT(A) allowed a relief of Rs.39,000 on account of P & L add backs. Selection of the case for total audit and quantum of income determined in the ex parte assessment are being disputed by the appellant.

3. The objection regarding selection of case for total audit is devoid of any merit. On the basis of information available with the assessing officer, the declared income was obviously an understatement. On I.T.O's. factual report, the Regional Commissioner of Income Tax had approved selection of the case for total audit. Selection of the case was, thus, in accordance with the prescribed procedure. The objection on this point, therefore, fails.

4. So far as the objection regarding quantum of income in the ex parte assessment is concerned, the same is not without merit. It was pointed out that the mill had been closed during the period when most of the notices for assessment had been issued and the statutory notices were mostly received by persons who were not authorised to receive the same. The quantum of income determined in the ex parte assessment was also challenged to be highly excessive. It was contended that the figures incorporated in the assessment order were not only harsh but punitive as none of the steel mills operating in the area had been assessed at figures anywhere near the income assessed in this case. It was further pointed out that the rage of income assessed in other cases was well-known to the I.T.O. who had cited two cases of the area in the assessment order also. On appellant's request the records of Bismillah Steel -Mill, Gujranwala, Sangum Steel Mill, Gujranwala, and A-One Steel Mill, Gujranwala were requisitioned. The first two cases were cited in the assessment order also. In the case of Bismillah Steel Mill assessment for assessment year 1992-93 had been made on income of Rs. 1,95,104 which included concealed income of Rs.5,940 also. In the case of Sangum Steel Mill assessments had been made on income of Rs.1,89,660, Rs. 1,90,000 and Rs.1,89,351 for assessment years 1991-92, 1992-93 and 1993-94 respectively. The income determined for assessment years 1991-92 and 1993-94 had been reduced in appeal in respect of these years. In the case of A-One Steel Mill assessments for assessment years 1991-92 and 1992-93 were made on income of Rs.1,91,900 and Rs.1,92,

100. These Steel Mills were in the same area and had more or less the same capacity as in the case of the appellant. Their electricity consumption was at the same level as in this case. Considering the fact that I.T.O. was well aware of the quantum of income assessed in parallel case, the income assessed in the case of the appellant cannot be termed as a best judgment assessment. The assessment on income of Rs. 801,237 is, therefore, unsustainable. .

5. The appellant's .A.R. has disputed the figures of electricity consumption on the basis of which sales have been estimated by the I.T.O. He produced copies of the correspondence between the appellant and the WAPDA authorities wherein the meter installed on appellant's, business premises had been claimed to be defective. The sales based on these figures were, therefore, claimed to be unjustified. Even if the contention regarding defective meter is accepted, there, is no criteria available for determining the actual consumption of electricity and production for the relevant period at this stage. At present the Steel Mill is admittedly closed. The very fact that the Mill had to be closed down in the subsequent period, is a clear indicative of the fact that business was not as lucrative as assumed by the I.T.O. In the absence of any reliable basis for determining the production, sales and income for the year under appeal it would be fair to refer to the assessments of parallel cases. Considering the assessments in the cases which have already been referred to in the earlier part of this order, estimate of income for this year at Rs. 20,00,000 would be fair and reasonable. The assessment would be modified accordingly.

6. The appeal succeeds as above. C.M.S./375/Trib Appeal allowed.