1997 PLP (Trib (PTD)

(iv) Expenses allowed are inadequate.

2. The facts of the case shown that the income declared at Rs.1,15,200 for the charge year 1985-86 was accepted under the relevant provisions of the Self-Assessment Scheme and assessment finalised under section 59(1). Information was subsequently gathered that security amounting to Rs.37,500 deposited with the principals

Pakistan State Oil Company Limited had not been shown in the balance sheet. The case was reopened under the provisions of section

65. Permission was obtained from the Central Board of Revenue. In compliance to notice under section 65 return was filed declaring income as before. 'This was followed by notice under section

61. The assessee expressed its inability to produce the books of accounts maintaining that these had been taken away by a former partner of the firm. The declared version was, therefore, rejected and turnover estimated under various heads and subjected to G.P. rate accordingly (page 3 of the assessment order). The security not declared in the balance sheet was added and minor add-backs made out of P&L Account. Income assessed stood at Rs.307,

490. Appeal was preferred against the assessment wherein the CIT(A) Zone I, Multan upheld the reopening of proceedings under section 65, confirmed the estimate of sales in kerosene oil reduced in the diesel account to Rs.39,00,000 (estimated at Rs.40,00,000), furnace oil account to Rs.4,10,000 (estimated Rs.4,50,000) and mobil oil to Rs.17,50,000 (estimated Rs.18,00,000). The G.P. rate applied in kerosene oil and light diesel was maintained whereas in furnace oil and mobil oil it was reduced to 5 % (against the estimated 6 % ). The action taken in respect of P&L Account additions was maintained.

3. The representatives of the two parties have been heard, their view, submissions and arguments have been considered. The issues raised in appeal are being disposed of accordingly. Reopening of proceedings under section 65.

4. It was pleaded by the learned A.R. that the order of the lower authorities was illegal as in invoking the provisions of prior approval of the I.A.C. had not been obtained. Under the circumstances the proceedings were not tenable. The learned D.R. opposes this point of view and maintains that the assessments pertain to assessment year 1985-86 for which the amended provisions of section 65(2) were not applicable. According to the provisions of the S.A.S. for the relevant year 1985-86 the assessing officer had obtained permission from the competent Authority (C.B.R.). In view of this fact there was no illegality.

5. The learned CIT(A), we find, has already considered and discussed this issue. He has supported his decision after relying on a cited case 1991 PTD (Trib.)

16. The learned A.R. could not convince us or distinguish the assessee's case from the decision relied upon and quoted by the CIT(A). When no argument on the contrary were forthcoming nor any plausible reason advanced we uphold the action of the first appellate authority. Estimate of Sales and Application of G.P. Rate:--

6. The appellant maintained that the purchases being verifiable the subsequent treatment by the authorities below was not justified. It was also pleaded that the business was on commission basis and the treatment as a trader by the Department was against the facts of the case. This plea is opposed by the D.R. who supports the impugned order. We have considered this argument and found that in response to notice under section 61 no books of accounts were produced. The plea that business is on commission basis was nowhere taken up by the appellant at any stage or any forum before coming to us. This plea cannot be entertained alongwith the reliance that the Department in the subsequent years has treated the assessee as a commission dealer. In the absence of appellant's inability to substantiate its own declared results, produce any parallel and similar case in support of application of G.P. rate, we uphold the action of the CIT(A) with regard to the trading account. The assessee's plea that the action of the I.T.O. was not justified in disturbance the estimate of sales and G.P. rate as the case had only been reopened on the issue of security deposit has also been considered. In the first instance the A.R. has not been able to convince us on any illegality over this action. Secondly, this issue stands settled in a number of cases by various decisions. Finally the assessee itself admits that it cannot substantiate its declared results. Security Deposit.

7. The appellant admits and acknowledges that the deposit of Rs.37,500 with the principal was not declared in the balance sheet. It's plea that the setting aside was not justified and should have been deleted has not been argued or advanced with any conviction or justification on what grounds and on what authority it is pleaded that the action is not justified has not been brought before us. We feel that the CIT(A) afforded an opportunity to the assessee which should be availed of by it, by presenting its point of view before the I.T.O.

8. The action in respect of P&L Account also does not call for any interference. The assessee is in no position to substantiate its declared results. The action of the authorities below is reasonable.

9. The appeal stands disposed of to the manner and extent indicated above. C.M.S./381/Trib. Appeal disposed of.