The titled appeal has been filed at the instance of Messrs Chicago Metal Works No. 9-D/1 Industrial Estate, Multan. Brief facts relating to the case are that the appellant an AOP filed income tax return for tax year 2009 declaring net income of Rs.767,689 later on the taxpayer was selected for audit under section 177(1) of the Income Tax Ordinance, 2001 on the basis of variations in sales shown in income tax return at Rs.2,7107,923 and sales shown in sales tax record at Rs.61,603,010 and variations in purchases indicated in income tax return at Rs.20,169,054 and in sales tax profile at Rs.48,302,746. Further verification of manufacturing and trading expenses of Rs.1,381,989, profit and loss expenses and applicability of Section 67 was also required to be ascertained. The taxpayer was asked to furnish the documents as provided under section 174 of Income Tax Ordinance, 2001 and section 22 of Sales Tax Act, 1990 including bank statement, wealth statement, personal expenditure statement with supporting evidence. Show cause notice under section 122(9) read with sections 122(5) and 111(1) of the Ordinance was issued. The explanation submitted by the taxpayer was found unsatisfactory Ind the Taxation Officer concluded the proceedings as under:--
(1) Sale as discussed in the show-cause notice. Rs.66,630,650
(2) No books of accounts furnished Therefore GP @ 25% is supplied In the manufacturerRs.16,657,663
(3) In the absence of books of account the claimed P&L expenses are liable to be rejected but taking into account enhancement in sales the same are accepted.Rs.4,151,053
(4) Balance available for addition Rs.12,506,610
(5) Addition under section 111(1)b as per show- cause noticeRs.72,956,106
(6) Total addition Rs.85,462,716
(7) Add Income declared Rs.115,153
(8) Total amended income Rs.85,577,869
(9) Tax on above income Rs.21,394,467 Feeling aggrieved the taxpayer filed appeal before the learned commissioner (Appeals) who confirmed the addition and rejected the appeal. Hence this appeal.
2. The learned ITP present for the assessee urged that the whole case has been framed on factually incorrect basis. He stated that the sale and purchase profile of the registered unit with the name and style Messrs Chicago Metal Works (Pvt.) Ltd., 8-C/1-B Industrial Estate, Multan having NTN 3179846 and STR No. 04-07-8708-077-55 who is doing business of tractor parts has been used which has no relevance. He stated that NTN of their unit in appeal upto February, 2009 was 2233299 with STR No.04.072710-063-46 and they filed the income tax return accordingly. He pointed out that from March, 2009 to June, 2009 the appellant filed sales tax return with new name and NTN No. i.e. Servo Motor Oil (Pvt.) Ltd., NTN 317984 but with old sales Tax Registration No.04-072710-063-46. He stated that these facts have neither been taken into considerations by the Taxation Officer nor by the learned CIR(A). He narrated that the Revenue could not realize this mistake and applied the sale and purchase figure of totally different company which has no standing. He contended that the Revenue failed to appreciate while applying the data of Chicago Metal Works No. 2 taken from PRAL data base. Whereas the (PRA) data base existed with the new name i.e. Servo motor Oil (Pvt.)
Ltd.. He also challenged the findings regarding application of GP Rate of 25% on blended .Oil business which he contended is unprecedented. He urged that this has been applied on whimsical basis and is not maintainable. He challenged the selection of the case on baseless presumption and without issuing of pre-selection notice. He argued that the order passed under section 122(1) of the Ordinance is also not maintainable contending that it has not been incorrectly applied by CIR (Audit Division). He stated that there is no justification to confirm the addition made under section 111(1)(b) of the Ordinance. The learned DR opposed the contention of the appellant's counsel and supported the order.
3. We have heard the rival arguments and find that the whole case has been framed on the basis of the sale and purchase profile of another company with 3 separate NTN and registration number under Sales Tax Act, 1990 having a different line of business. The basic facts have neither been thrashed out by the adjudicating officer nor by the learned Commissioner of appeals despite repeated pointation relating thereto by the appellant's counsel before that forums. The sale and purchase data of a company with a different NTN and STR numbers cannot be made the basis for working out the liability against the appellant having a different NTN and STR numbers and production line. We, therefore, deem it fit to set aside the impugned order and remand the case to the adjudicating officer for a fresh decision after hearing the appellant, verification the facts and reconciliation of the facts on grounds from the record and passing a speaking order.
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