ORDER NASIM SlKANDAR, JUDICIAL MEMBER.- The appellant in these appeals is a Private Limited Company which engaged itself in import and sale of ginger and potato seeds in the year 1989-90, in spices and stones as well in the year, 1990- 91 and in export of salt only in the year 1991-92.
2. The appellant returned a loss at Rs.83,603/- on import and sale of ginger and potato seeds in the year 1989-90. The assessing officer computed the income at Rs. 2,16,263/- by estimating sales at Rs. 25,00,000/- as against the declared at Rs. 17,91,598/- and by subjecting them to a rate of 15% as against shown at 5.03%. Learned CIT(A)-I, Lahore through his order recorded on 7.9.1991 confirmed the estimated sales but reduced the applied rate on ginger to 10%. The additions out of profit and loss account earlier made by the assessing officer were confirmed.
3. In the year 1990-91, as said above, the assessee traded in ginger and spices and also exported salt. As against the declared income at Rs. 78,234/- the assessment was framed at Rs. 2,66,854/-.
In the process consolidated sales were estimated at Rs. 20,00,000/- and subjected to a rate of 15%.
It may be added that the assessee returned a rate of 11.19% in case of ginger and at 7.38% in case of other items which was found to be on the lower side by the assessing officer. The declared consolidated sales at Rs. 16,22,411/- were also found to have not been established. The first appellate authority through an order recorded on 10.9.1991 reduced the combined GP rate to 10% as in the earlier year. Also the addition out of profit and loss expenses were found reasonable and therefore, confirmed.
4. In the year 1991-92 the assessee a loss at Rs. 53038/- from sale of sat and stone. The total sales as nor combined trading account filed with the assessing officer were shown at Rs. 15,13.184/- with a rate of 9.8%. The stone was imported while salt was locally purchased. Although the purchases were found to be verifiable yet a number of expenses in the trading account were found unverifiable. Therefore, the assessing officer estimated the combined sales at Rs. 19,00,000/- and subjected them to a rate of 15%. Before the first appellate authority CIT(A) Zone-I, Lahore an attempt was made to bifurcate the purchases.
However, the appellate authority through its order recorded on 15.6.1992 refused to interfere for the assessee either in estimation of sales or in the applied rate. It was in this regard found that in the year 1990-91 the appellant filed separate trading account for salt and other items and a rate of 16.7% was returned in the sale account. Therefore, the treatment meted out to it was found reasonable. The profit and loss expenses were also confirmed on the ground that the claims were unverifiable as well as excessive.
5. The assessee feels dissatisfied with the relief allowed in the first two years and its refusal in the third year 1991-92. The department is in cross appal against the reduction in applied rate from 15% to 10% in the years 1989-90 and 1990-91.
6. Parties have been heard. Learned counsel for the assessee claims that ginger is a perishable item which could not be stored for a longer period. Therefore, it had to be disposed of immediately on arrival from India as the storage expenses increased the cost considerable making the commodity uncompetity in the market. It is claimed that the margin of profit as finally determined by the first appellate authority could not be achieved as it was cold immediately on import. Though partly he supports the order of the first appellate authority in reducing the applied rate in the first two years from 15%to 10% yet prays for further reduction on the authority of at least three parallel cases cited before us. These are NTN 07-04-1714265 and 07-19- 1724812 and that of M/s. Ralia Nawab Khan, Commission Agent Faisalabad. In the first case a rate of 8.3% is claimed to have finally been determined in ginger account while in the second case a rate of 10% was applied. In the third and last case a rate of 26% % is stated to have been approved by the first appellate authority.
7. Learned DR on the other hand assails the reduction of rate in the first two years on the ground that the applied rate was quite justified keeping in view the defects pointed out by the assessing officer in the accounts mentioned by the assessee.
8. After hearing the parties, as far the first t\#o years are concerned we are not inclined to interfere for any of them. Learned first appellate authority confirmed the rejection of accounts to which no serious challenger has been thrown by the learned DR for the assessee. Also the objections made by the assessing officer having not been converted expressly or impliedly no exception to the rejection of accounts can possible be taken which otherwise appears to be in the line of the history of the case. Learned first appellate authority reduced the applied rate in ginger account to 10% after finding that in the first two years the combined trading account indicated bulk of the sales of this commodity and therefore, on the authority of a parallel case reduced the rate to 10%. The case of the assessee for further reduction in the applied rate -is however, totally mis-placed. In the second case cited as parallel before us a rate of 10% was confirmed by the CIT(I) on 27.6.1991. As for the other two cases are concerned we have neither been informed of neither nor the exact nature of the trading to hold them an parallel to the nature of business being carried on by the assessee.
Therefore, no case whatsoever is made out for a further decrease in the applied rate.
9. In the year 1991-92 the assessee appears to have entirely changed its sphere of business activity.
A combined trading account was offered before the assessing officer which indicated a rate of 9.8%. The stone was imported while salt was locally purchased. However, in case of sales these were found unverifiable to the extent of Rs. 2.84,335/- while those pertaining to salt were found totally verifiable. The assessing officer as well as the first appellate authority noted the fact that in the immediatel preceding year a rate of 16.75% was declared in salt account while it went down considerable without any explanation having come forth from the assessee. The contention of the learned AR for the assessee in his regard is that stone? Having been imported during the year was totally verifiable and therefore it could not have been included in the total estimate of sales. The contentions which appears convincing on the fact of it however, cannot be accepted in the facts and circumstances of the case. The assessee itself prepared and filed a combined trading account and at the first appellate level attempted to bifurcate with an idea to establish the imports account. This attempt was rightly frustrated started by the first appellate authority and the contention that the bifurcation of accounts was also offered at the assessment stage cannot be entertained in absence of any evidence to this effect. The assessee having filed to justify steep decline in GP rate in salt account, the treatment meted out at both at the original as well as first appellate level hardly calls for any interference.
10. The assessee has also challenged additions out of profit and loss account under various heads.
These were confirmed by the first appellate authority and the assessee has not challenged the objections made by the assessing officer with reference to unverifiability of part of these expenses or otherwise presence of an element of personal use etc. This being so, no case for an interference for the assessee in this regard as well is made out.
11. In view of what has been said above the appeals filed by the assessee in the three years and those by the department in two years shall meet their fate.
12. All five of them shall be dismissed.