ORDER AHMAD SAEED AWAN, J.- This judgment will dispose of Reference Case No.CTR 68/1993 filed under Section 136 (I) of the Income Tax Ordinance 1979 and P.T.R. No.7 of.1993 filed by the petitioner in respect of assessm ent year 1989-90 and 1990-91.
2. Briefly the facts of the reference are that the applicant, a private limited company derives income from manufacture and sale of Barsom and Iron ingots etc. The Applicant for the assessm ent year 1989-90 declared total sales at Rs. 1,71,45,994/-, declaring gross profit of Rs.
15,01,696/- which worked out G.P.@ 8.75 %. The Chairman, penal while' framing the assessment for the aforementioned year discarded the declared version and estimated sales at Rs. 1,75,00,000/- to bring the gross profit @ Rs. 12.66% as declared by the assessee and applied in the assessment year 1987-88. The applicant being aggrieved by the estimate of sales at Rs. 1,75,00,000/- and application of G.P.@ Rs. 12.66 % for the year filed an appeal before the C.I.T. Appeals; the learned C.I.T. Appeals upheld the order of Assessing Officer. The applicant -being aggrieved by the Appellate order further filed an appeal before the Income Tax Appellate Tribunal; the learned Tribunal also upheld the order of Assessing Officer by rejecting the appeal of the applicant. The applicant also moved an application before the learned Tribunal to recall its order in appeal in respect of the assessm ent year aforementioned to rectify the mistake by dealing and deciding all contentions urged by the applicant at the time of hearing of the appeal the learned Tribunal rejected the rectification application holding that there was no such ground as would justify the recalling of the order passed by the Tribunal. The applicant then filed application under Section 136 of the Income Tax Ordinance, 1979 requiring the Tribunal to refer questions arising out of the said order passed by the Tribunal in appeal in respect of their afore-stated assessment year. The Tribunal out of the five questions referred question No. 1, iv, and v for interpretation by this Court under Section 136 (1) of the Income Tax Ordinance. Questions No.1, iv and v read as under: "(i) Whether under the facts and circumstances of the case the Hon'ble Tribunal was justified to confirm the estimate of sales, when the sales were subject to exercise duty and complete record of turn over was maintained in accordance with the Excise Duty and regulation. Also party wise details of sales were provided to Hon'ble Tribunal.
(ii) ------
(iii) ------ (iv) Whether under the facts and Circumstances of the case the Hon'ble Tribunal was justified to ignore the ground in respect of Profit & Loss Account despite of the fact that the assessee appellant eleborately submitted arguments on it during the hearing.
(v) Whether under the facts and circumstances of the case the Honourable Tribunal was justified to confirm the estimate of sales and application of G.P. Rate despite of the fact that the Income Tax Officer did not issue any Notice under Section 62".
3. The applicant not being satisfied with the questions referred by the Tribunal also filed application under Section 136 (II) of the Income Tax Ordinance for the aforementioned assessment year and raised the following questions:- "(i) Whether under the facts and circumstances of the case the Hon'ble Tribunal was justified to apply the G.P. Rate at 12.66 % ignoring the element of Excise Duty at Rs.5.56. 100 which resultantly affected the fall in G.P. Rate as compared to the previous years.
(ii) Whether under the facts and in circumstances of the case the Honourable Tribunal was justified to ignore the contentions raised before it as state above".
4. Learned counsel for the applicant has contended that proper accounts of production of sales as required by the excise regulations were maintained and complete record of turn over was maintained and party wise details of sales were provided to the Tribunal; further contended that the Assessm ent Officer had not issued the mandatory notice under Section 62 of the said Ordinance on the point of application of G.P. Rate and estimate of sale.
5. On the other hand, learned counsel for the department contended that the Tribunal rightly upheld the order of the Assessing Officer and C.I.T. (Appeals) as admittedly purchases and sales to the extent of 40 % were unverifiable which alone was sufficient ground for rejecting the version.
6. The record had been perused; Admittedly, the entire purchases and sales were on cash basis and were not open to verification and the aforementioned discrepencies were admitted by the A.R.
Vide order sheet entry dated 30.12.1989. When confronted the learned counsel vehemently agitated that the procedure adopted by the Assessing Officer was unwarranted; he should have given notice under Section 62 of the Ordinance enabling the applicant to submit his explanation.
7. The contention of the learned counsel for the applicant, in regard to issuance of notice under Section 62 is misconceived. It would be appropriate to reproduct Section 62 of the Ordinance which reads as under:- "62. Assessm ent on production of accounts, evidence, etc.
(1) The Deputy Commissioner, after considering the evidence an record (including evidence, if any produced under section 61) as the Deputy Commissioner of Income Tax may require, an specific points, shall, by an order in writing, assess the total income of the assessee and determine the tax payable by him on the basis of such assessment.
Provided that where the assessee produces books of account as evidence in support of the return, the Deputy Commissioner shall, before disagreeing with such accounts, give a notice to the assessee of the defeats in the accounts and provide an opportunity to the assessee to explain his point of view about such defects and record such explanation and the basis of commutation of total income of the asessee in the assessment order.
(2) Where a person is authorised by the Central Board of Revenue under section 7 to assist the Deputy Commissioner in making an assessment and the Deputy Commissioner disagrees with the opinion of such person on any point concerning assessment, the Deputy Commissioner shall record, in the order under sub-section (1), the opinion of such person and the reason for his disagreement with such opinion."
8. This Section was substituted by Finance Ordinance 1980, while original Section 62 was as under: "62. Assessm ent. The Income Tax Officer may, after considering the evidence on record (including evidence, if any, produced under section 60 or section 61) assess, by an order in writing, the total income of the assessee and determine the amount of tax payable by him."
9. It is manifest from bare reading of substituted Section 62 and the original Section that there was no provision to issue notice under Section 62 to the assessee before disagreeing with his accounts and to provide an opportunity to the assessee to explain his point of view prior to finalising the assessm ent order. The provisions of Section 61 to Section 62 of the Ordinance to the effect that whether the assessee produces books of accounts as evidence in support of his version; the Assessing Officer shall, before discarding such accounts, give a notice to the assessee of the defects noted in the accounts book to provide an opportunity to the assessee to explain his point of view and record such explanation in the assessment order, was added by Finance Act, 1993. With the introduction of this provision following such a practice has become mandatory with effect from the amendment ie. July T993 and such mandatory notice was neither necessary nor required during the assessm ent year under consideration, therefore, the Tribunal was justified that notice under Section 62 was not necessary and confirmed the estimate of sales and application of G.P.
Rate keeping in view the previous history of the petitioner and the statement recorded on the order sheet of the learned A.R.
10. Admittedly, the I.T.P./A.R', or the assessee attended the office of the I.T.O, arid produced books of account in response to the notice under Section 61 of the Income Tax Ordinance. The case was discussed with him from time to time, The details, documents whenever necessary were obtained from him and scrutinized declared record of the year was compared with those of immediately preceding years. The A.R. Admitted discrepancies in the account books as already observed; when confronted could not controvert the above fact.
11. The contention of the learned counsel for the applicant that the assessee has a history of acceptance of the declared version is of no help to him for the very fact that the assessment in the preceding years were made on agreed basis.
In the year 1987-88 an addition of Rs. 89,306 was made which enhanced the declared gross profit from 12.16 % to 12.66 %. The applicant's counsel at the time of assessment has conceded before the Income Tax Officer that "The -purchases of raw material from Kabaria, which are not supported by vouchers of reliable evidence". It was the basis of those uncontroverted facts; the learned Tribunal confirmed the estimate of sales and application of gross profit made by the Income Tax Officer.
12. The contention of the learned cousel that certain issues raised and argued before the Tribunal were completely ignored is vague as the learned Tribunal while deciding M.A.No.41/L. 13/1991 observed as under:- "Coming to the grievance about non consideration of the add-backs out of the Profit & Loss Account, we find that chart was filed (and is obtaining on record) along with the history of the case and summary of the case relied upon during the hearing on 5.1.1991 but no arguments appear to have been addressed in this behalf with the result that our notes of that day do not contain any reference to these. Moreover, now the learned counsel despite our repeated suggestions to address us on de-merits (if any) of the add-backs, fringed from doing so and insisted that the order as a whole should be recalled. We have already held that there are no such grounds as would justify the recalling of the order or any rectification thereon nor the case-law recalled upon applies squarely to the facts before us. We, therefore, have no way but to REJECT the application as devoid of merits".
13. We are of the view that in the presence of the above observations made by the learned Tribunal, there is no justification to disagree with the learned Member of the Tribunal who consulted the notes taken at the time of hearing of the main appeal before them relating to the assessment year under consideration, which did not contain any reference to those arguments as contended by the learned counsel for the petitioner.
14. The result of the above discussion is that the reference under Section 136 (i) as well as application under Section 136 (ii) being without any merits stand dismissed.