ORDER CH. MUHAMMAD ISHAQ, JULICIAL.- Cross Appeals for the Assessment Years 1990-91 & 1991-92 have been preferred by the assessee and the department against the orders both dated 8.3.1995 passed by the Commissioner of Income Tax Wealth Tax (Appeals) Zone-I. Lahore.
2. The learned A.R. For the assessee contests the rejection of the declared version as having been wrongly confirmed by the impugned order. The reduction in the G.P. Rate from 23% to 15% as against the declared rate of 4.11% is also contented as being higher. Further the estimate of sales amounting to Rs. 49,00,000/- confirmed by the Commissioner of Income Tax is also agitated as being, unjustified. Additions confirmed/reduced by the learned first appellate authority in name of the items of the Profit & Loss Account have also been assailed. In addition thereto in the appeal for the Assessm ent Year 1991-92. The learned A.R. Agitates the framing of assessment under section 63 of the Income Tax Ordinance. 1979 as being unwarranted.
3. On the other hand, the learned D.R. In his appeals for the department for the afore-stated two years challenges the reduction of G. P. Rate from 23 to 15% on the ground that the reduction is unjustified keeping in view the history of the case. The learned D.R. Further challenges the reduction in some items of the Profit & Loss Account as having been wrongly allowed by the learned first Appellate Authority. In addition thereto, the learned D.R., for the Assessment Year 1991-92 also challenges the reduction by the learned C.I.T. (Appeals) in respect of the sales from Rs. 100.0, 000 to Rs. 95,000,000/- without assigning any reasons.
4. We have given our anxious consideration to the submissions bade by the respective parties in favour of their respective contentions. The record of the case has also been gone through.
5. The learned Commissioner of Income Tax (Appeals), in the impugned order, observed that on comparison for the Assessm ent Year 1990-91 with that of 1989-90, the G.P. Rate declined by 1.09%. It is also recorded in the Order that the explanation was offered by the assessee in respect of this decline. The explanation was that during the year under-consideration, no purchases of rice bran were made and only the previous stock of the Rice meal was disposed of there by increasing the cost of sales. Since the assessee had started and the business of production of Cooking Oil in this year, his cost and over head Expenses stood increased. It is noticed that while recording this explanation of the assessee, the learned Commissioner of Income Tax did not give his comments as to the correctness or otherwise all of this explanation. It appears that there is weight in the explanation offered by the appellant. Moreover, every year is a single entity and its on facts haw?
Got to be examined but this was hot one in this case.
6. Before us, the assessee has further submitted that the record showed the change of business but the appellant/assessee was assessed as if he was doing the old business. The learned A.R.
Submits that history could not be made basis as extraction of solvent into making Cooking Oil is a different thing. It is further submitted that the dase referred to pertain to the Punjab Cooking Oil Industries which is distinguishable inasmuch as this industry makes Ghee while the assessee is making Cooking Oil. The learned A.R. States that all these were ignored by the learned first Appellate Authority while recording the impugned order.
7. We are of the view that the impugned order has not given correct treatment to the assessee. It has placed reliance on the previous year, although there had been change of business during the year under appeal. We, therefore, hold that history in this case cannot be relied upon in determining the correct income of the assessee. On the other hand, we notice that the declared version of the assessee, though on points, may not be 100 per cant verifiable, yet the objections recorded by the officers below are not sufficient to discard the declared version. We, therefore, allow the acceptance of the declared version for both the years under appeal.
8. As regards the assessee claim in respect of the disallowances in the Profit & Loss Account, we are of the view that the disallowances as set forth in impugned order are neither arbitrary nor excessive. The learned C.I.T. (Appeals) appears to have given reasonably good treatment to these expenses which does not call for any interference. Consequently, the assessee's claim to the grant of further relief in this respect is not allowed. Consequently, the disallowances in respect of the various Heads of the Profit & Loss Account as reduced by the learned first Appellate Authority are upheld.
9. Regarding the appeals by department, it is observed that the trading results of the assessee having been accepted and those of the Profit & Loss Account are rejected by the learned CIT (Appeals) has treated these expenses, there is no room for further relief to the department. The department's appeals, therefore, are disallowed for both the years under consideration.
10. In view of the afore-stated reasons, all the four appeals are decided in the manner indicated above.