ORDER CH. MUHAMMAD ISHAQ, JUDICIAL MEMBER. - Cross Appeals in respect of Assessment Years 1989-90 and 1990-91 have been preferred by the assessee as well as the department to call in question the Order dated 23.12.1991 passed by the Commissioner of Income Tax, Appeal Zone-J Faisalabad.
2. We have heard the parties and examined the record.
3. The Assessee in his appeal contests the justification for the addition at Rs. 15,000/- and Rs.
16,000/- in the Cartage Account and Rs.20,000/- each in the Cash Discount Account in respect of the Assessm ent Years 1989-90 and 1990-91 respectively. Confirmation of the depreciation and- back at 50% in the account of car has also been contested for both the years under appeal.
4. The Revenue, on the other hand, agitates against the justification in accepting the declared trad ng results as being contrary to the facts and history of the case in respect of both the years under appeal. The Revenue also contests the full depreciation allowance on motorcycle for when it was not used wholly and exclusively for business purposes in respect of both the years under appeal.
Reduction/deletion of and-backs under various Heads has also been contested by the Revenue in respect of the year 1990-91.
5. Taking up the Revenue's appeal first, it has been argued before us by the learned DR that in the year 1988-89, the assessee has declared loss at Rs.35,100/- However, the assessment was framed at an income -of Rs. 20,000/.- on agreed basis. It is submitted that the same condition exists for these Assessm ent Years as well and placing reliance on the history that trading results should not have been accepted by the learned first Appellate Authority.
6. The learned A.R. Appearing for the Assessee submits that the declared results have been accepted because of verifiable factors. It is argued that the past history in the context of the instant appeals is not a relevant factor. It is further submitted by the learned A.R. That the declared G.P. Is much better than the parallel cases. Therefore, the case has rightly been decided in the first appeal.?
7. While deciding the appeals, the learned CTT. (Appeals) has discussed the points in an elaborate manner and made the following observations in respect of the trading side of the assessee's account: "Own Trading In Days & Chemicals"
Total sales in on account are declared at Rs. 1",34,570/- and Rs.27,50,882/- with declared G.P. Rates at 9. 75% and 10.19% in 1989- 90 and 1990-91 respectively. The Assessing Officers rejected the declared version with general and vagtie remarks about the alleged unverifiability of part of sales and the absence of stock register and estimated the sales at Rs. 1, 50,000/- and Rs.32 lac in 1989- 90 and 1990-91 respectively and applied thereto in each year G. P. Rate of 12 25%. The aforesaid treatment and the rejection of the declared version is vehemently contested as erroneous and unjustified. The purchases are fully vouched and verifiable having been made from Hoechst Pakistan limited. The sales are fully vouched and predominantly verifiable. No instance of unverifiable nature is quoted in the assessment order of 1989-90, whereas the to has himself mentioned in the assessm ent order of 1990-91 the particulars of the 10 parties to whom sales amounting to Rs.25,44,682/- were made on credit basis. Remaining sales of Rs.2,06,200/- only are shown on cash basis and even the same are fully vouched and verifiable. The to had not pointed out any variations in rates in respect of credit and cash sales. The quantitative and qualitative details are also recorded in the ledgers and the to has not been able to find or point out any specific defect or omission whatsoever. Thus, both the purchases and sales being fully vouched and verifiable could not be objected to or rejected. The to applied a G.P. Rate of 12.25% on the ground that if part of the addition made in the Assessment Year 1988-89 is attributed to the trading account, the same would evolve the G.P. Rate of 12.25%. The learned A.R. Contends that in respect of the Assessm ent Year 1988-89, the appellant had agreed to a net income of Rs.20,00f /- and neither to any separate additions in the trading and P&L / cs nor to the application of any G.P. Rate much less the aforesaid presumed G.P. Rates of 12.25%. Perusal of record confirms the learned A.R. 's contention. He further points out that the Department itself has applied much lower G.P. Rates in other cases e.g. 6.25% in the cases at N.T.Nos 03-01-0607555; 03-01-0605358 and 03-25-0675403; 8% in the case at N. T. No. 03-6- 0531592 and even in the cases of Importers, G.P. Rates are applied at 10% e.g. 03-06-0531121 and 0531306.
On the above facts and circumstances and in view of other cases, the G.P. Rates declared by the appellant at 9. 75% and 10.19% are quite fair and reasonable and should have been; accepted, as the purchases and sales are fully vouched and verifiable. Therefore, the declared results in on trading are accepted in both the years."
8. It is, thus, clear that the learned first Appellate Authority has correctly applied its mind and has done no favour to any one while deciding the appeals. It may further be observed that every year is an independent entity. The acceptance of Rs.20,000/- income as against the declared loss of Rs.35,100/- in respect of the Assessme nt Year 1988-89 does not debar the Appellate Authority from appreciating facts in respect of the subsequent years. The contention of the Revenue that history should be made the basis in the subsequent years as well, therefore, does not appear to hold good in the circumstances of this case. The contention of the learned D.R. To this effect cannot be accepted.
9. Regarding the appeal of the assessee in respect of the additions made in the Cartage Account and the Cash Discount Account, it is noticed that the same have not been made in conformity with the facts of the case and the learned CIT (Appeals) has not allowed the requisite relief to the assessee. We therefore, direct the deletion of the addition in the Car Account and the Cartage Account as being unjustified and without proper basis. The Assessee's appeals are, therefore, allowed as indicated above.
10. While deciding the appeal of the Assessee, we have discussed the detail. I pertaining to the Heads gifted by the Revenue. We, therefore, are not inclined to effect any change in this respect.
The learned C.I.T. (Appeals)'s order, therefore, shall hold the field. The contentions of the learned D.R., therefore, are held to have no merit.
2. In view of the afore-stated reasons, the appeals of the Assessee are allowed while those of the Revenue fail and are hereby dismissed.