ORDER SALEEM SHAD QURESHI, JUDICIAL MEMBER. - The assessee/appellant has come into appeals against the orders of learned CIT(A), Lahore vide his A.O. No. 294/CC-21 dated 14.7.92, A.O. No. 143/CC-21 dated 14.11.93 and A.O. No. 1558 dated 25.1.95 pertaining to assessment years 1991-92, 1992-93 and 1993-94 respectively.
2. Since all these appeals involved similar type of facts and issues which are identical in nature and requires a consolidated consideration. We, therefore, purpose to dispose of all these appeals through one combined order.
3. Brief facts of the case are that the appellant, a Private Limited Company, deriving income from steel re-rolling Mills. In the assessm ent year under consideration i.e. 1991-92 the assessee appellant has agitated mainly on the ground that the orders below are contrary to explanations offered and in share ignorance-.Of material I placed on record. It is further agitated that various assertions taken hy the I.T.O, in arriving at their findings are based upon erroneous j appraisal of the documentary proof and that the officers below have contradicted their on findings by their subsequent observations in the impugned order. The estimation of sales has also been contested to be unjustified and also that neither the declared sales rates were doubted nor the quantities sold. Various and-backs i.e. Salaries selling and distribution expenses are contested to be unfair and unjustified.
4. Similarly in the assessm ent year 1992-93 the assessee/appellant has agitated the same way as in previous assessm ents years that the orders passed by the authorities below are contrary to the explanation offered and certain and-backs i.e. Salaries, advertisement and publicity have been agitated to be incorrect and erroneous. In the assessment years 1993-94 the assessee/appellant has mainly objected that the assessment orders were passed in utter disregard to the explanations offered and that the department has departed from the near to the accepted history of the case and has erroneously determined sales on the basis of notional quantities calculated with reference to the consumption of electricity units. It was also objected that the relief granted by the learned CIT(A) in the first appellate course was neither adequate nor proper, rather full relief should have been allowed. It was further objected that in the presence of proper books of accounts and verifiable nature of purchases the formula adopted by the authorities below is miscarriages of justice. In this assessm ent year under appeal only and back out of salaries has been contested to be unfair and unjustified. The AR of the assessee/appellant has vehemently stressed and argued that complete books of accounts have been maintained and as such the declared trading results should have been accepted. To depict a clear picture and to draw a competitive comprehensive analysis the facts of the case for the years under appeal and two preceeding years are given as under:- Asstt: Year Declared Sales Estimated Sales G. P.Rate Declared G. P.Rate Applied 1989-90 1,16,45,666/- 1.60.00.000/- 6.19% 6.25% 190-91 1.66,38.,545,/- 1,80,00,000/- 6.15% 6.25% 1991-92 1,90,15.630/- 2,00,000,00/- 6,35% as declared 1992-93 2,57,45,380/- 2,65.00,000/- 6.15% 6.35% 1993-94 2,99,26,620/- 4,54,71,303/- 6.48% 5.35%
5. After hearing both the parties and going through all the aspects of the case as well as the orders of the authorities below we find that the assessee/appellant himself declared his sales in assessm ent year 1991-92 at Rs. 1,90,15,630/- which was estimated by the assessing officer at Rs.
2,00,00.000/-. The learned CIT(A) reduced the estimate of sales to the tune of Rs. 1,95,00,000/-. After considering all the facts and circumstances of the case, we find that the treatment meted out at the first appellate stage is quite reasonable and justified and also in consonance with the past history of the case. Therefore, the order of the learned CIT (A) does not call for any interference. We uphold the same. Similarly in the assessment year 1992-93 we find that the assessee/appellant himself declared his sales at Rs. 2,75,45,880/- which was estimated by the assessing officer at Rs.
2,65,00,000/- which resulted into an addition at Rs, 7.56.112/- whereas in the immediately preceeding/year i.e. 1991-92 an addition of Rs. 5,00,000/- was made which are upheld being reasonable. The addition made to the sales in the assessment year 1992-93 is in the same range as made in the preceding year and some how mutch with the part history of the case. It is, therefore, confirmed. Similarly in the assessment year 1993-94 the assessee/appellant declared his sales at Rs. 2,99,26,620/- which was estimated by the assessing officer at Rs. 4,54,71,3037- which had been agitated-by the assessee/appellant before us as to be quite unreasonable and unjustified especially keep in view the past history of the case. It is also further vehemently argued that the assessee/appellant showed an improvement in production record himself viz-a-viz preceding year, but still he is being punished without any fault on his part. After considering all the aspects of the case we feel that the assessee/appellant has a point in his argument. We also find that there was declared production for the year under appeal at 2518.500 M. Ton as against 2216.500 M. Ton for the assessm ent year 1992-93. The assessing officer has adopted production per unit of electricity consumed on average at 4.0 kg per unit. The assessee has declared average sales rate at Rs. 11875/-per M. Ton which was adopted at Rs. 12,200/- per M. Ton. The assessing officer was worker out 3727.156 M. Ton for the assessment year under consideration which was further reduced by the learned Cite (A) to the tone of 2850,000 M. Ton and also directed the assessing officer to work out addition accordingly by applying sales rate at Rs. 12200/- per M. Ton.
Against this treatment meted out the assessee appellant has come into second appeal before us.
6. After hearing both the parties at length we have gone through the record of the previous assessm ent years along with files of the assessment years under consideration. We find that the position of' the trading accounts is almost the same as it was in the previous assessment years rather the assessee has shown much better results in sales and profits. On the other hand the assessing officer has passed his finding just in surmises and conjectures. He failed to point out any material defect from the record which could support his conviction nor the learned DR was in a position to justify the action of the to, even the learned CIT(A) could not show any substantial material from the record to support his action, while reducing the estimate of sales the learned CIT(A) also totally lost sight of the fact that before imposing such heavy burden on an assessee there must be some substantial material or evidence which could be made basis of such a heavy estimate thought it was reduced to some extent even then could not justify his action. After considering all the aspects of the case we fix the production at 2600.000/- M. Ton for the assessm ent year 1993-94. The sales rate adopted at Rs. 12200/- per M. Ton is quite in order, and the assessing officer is directed to work out addition accordingly.
7. ADD BACKS OF SALARIES IN THE ASSESSMENT YEARS 1991- 92, 1992-93 and 1993-94: Salaries and-backs out of P & L has been challenged vigorously on behalf of the appellant as to be unreasonable and unjustified. Under the head of salaries total claim was made at Rs. 2,93,496/- out of which an addition of Rs. 90,000/- was made by the assessing officer. The learned CIT (A) found the same to be excessive and reduced to the tune of Rs. 30,000/- while all other and-backs were found proper and reasonable and were confirmed. The learned AR has also produced a copy of order of this Tribunal dated 21.4.92 pertaining to assessment years 1989-90 and 1990-91 in which assessee's claim regarding issue of salaries was accepted at the final appellate stage and disallowances made under the head of salaries were deleted in toto. It has been argued before us that the observation of the assessing officer regarding the production of documentary evidence in support of the claim of salaries based on misconception and erroneous assertions. It was also vehemently argued that the salary register has been produced before the assessing officer which has not properly been examined by the assessing officer. It was further contended that complete detail of staff and their position had been provided which was supported by their ID Cards, which has been totally ignored by the assessing officer. It was also vehemently argued that in the assessm ent year 1991-92 in ITA. No. 539,540/LB/1991-92 dated 21.4.92 the learned Tribunal deleted the additions maintained by the revenue authorities. It was further argued by the learned AR of the assessee that all the supporting evidence was produced before the I.T.O who indifferently over- looked and did not examine the requisite documents in support of claim of salaries.
8. After hearing both the parties and going through the record of the previous assessment years along with the record of the case under consideration, we find that the position of the trading accounts is almost same as it was in the previous assessment years. We observe that it was not fair on the part of the assessing officer to infer any conclusion there from in support of claim of salaries that the appellant duly maintained a register of salaries and complete detail of staff and their position had been provided which was further supported by their ID Cards. On one hand the assessing officer himself accepted the whole claim regarding salaries in the assessment year 1989-90. The observation of the assessing officer in respect of the assessment year 1990-91 that no salary register was produced itself supports the contention of the appellant that he was never required to produce the register. Considering all the aspects, we feel that the assessee/appellant has a point in his argument regarding the claim of salaries in all the assessment years. We have also gone through the order of the learned Bench of this Tribunal, who has deleted the addition after thorough probe into the matter. In these circumstances we feel that the additions under discussion for the assessm ent years under consideration were absolutely un-called for. And keeping in view the history of the case the amount under the head of salaries for the assessment years under consideration is allowed in toto and the additions made by the assessing officer which were further reduced by the learned CIT (A) in all the assessment years under consideration are ordered to be deleted.
9. All other and-backs i.e. Advertisement and publicity etc. Contested in all the three assessment years under appeal are considered to the quite reasonable and proper. We, therefore, upheld the same. No other ground of appeal has been agitated in all the assessment years under consideration. These appeals are disposed of in the manner as indicated above.