ORDER ASHFAQ AHMAD, ACCOUNTANT MEMBER.-This appeal is directed against the order of the CIT(A) for the Assessm ent Year 1989-90; The appellant is aggrieved on account of estimate of sales and adoption of G.P. Rate by the Department. In addition the assessee is aggrieved on account of following and backs: Item Claimed Rs. Disallowed by to Rs. Upheld reduced by CIT(A) Rs.
Salaries and benefits 925,505 50,000 50.000 Priming & stationery 59,692 10,000 10,000 Entertainment 3,83,687 70,000 70,000 Vehicle running & main 1,52,734 30,000 30,000 Travelling & Con. 1,98,079 35.000 20.000 Postage & Telephone 42.692 6,404 6,404 Staff & Welfare 5,95,672 50,000 50,000 Happier & maint 3.40,802 30,000 30,000 Selling expenses 8,75,276 75,000 50,000 Legal & Professional 1,56,000) 25,000 10,000
2. The brief facts of the case are that the appellant derives income from running a steel rerolling mills and for the year under consideration declared sales at Rs.65,583,600/- yielding a G.P. Rate of 6.9%. The Assessing Officer after pointing out certain defects in the body of the assessment order which may not be repeated for the sake of brevity estimated the sales at Rs.6,80,000,000/- and applied a G.P. Rate at 8%. The assessee being aggrieved preferred an appeal before the CIT(A) who reduced the sales at Rs.6,70,000,000/- and confirmed the G.P. Rate at 8%. Certain relief was allowed in the P&L account as well which has been reproduced above.
3. During the course of the hearing the learned AR vehemently urged that the treatment nineted out by both the to and the CIT(A) was contrary to the past history of the case. He stated that in the preceding year viz. 1987-88 the following results were declared (lor the Assessment Year 1988-89 the assessm ent was completed on agreement basis and therefore it does not constitute previous history of (lie case.).
Sales Rs.27,923.983 Gross profit 2,039.564 G.P. Rate 7.30% In this year the sales were estimated at Rs.32,000.000 and were subjected to a G.P. Rate of 9%. The same defects had appeared in the assessment order as in the impugned year, The assessee preferred appeal before the CIT(A) who vide his order dated 13.6.86 directed for the acceptance of the declared sales as well as G.P. Rate with the following observations: "Last year the G.P. Rate declared by the assessee was less than 5% and it was applied at 5%. This means that the assessee has an honest approach in life and tries his best to file true particulars of income. The rate declared this year being better than the preceding year does not need any interference. The to is directed to accept the GP rate of 7.30%.
Coming to the sales it is an established principle that when the goods are excisable and the quantities are verifiable an addition can be made in the sales unless there is addition made in the gross profit. Consequently the to is directed to accept the declared sales".
4. The Department being aggrieved preferred an appeal before this Tribunal who vide their order in IT A Nos.462 and 463/LB/1988- 89 dated 18.1.95 rejected the Departmental appeals by making the following observations: "Learned AR for the assessee has submitted that for the year 1986-87 the G.P was declared at 3.66% bv the assessee and it was adopted at 9% by the I.T.O, which was reduced by the learned CIT(A), to 5%. The Department has not come up in appeal against this application of G.P. Rate at 5 %. The department has come in second appeal only on the point of imposition of penalty. Keeping this important fact in mind the learned CIT(A) maintained that in the year 1987-88 the assessee has declared G.P. Rate at 7.3% on his on whereas for the last year it was fixed at.5% by the learned CIT(A). Thus it is established that good results had been declared by the tax-payer on this score and hence the learned CIT(A) ordered acceptance of the declared sales and G.P. Rate. Therefore, no interference is warranted on our behalf on the issue of G.P. Rate and declared sales."
5. The learned AR has pointed out that in the impugned year the declared sales are much higher than for the Assessm ent Year 1987-88 and also G.P. Rate declared though less by 4% adopted for the Assessm ent Year 1987-86 is again much more than 5% applied by the learned CIT(A) for the Assessm ent Year 1986-87 in which the Department did not prefer any second appeal. The learned AR has also cited two parallel cases at NTN 7-7-1733647 and 07-11-1279686 in which G.P rate has been applied at 5% and 5.5% respectively. The learned D.R. On the other hand, stated that since the books of account were found to be defective the to was justified in estimating sales and adopting higher G.P. Rate.
6. We have examined the pla of the appellant as well as that of the D.A. We find force in the A.R.
Plea in view of of the fact that for the Assessment Year 1986-87 in identical circumstances the learned Tribunal had accepted the declared sales of the appellant. In the year under appeal the declared sales are more than double and. Therefore, call for no interference. The G.P. Rate is also reasonable considering that for the Assessment Year 1986-87 the G.P. Rate adopted by the CIT(A) was 5% which was not a contested by the Department and also taking in view the parallel cases ointed by the learned AR which the DR was unable to controvert. Taking these facts into consideration the assessee's declared results are directed to he accepted.
7. The appeal is allowed in the above stated manner.