Law: Income Tax Ordinance, 1979

Section: 61A,62,111,144(C)

ORDER EHSAN-UR-REHMAN, (JUDICIAL MEMBER).-- The assessee as well as the Revenue/department have assailed the order, dated 31-3-2003 passed by the learned CIT/WT(A) through the titled cross-appeals. Facts in brief of the case are that the assessee is deriving income from manufacturing and sale of sports goods (Foot Ball Bladders) and is being assessed in the status of AOP. The Income Tax return was filed by availing the Self-Assessment Scheme but was selected for Total Audit through computer random balloting draw. During the course of assessment proceedings the details in the form of photocopies of monthly sales tax returns, Sui Gas/electricity bills, salaries paid, party-wise details of purchases and sales of goods, break-up of the cost of goods sold alongwith the written reply were filed. Details of stocks were also filed. Wealth statement of the members of the AOP alongwith personal expenditure statement of each number were also filed. The books of accounts were not produced as being not maintained. Sales were declared at Rs.27,50,000, yielding a GP rate of 14% and after deducting the profit and loss account expenses at Rs.2,31,000 that net income was declared at Rs.1,54,000. The Assessing Officer rejected the declared results. The sales were estimated at Rs.50,00,000 as these were agreed before the National Survey Team at the time of third visit. The Assessing Officer also took the suppressed sales of Rs.22,50,000 (which is a difference between assessed and agreed sales) as concealment being deliberately done by the assessee and by applying a GP rate of 20% to the such suppressed sales, worked out the concealed income at Rs.4,50,000, thus also initiated concealment proceedings by issuing penalty notice under section 111 of the repealed Income Tax Ordinance, 1979. A GP rate of 20% was applied by writing as being applied in another parallel case. After add-backs out of the P&L account expenses that net income was assessed. Such assessment was contested before the learned First Appellate Authority. The learned First Appellate Authority did not upheld the element of concealed sales of Rs.22,50,000 but maintained the estimation of sales at Rs.50,00,000. The…

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