Law: Income Tax Ordinance, 1979

Section: 32(3)

Income Tax Ordinance (XXXI of 1979)----S. 32(3)---Application of G.P. rate---Rejection of accounts ---Principles--¬Nature of business to be kept in view by the Assessing Officer---Assessing Officer rejected returned income and assessed at high altitude applying enhanced G. P. rate---First Appellate Authority set aside assessment--¬Assessment Officer while re-assessing again applied the same G. P. rate which resulted in additions and add-backs ---A.A.C. confirmed same to grievance of assessee---Issue of G.P. rate could be resolved at level of Assessing Officer---Enhanced G.P. rate was set aside and case was remanded by Appellate Tribunal with direction that while applying the G.P. rate, nature of business be kept in view. ORDER INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER).---A registered firm, deriving income from contracting business, has filed this further appeal against an order, dated 20-2-1988 recorded by the learned A.A.C. of Income-tax, Range-F, Lahore to agitate the issue of G.P. rate whereas the add-backs in the P&L expenses were not agitated at the time of hearing of appeal. 2. The relevant facts in brief are that the assessee filed a return to declare income of Rs.74,125 which was assessed at Rs.2,40,598. This assessment was set aside by the first appellate authority. In the re-assessment proceedings, the assessing officer again applied a G. P. rate of 17.5% to the declared receipts which resulted in an addition of Rs.34,871 in the trading account. After making add-backs in the P&L expenses the income determined at Rs.1,20,598. The learned A.A.C. confirmed the G.P. rate and dismissed the assessee's appeal. 3. The learned counsel of the assessees has strongly agitated the application of G. P. rate of 17.1 % in this case with the argument that the assessee has history of application of 15 % G. P. rate. The learned A.R. of the assessee also referred to certain parallel cases where a G.P. rate of 15% was being applied. The learned counsel of the assessee further argued that the assessee was engaged in the earth work business only and that a G.P. rate of 17% has wrongly been applied. The learned D.R. on the other hand supported the order of the learned…

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