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I. T: A. Nos. 1622 and 1660 of 1982-83, decided on 2nd January, 1985.

---Ss. 61, 62 a 63--Notice--Default--Ex-parts best judgment assessment-- Assessee's authorised representative pleading that reasonable opportunity was not afforded to assessee to explain his case and challenging that notice was not served on assessee at all as signature on notice did not tally with that of partner who was stated by Departmental representative to have received notice--Income-tax Officer after making certain query from employer company, with regard to payments made to assesses-firm on their own account and additional payments made to other workers direct in connection with contract of company, proceeding to frame ex parte assessment without confronting assessee with said material--Income-tax Officer proceeded in an indecent haste particularly when he did not even, confront assessee with material he had collected from employer company which he should have, if he had no intention to issue a notice under S.62 for requiring further information on certain points--Best judgment assessment, held, was not sustainable in circumstances and Appellate Assistant Commissioner had rightly converted same into normal assessment.

---Ss. 61 & 63--Notice--Default--Powers of Income-tax Officer to make best judgment assessment--Held, although on default of notice under S. 61, Income-tax Officer could complete best judgment assessment, it was however, not obligatory on him to do so especially when notice under S. 61 was issued once.

Zia H. Rizvi and M. Daud Khan, I.A.C. D.R. for Appellant.

Daud Khan, I.A.C. D.R. and Zia H. Rizvi for Respondents.

Date of hearing: 2nd January, 1985.

--These cross-appeals have been filed by the assessee as well as department and are directed against the order of the learned A.A.C. relating to the assessment year 1981-82. The assessee, a registered firm, consisting of 18 partners was engaged in the business of welding work for Messrs Aquater SPA, Machi Goth, Sadiqabad.

2. The assessee's appeal is taken up first in which objection has been taken to the application of G.P. rate of 20% on normal payments ordered by the A.A.C. The assessee received total payments of Rs.21,42,865 for carrying out welding work on behalf of the company.

The I.T.O. has framed the ex parte assessment which matter would separately be dealt with hereafter. In regard to the assessee's appeal the plea is that the total payments were not received by the assessee but part of the payments which related to overtime payment were made to the welders and that the net receipts paid to the company are of the order of Rs.11,32.079. The A.A.C. of I.T. dealing with this issue has set aside the case directing the I.T.0 to re-examine the point and after verification to take a decision on the same. In regard to assessee plea the G.P. rate of 20% applied by the A.A.C. on receipts of Rs.11,32,079 is apparently not unjust. Presuming that the assessee received payments of Rs. ii. 32, 079 the G.P. declared is Rs. 2, 07, 899. This would disclose a G. P. rate of 18.9%. Therefore, there is hardly any force in the assessee's plea that G.Ps. of 20% is high. The assessee's appeal being devoid of any merit is rejected.

3. The department has also objected to the application o G.P. rate of Rs.20% on the sales from welding against 30% applied by Income-tax Officer. We have heard the learned D.R. and note that so far as the question of application of G.P. rate of 20% in respect of normal payments for welding made to the assessee are concerned neither' any parallel case has been quoted, nor, is there any past history: which could indicate that the G.P. rate of 20 is on the same side, particularly when on the question of balance which were made on overtime charges basis the assessment order has been vacated by the learned A.A.C. and the department would have an opportunity to examine that issue as well- as to decide the appropriate rate of G.P. justified according to the circumstances of the case. In this view of the matter we feel that there is no ground for modification of the G.P. rate of 20%,to the normal payments.

4. The other ground of appeal taken by the department is that the learned A.A.C. was not justified in holding that the service of notice under section 61 of the I.T. Ordinance was issued and for alleged default of the notice the best judgment assessment was completed. The D.R. has taken the plea that one notice is sufficient and the ex parte assessment was rightly made since. The notice was properly served on one Mr. Muhammad Arshad, one of the partners; On the other hand the learned A.R. of the assessee has pleaded that it, was a case of a registered firm which had maintained the accounts and the case was being dealt with under detailed scrutiny and, therefore, a reasonable opportunity should have been afforded to the assessee to explain its case. On the other hand he also challenged that the notice was not served on the assessee at all since the signature on the notice do not tally with that of the Partner Muhammad Arshad. The I.T.O. on the other hand had made certain queries from the Managing Director of Aquator S.P.A. Sadiqabad in regard to payments made to the assessee firm on their own account and addition No.l payments made to other workers direct in connection with the contract of the company. Keeping this information in mind he had proceeded to frame ex parte assessment without confronting the assessee with this material, It is true that for default of notice under section 61 the best judgment assessment could be completed, but there is no obligation on the part of the I.T.O. to necessarily proceed and frame the ex parte assessment for default of notice under section 61 which was issued only once. Apparently he has proceeded in an indecent haste particularly when he did not even confront the assessee with the material that he had collected from the employer-company, which he should have, if he had no intention to issue a notice under section 62 for requiring further information on specific points. We are, therefore, of the view that best judgment assessment cannot be sustained in this case and the learned A.C.C. was correct in converting it into a normal assessment. We may mention in passing that on the question of additional payments the learned A.C.C. has already set aside the order and the I.T.O. would decide the issue after making the necessary enquiries as to whether the payments were made to the assessee or not and what should be the appropriate G.P. rate on the same.

5. In the result the appeals are decided accordingly.

M.Y.H. Order accordingly.

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