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M.A. No. 26/KB of 1985-86 and I.-T.A. No. 251/KB of 1984-1985, decided on 20th October, 1986.

---Ss.- 59 & 62--Assessee, who obtained an export permit for rice, contended that he sold away same under an agreement to a Corporation- Income-tax Officer rejected claim of assessee on basis of available record and assessed income in respect of rice export business in hands of assessee on his failure to prove agreement--Order of Income-tax Officer confirmed by Appellate Assistant Commissioner- -Assessee stating before Tribunal that as per direction issued by Tribunal while remanding case department had not provided him an opportunity to cross-examine an ex-partner of said Corporation in order to have correct information as to whether permit was sold to Corporation or not--Held, conduct of assessee had been questionable and dubious in filing return showing net income arising from sales from export and local--Assessee later on giving up plea of export business and taking completely different stand in selling away export permit to a Corporation after four years and not producing books of account and failing to furnish any evidence or statement from partners of Corporation regarding authority of accountant of Corporation who allegedly entered into said agreement of sale of permit on behalf of Corporation--- Assessee as such failed to prove genuineness of agreement of sale of permit which was even otherwise legally unsalable--Assessee's plea of not affording him opportunity to cross-examine a partner, who left Pakistan long ago, reflecting a deliberate attempt not to allow smooth carriage of justice--Income-tax Officer proceeded on basis of available evidence on record and there was no possibility of allowing any cross-examination of untraceable member who, had previously very clearly denied 'that any of partners had signed agreement of sale of export permit with asses see--Alleged agreement produced by assessee after more than three years after dissolution of Corporation and revision of return of income was based on totally different basis, i.e. instead of showing profit on export and local sales, on basis of sale of export permit for a certain sum and that also by virtue of an agreement of sale of permit which was not permissible under law and was clear contravention of conditions which were attached to rice permit--Held, this reflected shilly-shallying and vacillating behaviour of assessee by basing his income from activities carried on by reflecting sales locally and export and then revising income after several years and claiming it be resulting from illegal sale of permit of Rice Export--Income tax Officer, in absence of reliable evidence, was, therefore, justified in rejecting alleged agreement of sale of export permit and Assistant Appellant Commissioner rightly confirmed orders of Income tax Officer in circumstances. Appeal of assessee dismissed.

Ali Athar for Appellant.

Muhammad Farid, D.R. for Respondent.

Date of hearing: 22nd March, 1986.

.--There is one miscellaneous application at the instance of the department for assessment year 1975-76 and the other is the appeal of the assessee against the order of the Appellate Assistant Commissioner of Income-tax Hyderabad Range, Hyderabad, recorded by him in Income-tax Appeal No. 205/Larkana, dated 30-11-1984 for assessment year 1975-76.

2. First we deal with the miscellaneous application filed on behalf of the department. The Income-tax Officer in this miscellaneous application referred to the facts of the case which in brief are that the assessment for the, year under reference 1975-76 was made by the Income-tax Officer Companies Circle A-6 Karachi on 29th June, 1978 by rejecting the claim of the assessee that 11e had sold the export permit to Roshan Corporation for Rs.1;50,000 and by assessing the Income in respect of rice export business in the hands of the assessee in the status of an Association of Person for several reasons given therein. The first appeal of the assessee was rejected by the learned Appellate Assistant Commissioner, A-Range and the second appeal was also rejected by the Tribunal vide its order in Income-tax Appeal No. 1267/ KB of 1978-79 dated 6th June, 1979 and the Tribunal had not accepted the plea of the assessee that the assessee had sold the export permit to Messrs Roshan Corporation. The Income-tax Officer in the miscellaneous application further referred to para. 1 of page 2 which reads as under:-

"The Income-tax Officer summoned Messrs Roshan Corporation under section 37 of the Income-tax Act on 13-5-1978. Mr. Jan Muhammad an ex-partner of Messrs Roshan Corporation appeared before the income-tax Officer on 16-5-1978. He was confronted with the agreement allegedly executed by one of his co-partner Messrs Ali Akbar & Co. (the appellant) Mr. Jan Muhammad categorically denied the agreement having been signed by any of the partners of Messrs Roshan Corporation..."

Then the Income-tax Officer referred to para. 6 of page 6 of the order to the effect that:

"We find that no evidence what to say reliable evidence was adduced by the assessee to substantiate its belated set up plea of the sale of export permit of rice."

He then urged that in view of this clear finding of the Tribunal read with the order sheet entries, dated 20-3-1973 and 27th May, 1978 for the year under reference there was no mistake apparent in the order of the learned Tribunal which could authorise it to rectify its aforementioned order in favour of the assessee. The Income-tax Officer in the application also stated that the assessee in its miscellaneous application had urged that the assessee had taken a specific ground that the Income-tax Officer had failed to afford any opportunity to the appellant for cross-examination of Mr. Jan Muhammad of Roshan Corporation and. that the learned Tribunal had missed this point and did not adjudicate upon it. The Income-tax Officer further stated that the Tribunal accepted the contention of the assessee and reviewed the earlier order and set aside the orders of the officers below and remitted the case to the Income-tax Officer for making de novo assessment after providing the assessee a fair and reasonable opportunity of cross- examining Mr. Jan Muhammad of M/s. Roshan Corporation and also lead evidence in rebuttal if he so chooses. The Income-tax Officer also stated that the assessee had the knowledge about Mr. Jan Muhammad leaving the country and his non-availability accordingly for purposes of cross-examination. The Income-tax Officer further referred to the entries dated 20th May, 1978 and 27th May, 1978 and stated that the evidence with the department was so much incriminating against the assessee that even if Mr. Jan Muhammad wanted to favour the assessee it would not have been possible for him to wriggle out and the claim had to be rejected. The Income-tax Officer in the end prayed that the Tribunal should cancel its order bearing I.T.A. No. 9/KB of 1981-82 dated 16-12-1981 which had been passed unauthorisedly and restore its earlier order I.T.A. No. 1267/KB of 1978-79, dated 6th June, 1979.

3. At the very outset Mr. Ali Athar, the learned counsel for the respondent -assessee in this miscellaneous Application raised the preliminary objection that it is barred by limitation.

4. Mr. Muhammad Farid, the learned departmental Representative urged that the Tribunal cannot review the order and that the second order of the Tribunal was not served of Income-tax Officer at all. The assessee filed a letter to the Income-tax Officer dated 2nd March, 1982 through Mr. Nizami counsel of the assessee that the assessment had been set aside by the Tribunal in a miscellaneous Application. He urged that in the miscellaneous application filed by the assessee the respondent was Income-tax Officer Companies Circle A-6 and this application was filed on 20th September, 1981 pertaining to the order bearing I.-T.A. No. 1267, 1353/KB of 1978-79, dated 6-6-1979 for assessment year 1975-76. The assessee took two years and three months for filing this application. Mr. Muhammad Farid stated that the Tribunal passed its second order in Miscellaneous Application No. 9/KB of 1981-82 for assessment year 1975-76, dated 16-12-1981. It is stated by him that the order of the Tribunal was received by the Income-tax Officer, Larkana as well as case papers on 22nd February, 1982. Mr. Muhammad Farid urged that the jurisdiction of this case had undergone change in 1980 and the appellate Assistant Commissioner, Hyderabad had sent the case papers to Income-tax Officer, Larkana vide No. Jud-II/79-80 C. P-2976, dated 27-2-1980 by post. He also invited our attention to the fact that the Commissioner of Income-tax, Central Zone-A wrote a letter to the Income-tax Officer, Companies Circle A-6 on 27th August, 1976 asking him to transfer the case to Income-tax Officer, Larkana in case Central Board of Revenue passed such order and that upto 8th March, 1979 the case papers were with Income-tax Officer, Companies Circle A-6. As per the order sheet on 8th March, 1979 the representative Mr. A.R. Nizami appeared before the Income-tax Officer and the proceedings were dropped as per the past history of the case for 1976-77 onwards and the case was transferred to Income -tax Officer, Larkana. Thus, Mr. Muhammad Farid urges that the jurisdiction was of Income-tax Officer, Larkana and not of Income-tax Officer, Companies Circles A-6. He urges that the Income-tax Officer, Larkana got this letter very late through the assessee on 2nd March, 1982. The learned Departmental Representative also placed reliance on I.T.A. No. 1315, 1316/KB of 1980-81 for assessment year 1973-74 and onwards date 5-9-1985, and referred to pages 14 to 18 of the aforesaid order and urged that the Tribunal's order is nullity in the eyes of law. He further urged that the question of the application becoming time-barred does not arise besides the relief, which is being claimed is declaratory. The learned counsel Mr. Ali Athar, on the other hand, urges that the limitation begins from the date the order was passed. He also urged that under section 33 of the repealed Income-tax Act the Appellate Tribunal is to communicate its order to the assessee and to the Commissioner of Income-tax. He further stated that the Tribunal had passed its order in this case in the miscellaneous application on 16-12-1981 by the department. Hence application filed is barred by limitation having been filed on 20-2-1986.

5. After hearing both the learned representatives we hold that without least doubt the application filed by the department is out of time having been filed after more than four years and two months and there being no good reason for condonation as well, the same is not entertained and stands dismissed.

6. Now we take up the appeal of the assessee against the order of the learned Appellate Assistant Commissioner, recorded by him in Income-tax Appeal No. 205/Larkana, dated 30-11-1984.

7. The facts of the case are that the first assessment was made by Income-tax Officer Companies Circle A-6, on 30-6-1978 Karachi against which the Appellate Assistant Commissioner, A-Range, Karachi passed an order in Appeal No. 6809-KC/A/77-78 on 18-1-1979. The assessee preferred an appeal to the Tribunal as well as the department and the Income-tax Appellate Tribunal in I.T.A.No.1267, 1353iKB of 1978-79 for assessment year 1975-76 passed the order on 6-6-1979. Against this order the assessee made a miscellaneous application on 20-9-1981 under section 156 of the Income-tax Ordinance. The Tribunal in this miscellaneous application passed order bearing No. M.A. 9/KB of 1981-82 for assessment year 1975-76, dated 16-12-1981 rectifying their earlier order being set setting it aside. The Income-tax Officer Circle-A Larkana Mr. Mushtaque Ahmed Sahito passed an order under section 62 read with order under sections 156 and 35 of the Tribunal. Against this order the assessee preferred an appeal to the Appellate Assistant Commissioner, Hyderabad Range, Hyderabad who vide his order bearing Appeal No.205/Larkana, dated 30-11-1984 held that the treatment of the Income-tax Officer did not call for any interference on any account and dismissed the appeal being without any merit. The assessee then preferred an appeal against this order to the Tribunal and has been filed on 23rd May, 1985 stating the date of communication of order to be 14-4-1985.

8. The learned counsel for the appellant Mr. Ali Athar urges that out of nine grounds of appeal filed by the assessee he requests that first ground No. 9 should be considered about the re-assessment order which reads as under:-

"The re-assessment order passed by the Income-tax Officer is prima facie barred under S.66 of the Income-tax Ordinance, 1979 on the basis of the reasons:-

(i) The re-assessment order was served on the appellant on 12-11-1983.

(ii) The re-assessment order does not bear any date.

(iii) The demand notice and the I.T. 30 i.e. the Assessment form also do not bear any date."

Mr. Ali Athar very vociferously urged that neither the assessment order nor I.T. 30, nor Demand Notice bear any date of passing the order and on the order sheet against date 30th June, 1983" the words are written "reserved for orders". Mr. Ali Athar urged that there is an irresistible conclusion that the assessment order was never passed on 30th June, 1983.and thus, it is barred by limitation. Mr. Muhammad Farid, the learned Departmental Representative in this behalf urged that the order is not barred by limitation and the Income-tax Department's procedure is to maintain demand and collection register and the cases are entered therein. The case which is entered in the month of June is shown not only in the register in that portion pertaining to the month of June but a statement is also sent about the number of cases disposed off during the month as well as the demand created. He also referred to sections 166(2)(a) and (d) of the Ordinance and urged that in this case first return was filed on 4-2-1975, second return was filed on 29-12-1977 and third was filed on 12-4-1978 and the assessment had been completed first time on 28-6-1978.

9. After hearing both the learned representatives as for this preliminary issue raised by Mr. Ali Athar is concerned we hold that the assessment was made within the prescribed time as is reflected by the record. Besides the assessment for this year which ends before the 30th day of June, 1979 the provisions of the repealed Income-tax Act relating to computation of total income and tax, do apply and the proceedings for the assessment year 1975-76 has to be continued as if the Ordinance had not come into force.

10. We take up now the other grounds of appeal of the appellant. Mr. Ali Athar, the learned counsel urged that the order passed by the Income-tax Officer and confirmed by the learned Appellate Assistant Commissioner is without jurisdiction as the directions of the Appellate Tribunal in Miscellaneous Application No. 9/KB of 1981-82, dated 16-12-1981 were not complied with. He urged that reliance has again been placed by the Assessing Officer as well as Appellate Assistant Commissioner of Income-tax on the alleged statement of an ex-partner of Roshan Corporation obtained behind the back of the appellant and without affording an opportunity to the appellant to cross-examine Mr. Jan Muhammad which vitiates the proceedings and renders the order as illegal and void. He urged that it is not a statement on solemn affirmation. He urged that summons to Messrs Roshan Corporation were issued and postal authorities returned this summons unserved. He urged that Messrs Jan Muhammad, Piyar Ali and Mr. Sadruddin were partners of Messrs Roshan Corporation and Mr. Musabhai was Manager-cum-Accountant of the concern and that his affidavit was filed with the Income-tax Officer. Mr. Ali Athar urged that he was maintaining the accounts of appellant for export of rice de facto done by Messrs Roshan Corporation being in the trade in the name of "Messrs Ali Akbar & Co." The Income-tax officer had ample authority and call for the account book for examination to this effect and that a request was also made by the representatives. He also urged that both the Income-tax Officer and Appellate Assistant Commissioner of Income-tax indulged in making surmises without any evidence and being contrary to the evidence. Mr. Ali Athar also urged that the Income-tax Officer again relied upon the original order of the Tribunal dated 6-6-1979 bearing I.T.A. No. 1267/KB of 1978-79 which had been rectified by the Appellate Tribunal itself on 16-12-1981 in miscellaneous application bearing No. 9/KB of 1981-82 for assessment year 1975-76. He further urged that without prejudice to the above arguments the rate of gross profit applied by the Assessing Officer and confirmed by the Appellate Assistant Commissioner is also excessive in view of the fact that the appellant had no expertise in export business and no contact with foreign buyers of rice. He lastly prayed for application of reasonable gross profit as in other cases. Mr. Muhammad Farid, the learned Departmental Representative, on the other hand, referred to pages 2 to 4 of the assessment order and also pages 5 to 12 of the second Appellate Order of Mr. Junejo, dated 13-11-1984 bearing No. 205/Larkana and urged that the Assessing Officer was justified in application of 30% in export sales and 10% in local sales as gross profit as well as the computation of income and that the learned- Appellate Assistant Commissioner was also justified in confirming it for the detailed reasons given.

11. The brief facts of the case are that pursuant to the directions of the Tribunal in Miscellaneous Application No. 9/KB of 1981-82, dated 16-12-1981 the Income-tax Officer issued summons to the assessee and Mr. Jan Muhammad partner of Roshan Corporation but the summons of Mr. Jan Muhammad could not be served through postal means as well as through the territorial officer in view of the fact that the partners were reported to have left the place after discontinuance of business and were not in Pakistan. Besides Mr. Ali Akbar partner had also expired. In these circumstances the Income-tax Officer was of the opinion that the only inescapable procedure would be to decide the case on merits and on the basis of material placed on record. Mr. Jan Muhammad the partner of Roshan Corporation has attended from time to time as well as Mr. A.R. Nizami, Advocate before the Income-tax Officer and the latter contended that the department had to provide an opportunity to cross-examine Mr. Jan Muhammad, the partner of Roshan Corporation in order to have the correct information as to whether the permit was sold to Messrs Roshan Corporation or not and that no opportunity had been provided to the assessee hence their contention should be accepted in view of the Tribunal's observations which reads as under:-

"The grievance of the appellant is well-founded and the failure on the part of the Income-tax Officer to provide opportunity to the assessee to cross Mr. Jan Muhammad of Messrs Roshan Corporation or to lead evidence if any in rebuttal thereof, has resulted in rendering the assessment order bad in law. The omission on our part to consider this important plea... has resulted in rendering our order to be inconclusive and ineffectual... the accidental omission on our part to deal with the aspect of the case and adjudicate upon this issue, has resulted in grave miscarriage of justice".

Mr. A.R. Nizami has also filed written arguments vide letter dated 16-5-1983 which was reproduced by the Income-tax Officer in his order made pursuant to the Tribunal's order in Miscellaneous Application as under: -

"(i) My client should not, in all fairness and justice suffer because of the wrongful or illegal procedure adopted by the Assessing Officer who framed the original assessment and further because of the present non-availability of one Jan Muhammad who had been previously called and examined by the Assessing Officer as his witness without affording opportunity to my client to cross-examine him, and he founded the edifice of his assessment on the basis of such statement which was prime facie a nullity in the eye of law, having not been subjected to cross.

(ii) So far as the role of Mr. Jan Muhammad is concerned, submission have already been made in detail before and above, looking to the facts of the case the Tribunal has been just enough in issuing the alternate direction that the assessee be also allowed to "lead evidence, if any, in rebuttal thereof". In pursuance of such direction and with reference to verbal discussions with you on this issue, as you yourself have been judicious enough in issuing summons under section 148 of Income-tax Ordinance, I, also Mr. Moosa Bhai Charani, the then Manager of Messrs Roshan Corporation, who had signed the agreement dated 16-8-1973 on behalf of Messrs Corporation, was found out with much difficulty and contacted for the purpose. Unfortunately owing to his serious illness, Mr. Moosa Bhai could not appear personally at Larkana before you. He has, however, tendered his requisite evidence on all vital issues in the genuineness of the said agreement but also nullifying the effect of the false statement of Jan Muhammad who was a partial witness being an interested party in the deal. This affidavit is submitted herewith which is self-explanatory."

(iii) In view of the positive evidence now led in favour of the subject as desired by the Tribunal re-assessment may now please be framed on the basis of such evidence according to the Tribunal's mandate. The department has also accepted the responsibility of this resultant quantum of income, while giving such reduction in the exactly parallel case of Haji Abdul Karim referred to in my previous letter. The affidavit of Haji Moosa Accountant is as under:-

That I had been Manager-cum-Accountant in the firm of Messrs Roshan Corporation, 1/5 A1-Yousuf Chamber, Frere Road, Karachi, for several years till it discontinued its business and the said firm was disolved and wound up its affairs in late nineteen seventies; and thereafter, the partners left for America for good but their whereabouts there are not known to me."

That I was the accredited agent of Messrs Roshan Corporation, in carrying on their business and conducting all dealings inclusive of concluding agreements with the parties, on their behalf, in the ordinary course and routine, and the established authority of nine could not be challenged by anyone."

That as per the said agreement, Messrs Roshan Corporation purchased the entire business under the E.P.C. involved in lieu of Rs.1,50,000 paid to Messrs Ali Akbar and Company and only to fulfil the requirements of law Messrs Ali Akbar and Co., were bound to sign all papers, documents as and when required.

That under direction of Messrs Roshan Corporation. I also maintained books of accounts for Messrs Ali Akbar and Company and I recollect that a profit of about Rs.1,36,000 had been shown therein; and that I was compelled to produce the said books of accounts in 1978 or so before the Martial Law Authorities who have not returned the same as yet. Hence I am unable to produce the said books.

That in practical conducting of this business Messrs Ali Akbar and Co. had no say obviously for the reason that with the conclusion of the said agreement they ceased to have any interest in the said business."

After going through the record of the case and after thorough discussion with the assessee I am of the opinion that the contention put-forth by the assessee cannot be accepted. The learned Income-tax Appellate Tribunal has discussed the issue of alleged sale of permit at length and rejected it in its original order which is evident from the following portion of the learned Income-tax Appellate Tribunal:-

"We have given due consideration to the submission made at the Bar and have also carefully perused the Orders of both the Officers below. We do not find any force in the contention of the learned counsel for the appellant that the revised return filed on 11-3-1974 disclosion income of Rs.1,35,000 after claiming an ad hoc expenses of Rs.15,000 on account of sale of rice permit, was wrongly rejected by the Income-tax Officer. As a matter of fact to find that no evidence, what to say of reliable evidence was adduced by the assessee to substantiate its belated set-up pleas of the sale of export permit of rice. The Income-tax Officer and so also the appellate authority have dealt with this issue in a proper and befitting manner and we do not feel persuaded to disturb their orders in this behalf in any manner. The pleas adopted by the assessee before the assessing officer in respect of actual export having been made by Messrs Roshan Corporation. Karachi and the account having been only maintained in the name of the assessee on account of there being a bar to the same of export permit of rice, are also not substantiated by any evidence whatever. The entire burden to prove the alleged sale transaction or the actual export of rice having been made by Messrs Roshan Corporation Karachi was squarely on the assessee, which it utterly failed to discharge. We are, therefore, satisfied that the officers below rightly proceeded to assess the appellant in respect of both the export and local sales of rice."

The Income-tax Officer subsequently observed that:-----

"During the course of assessment proceedings Mr. Jan Muhammad partner of Roshan Corp., was examined to verify the contention of the assessee that Export Permit was sold to Messrs Roshan Corp. the statement recorded by the Income-tax Officer was duly confronted to the authorised representative of the assessee which is evident from the order sheet entry dated 20-5-1978. The authorised representative of the assessee did not ask for cross-examination and stated that he had nothing to add to his earlier explanation."

The Income-tax Officer then in view of these facts formed the opinion that there was nothing on record to prove that the rice permit was actually sold to Messrs Roshan Corporation and computed the income of the assessee by adopting 30% gross profit on total sales of Rs.67,43,092 in export sales and by adoption of 10% gross profit on sales of Rs.6,50,000 in local sales, simultaneously stating that as has been upheld by the Income-tax Appellate Tribunal and "as no relief under this head has been allowed in appeal", respectively in these two accounts. He further allowed the total expenses as were allowed by the I.T.A. at Rs.6,09,093 and computed the total income at Rs.14,78,834. The learned Appellate Assistant Commissioner in appeal very ably discussed in detail after hearing the arguments and the perusal of the record thoroughly. He observed that the appellant had obtained an export permit for 2,000 tons rice I-Irri 6 Sind White 55% from the State Bank of Pakistan on 15-8-1973 vide E.P.C. No.226 for exportation before 31-12-1973. He stated in his order that the assessee disclosed to the Income-tax Officer that his export sales amounted to Rs.67,43,091 and local sales were of Rs.5,91,i99 with overall gross profit of 18.4% and net income of Rs.1,36,684. Later on the income was revised for the asset year 1975-76 on 12-4-1978 with a net income of Rs.1,35,000 claiming that the export permit had, in point of fact, been sold for Rs.1,50,000 to Messrs Roshan Corporation, Karachi through an agreement, dated 16-8-1973 and a copy of the same was also filed. The revision of the return was explained to be necessitated on account of the desirability of showing the real state of affairs after imposition of material law explaining further the reasons. It was also explained by the appellant that in spite of this agreement of sale of permit the appellant company was bound to sign all papers required in the transaction, the permit being in their name and that the book of account were also maintained accordingly, but by Messrs Roshan Corporation's Accountant wherein the profits as stated at Rs.1,36,684 has been shown. It was also stated that the books were always in the custody of Messrs Roshan Corporation's Accountant who had surrendered these books to the material law authorities subsequently and this fact had prevented the appellant company from presenting the said books when called for by the Assessing Officers, the appellant having lost the control over the same and that this position was intimated to the Income-tax Officer. The Assessing Officer held the agreement of sale of permit to be fake for number of reasons and computed the income as stated supra against which the Appellate Assistant Commissioner in the order bearing No. 6809/KC/A/ 77-78, 18-1-1979 upheld the sales as declared by the appellant and also the gross profit at 10% in local sales but the gross profit was reduced from 30% to 20% in export sales as well as deleting the disallowance of expenses of Rs.3,87,927. On further appeal both by the appellant company and the department, the Tribunal in their order bearing No.1267/ KB and 133/ KB of 1978-79 for assessment year 1975-76, dated 6-6-1979 held that the appellant-company failed to prove the alleged transaction if an agreement of sale with Messrs Roshan Corporation in respect of the export permit for 2,000 million ton of rice obtained by the assessee from the State Bank of Pakistan and (that the said permit) was unsaleable. The Tribunal restored the gross profit at the rate of 30% on export of rice maintaining the deletion of the disallowance by the learned Appellate Assistant Commissioner. However, on miscellaneous application by the appellant company the Tribunal set aside the earlier order with the direction in that the plea of the appellant that the Income-tax Officer had not allowed them to cross-examine the partner Jan Muhammad of Roshan Corporation about the above-mentioned issue of sale of permit to Messrs Roshan Corp. directed to afford the appellant a chance of cross-examining the partner Mr. Jan Muhammad simultaneously allowing him to produce any other evidence in defence. After this order what the Income-tax Officer did, has already been narrated in the earlier part of this order. The learned Appellate Assistant Commissioner discussed most exhaustively and beyond any shadow of doubt in a very able manner in several paras. all the aspects of the case meticulously and thrashing out all the facts came to the conclusion that "the appellant had not been able to prove his belated set up of arguments and contentions and the treatment of the Income-tax officer did not call for any interference on any account and, therefore, present appeal being without any merit stands dismissed."

12. The Tribunal in this case by its order in Miscellaneous Application No. 9/KB of 1981-82, dated 16-12-1981 had rectified their order by directing de novo assessment after providing a fair and reasonable opportunity to cross-examine Mr. Jan Muhammad and also had allowed the appellant to lead evidence in rebuttal if it so chose. The learned Appellate Assistant Commissioner in this respect had observed that the assessee's main plea before the Tribunal was that they, have been denied an opportunity to prove that the agreement was genuine and then he observed that:---

"But on the other hand, it was in the complete knowledge that Messrs Roshan Corporation had ceased doing business and its partners including Jan Muhammad have left for America and, therefore, were not contactable. Obviously, knowing this fact fully well, the appellant was only sure of this that since Mr. Jan Muhammad was not contactable, hence he shall take the benefit of doubt and the above alleged "agreement" shall be accepted by the Department. This thinking on its own was enough to approve that the appellant was interested only in confusing and misleading the Hon'ble Tribunal and getting the asset, set aside on any excuse, whatsoever. The appellant gets the case set aside from the Hon'ble Tribunal on the plea that a chance should be allowed to him to cross Mr. Jan Muhammad and now before me in his grounds of appeal he says "that the Income-tax Officer was not justified in making the appellant suffer because of the non-availability of Mr. Jan Muhammad, the Departmental witness, the appellant" obvious inability to cross him at this late stage over which he has no control - - - -- - The appellant knew about the non-availability of Mr. Jan Muhammad, he knew that it was not possible now to present him for cross, and that it was now late and he wrongly dubs Mr. Jan Muhammad as "the Departmental witness" (which was again wrong because Mr. Jan Muhammad was an independent witness, being the partner of Messrs Roshan Corporation, which was dragged into this matter by the appellant himself after complete 4 years of asset, proceedings and hence it was primarily his responsibility to prove the bogey of sale of rice export permit to Messrs Roshan Corporation and it has become late to prove this contention, then it not the Department but the appellant itself, which should stand to suffer from the consequence),-- and even then lie misted in believing the Hon'ble Tribunal that Mr. Jan Muhammad could be available even at this late stage, after the closure of business of Messrs Roshan Corporation seizure of its books by Martial Law Authorities and passing of so many intervening years for cross by the appellant."

The learned Appellate Assistant Commissioner after thrashing out these facts very ably held that the non-availability of Mr. Jan Muhammad in the above circumstances should not be allowed to go in favour of the appellant.

13. There is no doubt in our mind that the assessee conduct was questionable and dubious in filing the return showing the net income arising from the sales from export and local and this admitted position was till 17-12-1977. Then the plea of export business was given up and then t,,)ok completely different stand of selling away the export permit of rice to Messrs Roshan Corporation after four years and then not producing the books of accounts etc. and subsequently taking the plea that the books were in possession of Messrs Roshan Corporation coupled with the fact that no evidence or statement from the partners of Messrs Roshan Corporation was furnished regarding the authority of the Accountant of Messrs Roshan Corporation. Mr. Musabhai to enter into the alleged agreement on behalf of Messrs Roshan Corporation with the appellant at any stage and specially when partner Mr. Jan Muhammad had specifically denied and contradicted of any such agreement. Further' the onus way, on the assessee to prove the genuineness of the agreement of sale of permit of rice which he failed to do and which permit was unsalable even otherwise legally. The Tribunal had given directions for allowing opportunity to the assessee to cross-examine Mr. Jan Muhammad, ex-partner and we are in no doubt that the learned Appellate Assistant Commissioner is extremely ju.3tified in coming to the conclusion that it was in the complete knowledge of the appellant about the cessation of the business activities of Messrs Roshan Corporation and the non-availability of Mr. Jan Muhammad, partner of Messrs Roshan Corporation having gone out of Pakistan. The appellant having taken a somersault after four years hibernation was bound to provide sufficient evidence in support of the agreement for sale of permit and it was not the duty of the Income-tax Officer to trace on. Mr. Jan Muhammad either in Pakistan or if he was not available in Pakistan then outside Pakistan. There is no doubt in our mind that the plea of cross-examining Mr. Jan Muhammad long after even the Tribunal's having passed the order, i.e., about two years and three months reflects a deliberate attempt not to allow smooth carriage of justice. In these extraordinary peculiar circumstances the Income-tax Officer was justified to proceed on the basis of available evidence on record there being no possibility of allowing any cross-examination of the untraceable Mr. Jan Muhammad. The partner of Messrs Roshan Corporation a firm dissolved in 1975, the Authorised Representative of the appellant had urged before the appellate Assistant Commissioner on 15-1-1979 that it is significant that the summons under section 37 were issued to Messrs Roshan Corporation on 13-5-1978, i.e. to a firm which did not exist on the said date having been dissolved long ago and the partners thereof, it is learnt, absconded without payment of huge income-tax liability. The learned appellate Assistant Commissioner most rightly made the observation 'that he appellant knew about the fact of non-availability and non-contractibility of the partners of Messrs Roshan Corporation including Mr. Jan Muhammad and even then went on misleading the Hon'ble Tribunal that he firm should be given chance to cross Mr. Jan Muhammad and for his purpose the assessment should be set aside'. We are left with no doubt that under these queer and peculiar circumstances knowing fully well about the dissolution of the firm and the non-availability of the partners etc. raising a plea before the Tribunal to allow opportunity to cross-examine a partner of defunct-firm which was not at all possible to be carried out then the only inescapable procedure for the Assessing Officer was to place reliance on the available evidence remaining unrebutted and thus there was absolute possible compliance by the assessing Officers. In this respect at this juncture it will be of immense guide and assistance if we refer to the order of the tribunal in I.-T. A. No. 1267/KB of 1978-79 for this very year passed on 6-6-1979 wherein hey had in para. 6 of their order observed that:

"As a matter of fact, we find that no evidence, what to say of reliable evidence was adduced by the assessee to substantiate its belated set up plea of the sale of export permit of rice. The Income-tax Officer and so also the first appellate authority have dealt with this issue in a proper and befitting manner and we do not feel persuaded to disturb their orders in this behalf in any manner. The pleas adopted by the Assessing Officer in respect of the actual export having been made by Messrs Roshan Corporation, Karachi and the accounts having been only maintained in the name of the assessee on account of there being a bar to the sale of export permit of rice, are also not substantiated by any evidence whatsoever. The entire burden to prove the alleged sale transaction or the actual export of rice having been made by Messrs Roshan Corporation, Karachi was squarely on the assessee, which it utterly failed to discharge. We are, therefore, satisfied that the officers below rightly proceeded to assessee the appellant in respect of both the export and local sales of rice. "

Even otherwise the appellant's contention that the agreement with Messrs Roshan Corporation for sale of the export permit of rice for Rs.1,50,000 ,,gas signed by Mr. Musabhai, the Accountant-cum-Manager of Roshan Corporation is of no legal value as he was not empowered to sign such agreement. The simple issue is that the partner of Messrs Roshan Corporation Mr. Jan Muhammad very clearly denied that any of the partners had signed the agreement and that the Manager Musabhai had lot been empowered by the firm to sign any such agreement and that he said Manager had also left the service and that the firm of Messrs Roshan Corporation was also dissolved on 31-3-1975 coupled with the nether fact that there is total denial of payment of &s.1,50,000 to Messrs Ali Akbar and company by Messrs Roshan Corporation. Further Mr. Jan Muhammad in unequivocal terms also stated that Messrs Ali Akbar and Company had prepared the alleged agreement in collaboration with his ex-manager in order to evade income-tax and other liabilities.

It was also stated in the declaration by Mr. Jan Muhammad that if there was any such agreement then why it was not produced previously by the said Messrs Ali Akbar and company and why it was produced after five years. After looking into these facts we are of the opinion that the assessee either deliberately or of course not inadvertently followed such line of action, which perhaps it never visualized to be harmful to such an extent to it. The facts as are on record are that the firm Messrs Roshan Corporation was dissolved on 31-3-1975 and the alleged agreement was produced after more than three years on 12-4-1978 after the dissolution of the firm and the revision of the return of income was based on totally different basis, i.e. instead of showing profit on export and local sales, on the basis of sale of export permit at Rs.1,50,000 and that also by virtue of an agreement, dated 16th August, 1973 'and that too, not being permissible under the law and a clear contravention of the conditions which were attached to the rice permit. This does reflect the shilly-shallying and vacillating behaviour of the assessee by basing his income from activities carried on by effecting sales locally and export and then revising the income after several years and claiming it to be resulting from illegal sale of permit of Rice Export. Hence for failure of the assessee to adduce any reliable evidence we hold that the Income-tax Officer was justified in rejecting the alleged agreement for sale of export permit and the learned Appellate Assistant Commissioner has rightly confirmed his order in view of these peculiar circumstances.

14. As for the ground No. 8 of the assessee is concerned, the assessee agitated that without prejudice to the other grounds, rate of gross profit applied by the officers below is excessive particularly having regard to the fact that the appellant had neither experience of export business nor had any contact with foreign buyers and had not done any such business at any time or after. In this respect we have to again refer to the order of the Tribunal bearing I.T.A. No. 1267/KB of 1978-79, dated 6-6-1979 which has already been quoted on page 14 of this order and further the subsequent appreciation of all the facts of the case, and then their decision on this issue. The same for the sake of easy reference is incorporated as under:-

"We are, therefore, satisfied that the officer below rightly proceeded to assess the appellant in respect of both the export and local sales of rice. The two cases cited by the counsel for the assessee-appellant before us, referred to above, are not at all parallel cases as they are not relating to the charge year 1975-76 to which year this appeal relates. Besides, it is observed that in the case bearing GIR No. 450/Co.XII, the applied gross profit rate was only 1 % as against the disclosed gross profit rate of 0.68%. It can hardly be said to have any relevancy with the case of the assessee, who itself declared an overall gross profit rate of 10.72% after adjustment. The only other assessment order relied upon by him was of the year 1974-75. Here also 7 % gross profit rate was adopted as against gross loss of Rs.26,812 shown by the assessee. We do not find any reason to place reliance on any of these two assessment orders cited by the appellant's counsel. In the assessment order under appeal, we find that the Income-tax Officer has given as many as five cases, and the nearest one is the case of the assessee is that of E.P.C. 206, wherein 29.23% gross profit rate was shown. As rightly pointed out by the Income-tax Officer in his order, which fact seems to have escaped the attention of the learned Appellate Assistant Commissioner, that the assessee's rate per ton being US 341; whereas in the other cases the highest rate per ton is US dollars was 314. Moreover, the broken percentage of the assessee was 55% whereas in other cases it was 35% to 45% excepting in one case Irri-8, Sind wherein rate per M/Ton was 135 U.S. only. We are, therefore, clearly on the view that while allowing relief to the assessee in the rate of profit, the learned Appellate Assistant Commissioner, wholly failed to take into consideration some very material and relevant facts and had thus fallen into an error in allowing relief to the assessee with the observation that,- - - - - -learned Assessing Officer seem to be exhorbitant with the percentage of broken rice shown by the appellant."

After this observation the Tribunal further held that:-

"After giving due consideration to the facts fully dealt with by the Income-tax Officer in his order and looking to the rate per M /Ton granted to the assessee, we are firmly of the view that action of the Income-tax Officer in applying 30 gross profit rate in export sales was wholly justified. Accordingly we would vacate the order of the learned Appellate Assistant Commissioner on this issue and restore that of Income-tax Officer."

In view of this, this ground cannot be considered by us; besides there is absolutely no doubt that the Tribunal vide their order in the Miscellaneous Application No. M.A. No. .9/KB of 1981-82 for 1975-76 assessment year, dated 16-12-1983 had given a very specific direction to allow the assessee a fair and reasonable opportunity to cross-examine the partner Mr. Jan Muhammad and to lead evidence in rebuttal if it so chooses to do. Hence no other ground is tenable in appeal before us and the appeal fails on this ground also.

15. The appeal being devoid of any merit fails and stands dismissed.

M. Y. H. Appeal dismissed.

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