1989 PLP (Trib (PTD)

Receipts from Municipal Corporation Gujranwala. Gross receipts Rs.13,57,149 Income-tax deducted Rs.40,712 Security deducted Rs.1,35,632 Bitumen & rent of road roller deducted Rs.24,263 Net receipts Rs.11,56,542 The assessee has supplied a photo-copy in' which the date-wise details of the payments, tax deducted and security deducted etc. has been given. The aforementioned receipts. were from 25-8-1982 to 28-6-1983. The other payments received by the assessee were to the tune of Rs.2,10,

384. Thus total certified receipts were Rs.15,67,533.

4. In para (2) of his order the I A C has himself admitted as under:- "As per payment certificates dated 7-11-1983 and 12-9-1983 total receipts work out to Rs.15, 67, 533."

5. The learned counsel for the assessee further contended that when the revised return was filed the assessing officer issued a notice to the assessee on 23 5-1984 to explain the reasons for revising the return. The assessee duly replied to this notice on 28-5-1984 and explained the aforementioned circumstances. The assessing officer was satisfied with the explanation of the assessee as no further notice was given to the assessee and thus the/ agreed assessment was made at an income of Rs.75,

000. As for the unsigned return the learned counsel contended that when the assessee admits that he had filed the return and the assessing officer was satisfied about the reasons for tiling the revised return and the return was available on record, it cannot be said to be an invalid return merely because it does not bear any signatures. On this issue the learned counsel relied upon Tribunal's decision reported as 1987 P T D 632 The learned counsel further contended that an agreed assessment is a valid assessment and therefore cannot be said to be erroneous in law. He has relied upon the Tribunal's decision reported as 1988 P T D (Trib) 965.

6. We have considered the arguments of the parties. In order to attract section 66A both the conditions namely that the assessment order was erroneous in law and prejudicial to the interest of revenue had to be established. It has been successfully established by the learned counsel for the assessee with the support of the case-law that an agreed assessment is a valid assessment and therefore cannot be said to be erroneous in law. Mere fact that the assessee's return had not been signed cannot be said to be an invalid return as this is nobody's case that the return had not been filed. Both the assessee as well as the department admit that the revised return had been filed and as a matter of fact the assessing officer made an inquiry into the reasons for filing the revised return. He issued a notice to this effect to which the reply was duly given by the assessee. Apparently, the assessing officer was satisfied with the reasons advanced by the assessee for filing the revised return. Therefore, mere non-signing of the return cannot make it an invalid return. The Tribunal has already held in P T D (1987) P-632 that a return cannot be said to be invalid if both the parties admit that the return had been filed. Therefore, it follows that an agreement made by the department as well as by the assessee on the basis of a return, which was validly filed, cannot be said to be erroneous in law. As for the agreed assessment being prejudicial to the interest of revenue, suffice it to say that every agreed assessment is always prejudicial to the interest of revenue to some extent. As a matter of fact an agreed assessment suits both the assessee as well as the department and an agreed assessment is made on the principle of give and take. The assessee gains in an agreed assessment as income is not assessed at a higher figure, which is otherwise possible. While the department also gains as because of the agreed assessment though the department loses some of the taxes but gains by immediate collection of tax as well as because of the bar against filing of the appeal. Thus both the parties make a compromise for mutual interest on the basis of which an agreed assessment is made with free consent. Even otherwise, if the agreed assessment is allowed to be reopened under section 66-A it will not be in the interest of the department either. If such a view is allowed to be taken that would amount to create a distrust in the assessee's mind and nobody would come forward to make an agreed assessment. In that case in the minds of the assessees there will also be a lurking doubt that subsequently their cases can be reopened by an I A C exercising the power under section 66-A of the Ordinance. Thus, in such an event on the one hand the assessee had to pay the tax on the basis of an agreed assessment and on the other hand the very assessment is likely to be cancelled subsequently and then the income would be assesseed in normal manner.

7. An agreed assessment binds both the parties, the assessee as well as the department. If the assessee is debarred from filing an appeal against the agreed assessment the department should also consider itself bound by the agreement. On this principle the department cannot therefore be allowed to reopen the agreed assessment.

8. For the foregoing reasons, I vacate the restore that of the I.T.O. The appeal is accepted. M.B.A./635/T The appeal accepted.