1989 PLP (Trib (PTD)

Muhammad Tayyab Accountant for Respondent. Date of hearing: 24th September, 1988. This is a Departmental appeal relating to the assessment year 1984-85. The assessee is a registered firm deriving income from the sale of medicines. In the grounds of appeal the Department has contested the reduction in the trading account addition from Rs.30,000 to Rs.10,000 allowed by the learned AA.C., Range-B, Faisalabad.

2. The facts of the case are that the original assessment had been made in the case at an income of Rs.56,043 as against declared income of Rs.33,

442. In appeal, the learned A A C set aside the assessment with certain directions and the I T O made re-assessment by making addition of Rs.20,000 towards G.P rate Rs.5,000 in respect of the cash discount account and Rs.5,000 in connection with the bonus account. In this way total addition in the trading account came to Rs.30,000 and the additions out of P & L account were retained at the earlier figure of Rs.2,

600. In this manner assessee's income was assessed at Rs.66,

043. The assessee filed an appeal against this order of re-assessment and contended that the addition of Rs.30.000 in the trading account was unjustified particularly in view of the fact that the predecessor of the I.T.O. who made the assessment had agreed to make an addition of Rs.10.000 m the trading account. The A.A.C. in his order observed that the assessee's contention regarding the agreement was valid since the relevant order sheet entry dated 3-3-1986 read as under- "Present Mr. Muhammad Tayyab Manager and Mr. Muhammad Amin Ch. A.R. Case re-examined. They have agreed to a round addition of Rs.10,000 to the trading results." The learned A.A.C. wrote that after this entry no notice under section 65 (2) was issued by the I.T.O. intimating to the appellant that he intended to increase the addition 'already agreed upon. The learned A.A.C. observed that under the circumstances the I.T.O. was legally bound to honour the agreement which had been arrived at earlier and he, therefore, reduced the addition in the trading account from Rs.30,000 to Rs.10,

000. The Department contests this reduction but the action of the learned AAC appears to be quite justified. The AAC was quite right in pointing out that the Department had agreed with the assessee with regard to certain quantum of addition and if at all the Department had any strong reasons for not abiding by the agreement (which incidentally does not appear to be the case) the assessee should have been duly confronted with the facts justifying the departure from the agreement and the quantum of addition now proposed to be made. Since such an opportunity was not given by the I.T.O. to the assessee and even otherwise the facts given by the I.T.O. in the order of re assessment do not appear to be very compelling the AAC's view that the originally agreed additions of Rs.30,000 were reasonable is upheld. The Departmental appeal thus stands rejected. M. B. A./614/T Appeal rejected.