1990 PLP 903 (PTD)

MUHAMMAD AFZAL LONE, ACTG. C.J. ‑‑‑The petitioner, who is an assessee of the Income‑tax Department filed a return for the assessment year 1988‑89 declaring a net income of Rs. 29,

317. In the proceedings before the Assessing Officer, the company was represented by its Accountant Khurshid Ahmad Khan and Chartered Accountant, Tufail Muhammad who agreed that the assessment be made at a net income of Rs. 2,20,

000. The precise writing to this effect appearing in the Income‑tax file duly signed by them is reproduced below:‑‑ "Agreed at a net income of Rs. 2,20,

000. Sd/‑Muhammad Tufail 30‑3‑1989. Sd/‑Khurshid Ahmad" On the basis of this agreement the Income‑tax Officer passed a brief order on the same date, which is as under:‑‑ "30‑3‑1989: Muhammad Tufail, CA, alongwith Khurshid Ahmad Khan, Accountant, attended alongwith books of A/c comprising of cash books and ledger books examined, case discussed and income of Rs. 2,20,000 is agreed for 1988‑89:" This was followed by another order dated 30‑3‑1989.

2. The petitioner challenged this assessment through a revision before the Commissioner of Income‑tax on the plea that the Authorised Representative was never authorized by it to enter into any sort of agreement with the Department. The Revisional Authority found that the agreement was signed not only by the Authorised Representative but also by the Accountant of the Company and maintained that the petitioner's contention was devoid of force. Consequently, the revision was dismissed on 29th June, 1989. 1t is under these circumstances that the petitioner has come to this Court for judicial review of the orders passed by the Tribunals below.

3. I have heard the learned counsel for both the sides and examined the available record. A reference to the copy of the deed of Power of Attorney placed on this file by the petitioner demonstrates that the power conferred on the Authorised Representative includes:‑‑ "That his explanation and statement will be binding on me/us and he is also authorised to receive all notices, orders, etc." There should be no doubt that the writing aforesaid duly signed by the Authorised Representative of the petitioner partakes the character of a statement within the meaning of the contents of the deed of Power of Attorney. Even the learned counsel for the petitioner willy‑nilly admits it. This alone is enough to non‑suit the petitioner. The argument of his learned counsel, however, is that the assessment on the basis of the agreement is not countenanced by law. In his submission, the Income‑tax Ordinance is a complete Code in itself which lays down the procedure to be followed by the Assessing Officer before rendering an assessment order. Reference in this connection has specifically been made to sections 61, 62 and 63 of the Ordinance to canvass that the assessment order must disclose the basis on which it is rested and the income computed. The argument, thus, is that an agreed assessment is extraneous to the one envisaged by these statutory provisions. Reliance in this behalf has been placed on Tanvir Brothers Oil Dealers v. Commissioner of Income‑tax (1990 P T 'D 383).

4. In reply the learned counsel for the Department has contended that the petitioner attended the proceedings before the Income‑tax Officer through its Authorised Representative on a number of dates; kept on obtaining adjournments to avoid assessment and ultimately offered to be assessed at Rs. 2,20,

000. Thus, according to the learned counsel, the petitioner was estopped by its own conduct from questioning the correctness of the assessment and not entitled to any relief under writ jurisdiction.

5. It is to be noticed that under the Income‑tax Ordinance, the duty of assessing and collecting the public revenue is cast on the assessing officer. He has to discharge this obligation in accordance with the provisions of the Statute. My attention has not been drawn to any specific provision in the Ordinance empowering the Income‑tax Officer to pass an assessment order on compromise basis. In this view of the matter, the agreed assessment does not fit into the broad contours of the Ordinance. Earlier similar issue was raised in the precedent case before a Division Bench of this Court of which one of us (Lone, J.) was the member. The Division Bench maintained that:‑‑ "We entirely agree with the view taken by the Tribunal. In the Ordinance, there is no room for an agreed assessment and the I.T.O. had to assess the petitioner's total income, on the strength of the material on the record and such other evidence on specific points, as required by him??" As observed above, the assessment has to be made by the assessing officer on the foundation of the material before him. If the assessee's books of account, his bank account or other evidence produced by him or mustered by the Income‑tax Officer, warrant a higher assessment, the Income‑tax Officer, cannot ignore that evidence and go ahead with an agreed assessment. However, the position would be different if there is no material at all and the assessee agrees to be assessed at a particular figure. In such an eventuality the assessee's admission constitutes evidence, and may be acted upon by the Income‑tax Officer. It may be added that the Income‑tax Officer, is a quasi‑judicial Tribunal and required to pass a speaking order manifesting application of mind for resolution of the controversy before him. He must give reasons in support of his order which should be adequate and informative so that if the order is called in question before a higher forum, the latter can appreciate and evaluate the process by which the decision was reached. Both the orders of 30th March, 1989, rendered by the Income‑tax Officer, do not answer this test. The assessee is a Private Limited Company and has maintained books of account, which were produced before the Income‑tax Officer. The reasons for rejecting the accounts followed by discarding of the declared version and then making agreed assessment instead of computing the income, on the strength of the material on the rile, are not sufficiently forthcoming from the record. The Commissioner of Income‑tax, has also failed to advert to this aspect of the case. Thus, the order of the revisional authority confirming the order of the income‑tax Officer, also suffers from the same infirmity.

6. As regards technical objections to the sustenance of the writ petition, it may be observed that estoppel does not flow out of the proceedings which are violative of law. The rule that a litigant on account of his conduct may be disentitled to discretionary relief under writ jurisdiction, is an equitable doctrine by which the Court regulates its jurisdiction and is not an absolute rule.

7. For all these reasons this writ petition is accepted, the impugned orders are declared to have been passed without any lawful authority and of no legal effect. This judgment shall not preclude the Assessing Officer to proceed in the matter, in accordance with law. The parties are left to bear their own costs. M.B.A./A‑1037/L ?????????????????????????????????????????????????????????????????????????????? Petition accepted.