I.T.AS NOS. 212 TO 215 (IB) OF 1986-87, DECIDED ON 26TH DECEMBER, 1987. Versus I.T.AS NOS. 212 TO 215 (IB) OF 1986-87, DECIDED ON 26TH DECEMBER, 1987.
ORDER
1. These departmental appeals are directed against the consolidated order recorded by learned A. A. C. of Jhelum Range, on 30th January, 1986, relating to the assessment years 1980-81, 1981-82, 1982-83 and 1983-84.
2. The brief facts giving rise to these appeals are that the respondent, an individual deriving income from his shop declared it at Rs.4,500, Rs.4,500, Rs.5,000 and Rs.7,000 for the assessment years 1980-81, 1981-82, 1982-83 and 1983-84, respectively. It appears from the perusal of the record that the Income-tax Officer was not satisfied with the income declared in the returns of income for all the four years. Since the respondent was not maintaining any accounts, the Income-tax Officer started investigating his sources of investment for purchase of land and construction of shops thereon. The proceedings dragged on before the Income-tax Officer on various dates and meanwhile not only statement of the respondent but also of Mr. Muhammad Munir was recorded. The respondent had stated before the Income-tax Officer that he purchased shop for a sum of Rs.50,000 which he obtained from selling golden ornaments of his wife and from borrowing of Rs.25,000 from Mr. Muhammad Munir. It further appears that the Income-tax Officer served a notice on the respondent on 6-10-1985 but on 13-10-1985, she framed allegedly agreed assessment by estimating income of the respondent at Rs.13,000, Rs.15,000, Rs.16,000 and Rs.20,000 in- each assessment year involved and thus created total tax liability of the respondent amounting to Rs.1,500 for all the four assessment years as it was amount of tax allegedly agreed upon by the respondent. Having been aggrieved and dissatisfied, the respondent went up in appeal. It was contended before learned A.A.C. that the respondent was an illiterate person and that he was not in a position to read out what was written on the order sheet. According to respondent he just signed it. The alleged agreement was totally denied. Moreover, it was contended on behalf of the respondent before learned A. A. C. that his stock in trade was in the extent of Rs .5,000 only. Learned A. A. C. accepted all submissions of the assessee and consequently, reduced his income to Rs.10,000, Rs.11,000, Rs.12,000 and Rs.13,000 in each assessment year. This time, the department felt aggrieved and has come up in second appeal before me.
3. Mr. Maqbool Hussain Shah,, the learned D.R. vehemently argued that learned A. A. C. was not justified in annulling the agreed assessment by holding that the Assessing officer obtained signatures of the respondent without explaining to him what for his signatures were being obtained. Learned D. R. further argued that learned A.A.C. had no material to come to a conclusion that the statement of the respondent before him that he was having a stock of Rs.5,000 only, was correct.
4. The respondent appeared before me in person. He again reiterated his statement made before learned A. A. C. According to him, his signatures were obtained on a blank order sheet. He further stated that he was a retired employee carrying on his business with a little capital and that he was not in a position to pay the tax.
5. I have heard learned D.R. as well as the respondent and have also perused not only the impugned orders but also departmental record. From the perusal of the impugned order, it appears that the learned A.A.C. reduced estimated income because the respondent was ?an illiterate person and the Income-tax Officer had not spelt out the exact amount of tax to be assessed. Learned A.A.C observed:--
6. "Perusal of assessment record shows that contentions of the appellant do hold force as the entry per order sheet shows that though the assessing officer wrote in her handwriting that assessee appeared and assessment agreed upon yet no figure of incomes are spelt out. The appellant has signed the order sheet in Urdu. Keeping in view that appellant is carrying on his business with stock of Rs.5,000, and merely selling to fees, buscuits etc. incomes determined seem to be on the higher side which are accordingly reduced to Rs.10,000, Rs.11,000, Rs.12,000 and Rs.13,000, for the assessment years 1980-81, 1981-82, 1982-83 and 1983-84, respectively."
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8. I have very closely examined the departmental record and have noticed that the respondent had signed the order sheet on several dates. I have specifically noted that on all the dates he affixed his signatures on the order-sheet, which commenced from the right side and proceeded to left side and are placed at the bottom of the order written on those dates when he put his signatures. However, when I came to the date of the alleged agreement, I found a note written in Urdu with figures in English. It was written on the right side margin of the order-sheet and was commencing from the top side and proceeding to bottom side of the page, I showed the entry to the respondent present in the Court and requested him to explain as to what was written in Urdu under which he affixed his signatures. He read out the bottom line in which it was written that Rs.1,500 tax was agreed upon but he declined to read first line on-the ground that his eye sight was weak. Let me mention here that in the first line it was written that agreement was regarding all the four years 1980-81 to 1983-84. I also wanted him to explain as to why he affixed his signature on 13th October, 1985, in a line which was proceeding from top to bottom whereas his all other signatures proceeded from right to left. He stated that he signed on October 13, 1985 in the, way as the Inspector wanted him to sign.
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10. After a careful consideration of all the aspects of the matter. I think that the contention of the respondent that his signatures were obtained on blank order-sheet, is baseless. Had it been intention of the Income-tax Officer to conclude the assessment proceedings by false agreement, she could have done that much earlier as the respondent had put his signatures 5 or 6 times before her on earlier dates. Secondly, it further appears that he affixed his signatures on the right side margin of the order-sheet which is below the text of the alleged agreement which was written on right side margin and proceeded from top to bottom of the order sheet. Signatures are also affixed in the same direction. This circumstance, in my humble opinion, very much goes against the respondent. Moreover, as pointed out earlier, he also read out bottom line of the alleged agreement before me. Thus, it cannot be said that he was not in a position to read out what was written in the order-sheet. I think that he made a false pretext of weak eye sight while reading first line. If he could read bottom line with the help of same eye glasses, there appears no reason as to why he could not read out the first line. I, therefore, with due respect to learned A. A. C. have come to the conclusion that the alleged agreement was entered into in fact and the respondent affixed his signatures thereon after fully knowing the contents thereof. In my humble opinion, the alleged agreement took place with the free consent of the respondent. However, this does not appear to be the end of the matter.
11. In the eyes of law, an agreement which is sought to be called a contract binding on both the parties, should not only be the result of an offer by a promisor and acceptance by a promisee but should A always be coupled with a consideration. This expression does not mean any monetary gain but consists of some act or abstinence or promise for act or abstinence. Clause (d) of section 2 of the Contract Act, 1872, defines this expression as under:--
12. "Clause (d) of section 2.
13. When at the desire of they promisor, the promisee or any other person who has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise."
14. Thus, it is clear that there should be some person who makes an offer for contract. He is called in law a promisor. Then, there should also be a person who accepts the offer. He is called promisee in law. Moreover, the promisor or other person should have either abstained from doing or should do or abstinence from doing or promises to do or abstains from doing, something, at the request of the promisor. Before it becomes valid and binding, a contract must have all these three ingredients, apart from others with which we are not presently concerned. An agreed assessment is also a contract pure and simple and must be constituted by these three ingredients with which we are presently concerned. In other words, the consideration also must be there as the promisor and, the promisee are surely always there in the shape of assessing officer and the assessee. Thus, before an agreed assessment become binding on an assessee, it must be established from the record that the Income-tax Officer did or promised to do or abstain from doing something. Suppose if an Income-tax Officer discloses his mind to the assessee that he is going to estimate his income at certain amount if the latter fails to explain certain aspects of his accounts books or his business affairs. Now if the assessee comes to the Income-tax Officer and agrees to be assessed at an amount of tax which is lesser than the proposed tax by the Income-tax Officer, it can undoubtedly be said that it is a valid and binding contract for the reason that the Income-tax Officer abstained from doing something i.e. he did not proceed with the matter further. In other words, if the Income-tax Officer neither does anything nor abstains from doing anything, the contract would not be legal and binding contract in the eyes of law on the assessee as it would be without consideration. Such a contract would be unilateral. Since the income-tax Officer as an assessing officer is in commanding position in assessment proceeding, the law, therefore, does not countenance with favour any agreement which appears to be unilateral. It is, therefore, incumbent on an Income-tax Officer that while framing agreed assessment he should make it clear that he did not do so unilaterally but the assessee also gained some favour from him. Otherwise, floodgates of litigation would be opened which would not be managed by the appellate forums.
15. With this background, when I revert to the facts of this appeal, I find that the alleged agreement is not unilateral. In other words, agreed assessment is very much coupled with the consideration. It is true that the Income-tax Officer examined Mr. Muhammad Munir from whom alleged loan of Rs.25,000 was obtained by the assessee. But the assessing officer was also in a position to survey the "ZARGAR" who issued the receipt regarding the sale of golden ornaments. Moreover, in survey report, stock in trade was mentioned to be ranging between Rs.10,000 to Rs.15,000 and sales were between Rs.400 to Rs.500 per day. The assessing officer would have been very much within his rights to conduct a local enquiry. Indeed, it was ordered on 19th June, 1984 and 19th February, 1985, but for unknown reasons, it could not be carried out. Moreover, the respondent had admittedly constructed a shop on plot of land purchased by him, but the Income-tax Officer did not investigate the sources of investment regarding construction of one or two shops. The case of the assessee before me was that he was the owner of only one shop and the second shop was constructed by his brother. It further appears that on 16th October, 1986, the Assessing Officer had served a notice on the respondent under section 61 of the Income-tax Ordinance which might have impressed upon the respondent that the assessing officer was in a mood to proceed further with the matter. As such, if he entered into an agreement on 13th October, 1985, it cannot be said to be lacking consideration. In other words, he has abstained from doing something. I, therefore, hold this agreed assessment legal and binding on the respondent.
16. Let me also mention here that according to his own admission, personal expenditure of the respondent had been between Rs.1,200 to Rs.1,300. Had he not been earning, something, he could not have been in a position to meet the household requirements of his family consisting of his wife, four sons and one daughter, some of whom were also school-going. From this angle also, the agreed assessment of tax at Rs.1,500 for four years was surely favourable to the respondent.
17. Now as far as alleged stock of Rs.5,000 is concerned, I agree with Mr. Maqbool Hussain Shah, the learned D.R. that learned A.A.C. had no basis for it available on record.
18. In view of the discussion made above, I find force in these departmental appeals, which are hereby allowed. The impugned order of learned A.A.C. is hereby reversed and assessment order of the income-tax Officer is restored. All the four appeals stand disposed of accordingly.
19. M.B.A./464/T ????????????????????????????????????????????????????????????????????????????????????? Appeals allowed.