JUDGMENT: MUHAMMAD ZAHOORUL HAQ, J.-1. The Commissioner of Income Tax, Karachi (West Zone) has referred to us the following question under section 66(1) of the Income-tax Act:-- "Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was justified in allowing the appeal of the respondent placing reliance on the Circular letter of the Board No. 29(69)-ITO/57, dated 22-2-1962 which had reference only to Karachi and was applicable to the optees of the scheme only?"
2. The admitted position is that the respondent has been plying two buses in Mirpurkhas from 1960 and 1965. He did not maintain proper accounts and, therefore, for the year 1971-72 his accounts were rejected by the Income-tax Officer. The respondent declared net income of Rs. 7,000 for this year but it was not accepted and his net income from two buses was computed to be Rs. 49,918. It was considered by the I.T.O, that maintenance for two old buses was bound to place extra burden of maintenance on the assessee but the expenses claimed by the respondent were regarded as very high and he, therefore, allowed 70% expenses on the estimated gross receipts and gross receipts were placed at Rs. 2,49,660 on the basis of 36 seats multiplied by four trips every day multiplied by 365 days.
3. In the appeal the Appellate Tribunal set aside the best judgment assessment and relied upon the letter of the Central Board of Revenue No. 29(69)-ITO/57, dated 22-2-1962 read with C.B.R's letter of even number, dated 19th August, 1958. The income of the respondent was assessed at Rs.
10,000 for the two buses. The letter of C.B.R, dated 19th August, 1958 had prescribed a standardized net profit for the buses plying in Karachi on important or unimportant routes. And a sum of Rs.
10,000 to Rs. 6,000 was to be taken as the net income of every bus depending upon the route and the year of running the bus. This rate of net profit was amended later on 22-2-1962. The maximum net profit was still maintained Rs. 10,000 but minimum net profit was brought down to Rs. 4,500. The Commissioner appears to be right in its submission that the letters in question are in respect of assessee plying motor buses in Karachi and that before a person could get the benefit of these standardized profits the assessee had to opt for this scheme. However, Mirpurkhas area is covered by the jurisdiction of the Commissioner, Karachi and, therefore, the benefit which is allowed to the bus owners of Karachi could be made available to the bus owners of Mirpurkhas. In any case it appears to us that if the bus, like that of the respondent, was plying in Karachi then it would have given a net income of Rs. 4,500 only while the respondent had been assessed by the I.T.O, at the rate of Rs. 25,000 for every bus. The anomaly in the two rates of profit was too obvious and too enormous, and considering that Karachi and Mirpurkhas are near about areas and within jurisdiction of Commissioner of Income-tax, Karachi we do not find anything wrong in the Income- tax Appellate Tribunal following the letter of the C.B.R, above referred. In fact if any relief can be provided to any assessee on the basis of instructions of C.B.R, then the relief should be provided to him and the same had been done by the Appellate Tribunal and we are, therefore, of the view that in the circumstances of the case the Appellate Tribunal was justified in allowing the appeal of the respondent. Even if they were not absolutely right in following the referred circular of the C.B.R, then it would only be a technical mistake committed by them. And if they had just mentioned that they were acting in the spirit of the letter of the C.B.R, in respect of buses at Karachi then their judgment would have been just and absolutely unassailable. But in any case in the facts and circumstances of the case they were certainly entitled to accept the appeal of the appellant and could have acted in consonance and in the spirit of letter of the C.B.R., dated 22-1-1962.