ORDER ASHFAQ AHMAD, ACCOUNTANT MEMBER.- The appellant is aggrieved on account of reopening of assessm ent under section 65 and penalty imposed under section 111. On the other hand the department is aggrieved on account of deletion of additional tax imposed under section 87 amounting to Rs. 11,648.
2. The brief facts of the case are that the original assessment in this case was finalised at Rs.
421,325. Subsequently it was discovered that the income from the heads feet and skins was not declared by the assessee. The ITO therefore, reopened the proceedings under section 65.
3. During the course of the hearing the learned AR agitated that the ITO was not justified in reopening the assessm ent under section 65 as all the facts were before him at the time of passing the original order. He also stated that in reply to notice under section 62 he had pointed out that income of feat and skins was estimated in the original order. The learned AR also urged that the ITO had not applied his mind and the case was accordingly reopened on the Instruction of IAC. In this connection he cited a part of the assessment order passed under section 62/65 in which it has been stated:- "The case was reopened under section 65 in consequent upon the observations made by the worthy IAC Range-1, Multan vide his letter No. 720, dated 24.11.1992.
From the above it is obvious that the IAC has instructed to proceed under section 65 and it was not the ITO's on decision. If the IAC had reasons to believe that the assessee had not disclosed true particulars of his income tax he would have initiated proceeded under section 68-A and not directed the ITO to proceed under section 65. In support of his contention he cited a reported case (1991) 63-Tax-113 (H.C. Kar) wherein it was held:- "Income Tax Ordinance, 1979 (XXXI of 1979), Sections 7, 65(2) Assessment-Notice-Income Tax Officer framed assessm ent after obtaining guidance/direction from IAC-Whether assessment without legal authority- Held Yes-Notice issued by the Income Tax Officer-Whether jurisdictional- Held yes."
4. The learned D.R. On the other hand, stated that the assessee had failed to disclose income from feet and skins and, therefore, the ITO was perfectly justified in reopening the case under section 65.
He also stated that instructions issued by the IAC for reopening the case were in order and the assessee is merely trying to wriggle out on technical grounds.
5. We have considered the arguments of the learned AR and DR. The contention of the learned AR that income of feet and skins was declared by the assessee is not tenable as on scrutiny the same has no where been shown to have been declared. We, therefore, reject the appeal on this issue.
However, the second point raised by the appellant has some merit as the learned honourable Judge in the above reported case has opined that:- "The authority should realise that the assessment proceeding is of quasi-judicial in nature and it is possible that the Income Tax Officer may seek assistance or guidance from his superior who may be revisional or appellate authority and in such circumstances the very purity and sanctity of the hierarchy which provides for original and appellate jurisdiction is completely tarnished. If the Income Tax Officer before making the assessment seeks direction from his superior and on their direction passes the assessm ent order than in such circumstances the appellate and revisional jurisdiction will be completely meaningless. This could never be the intention of the legislature and that is why Section 7 has to be interpreted in a restricted manner."
6. Taking into consideration this fact the proceedings under section 65 were not legal and proper as the ITO had not himself formed any opinion but was directed to do so by the IAC. We, therefore, restore the original assessm ent finalized by the Assessing Officer.
7. As we have accepted the appeal filed by the assessee, therefore, the penalty imposed under section 111 also stands deleted.
8. With regard to departmental appeal the learned DR has submitted that the learned CIT (A) was not competent to entertain appeals under Section 87. We have considered the view point of the DR and are in agreement with him.
Therefore, we remit the case back to the Assessing Officer on this issue who shall decide the same on merit after giving the assessee an opportunity to present documentary evidence.