(a) Income Tax Ordinance (XXXI of 1979)---

----Ss.66-A(2), 66(1), 64 & 59(4)---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Limitation for assessment in certain cases---Assessment year 1993-94---Original assessment was made under S.62, Income Tax Ordinance, 1979 on 3-8-1994 and same was cancelled by the Inspecting Additional Commissioner under S.66A on 16-4-1995---Assessment under S.66-A/62 was made by the Assessing Officer on 10--5-1997---Assessee contended that assessment might have been finalized before 30-6-1995 in terms of S.64 of the Income Tax Ordinance, 1979 and assessment passed under S.66-A/62 as on 10-5-1997 was barred by time---Validity---Section 66(1) of the Income Tax Ordinance, 1979 clearly provides that assessment could be made at any time within two years from the end of the financial year in which order of the Inspecting Additional Commissioner made under S.66-A was received by the Assessing Officer-- Order under S.66-A by the Inspecting Additional Commissioner was made on 16-4-1995 and fresh assessment was finalized on 10-5-1997 by the Assessing Officer before the period of limitation of two years prescribed under S.66(1) of the Income Tax Ordinance, 1979.

PLD 1957 (SC Ind.) 448; PLD 1982 Lah. 109; PLD 1974 Lah. 458; PLD 1965 (W.P) Kar. 69 and 1981 SCMR 267 irrelevant.

(b) Income Tax Ordinance (XXXI of 1979)---

----Ss.3(1)(AA), 4(2), 2(17-A) & 5---Income-tax Authorities---Appointment and jurisdiction of---Assessment was finalized by the Special Officer-- Assessee contended that Regional Commissioner of Income-tax was neither empowered to appoint any Special Officer nor the Special Officer was listed as an Income Tax Authority under S.3 of the Income Tax Ordinance, 1979 for the purposes of the Ordinance, and assessment order finalized by the Special Officer was, therefore, of no legal effect, ab initio illegal. void and without lawful authority---Validity---Regional Commissioner of Income-tax, being one of the Income-tax Authorities specified in S.3(1) of the Income Tax Ordinance, 1979, was competent to appoint an Inspector of Income-tax subordinate to him under S.3(1-A) as Special- Officer by virtue of powers vested in him under S.4(2) of the Income Tax Ordinance---1f Inspector of Income-tax was appointed as Special Officer under S.4(2). he became competent to function as Deputy Commissioner of Income-tax within the jurisdiction assigned to him under S.5 of the Income Tax Ordinance, 1979.

(c) Income Tax Ordinance (XXXI of 1979)---

----S.8---Administrative order challanged before Appellate Authorities-- Administrative orders issued by the officers in administrative hierarchy of Income-tax Department were not amenable to the Appellate jurisdiction of the Appellate Authorities in the hierarchy established under the Income Tax Ordinance, 1979---Any administrative error, irregularity or excess of jurisdiction lies exclusively within the domain of the administrative hierarchy and could not be contested before the Appellate Authorities under the Income Tax Ordinance, 1979.

(d) Income Tax Ordinance (XXXI of 1979)---

-----S.7---Draftassessment, approval of ---Assessee objected that draft assessment order of Assessing Officer which had the approval of Inspecting Additional Commissioner was bad in the eyes of law and assessment made in pursuance of direction of Inspecting Additional Commissioner was without lawful authority and of no legal effect---Validity---Draft order which contained grammatical mistakes and was not in a proper form was returned by Inspecting Additional Commissioner without any adverse directions, orders or instructions to cause any prejudice to the case of assessee-- Approval of draft assessment order in favour of assessee was an internal administrative matter and was not against any provision of the Income Tax Ordinance, 1979 including S.7 dealing with assistance, guidance or instructions by the superior Income-tax Authorities.

1993 SCMR 29 anti 1991 PTD 219 distinguished.

(e) Income Tax Ordinance (XXXI of 1979)---

----S.59---C.B.R. Circular No.9 of 1994, dated 1-1-7-1994, para.4(i) & (ii)-- Self-assessment---Assessment was finalized under S.62, Income Tax Ordinance, 1979---Assessee pleaded that if its return had been selected for total audit under para. 4(ii) of the Self-Assessment Scheme, as provided under S.59 (1-A) of the Income Tax Ordinance, 1979 the Assessing Officer was empowered- to pass an order under S.62 or 63 of the Income Tax Ordinance, 1979 but if return was selected under para. 4(i) of the Self Assessment Scheme through computer random ballot, it still remained in the scheme itself and should have been assessed under S.59(1) within the limitation provided under S.59(4) of the Income Tax Ordinance, 1979-- Validity---No distinction existed between the returns selected for audit through computer ballot or selected otherwise for the reasons mentioned in the Self-Assessment Scheme made under S.59(1) of the Income Tax Ordinance, 1979---All returns selected for audit fall outside the ambit of S.59(1) and assessments in such selected cases were to be made under S.62 or 63 as provided in S.59(1-A) of the income Tax Ordinance, 1979-- Objection was rejected by the Appellate Tribunal.

1980 SCMR 156 ref.

Nadir Mumtaz. D.R. for Appellant (in I.T.As Nos.255/IB of 1995-96 and 1280/IB of 1998-99).

Mir Ahmed Ali for Respondent. (in I.T.As. Nos.255/IB of 1995-96 and 1280/IB of 1998-99).

Mir Ahmed Ali for Appellant (tit I.T.As. Nos.1139/IB of 1997-98 269/IB of 1995-96 and 486/ Its of 1998-99.

Date of hearing: 18th .May, 2000.

ORDER

JAMEEL AHMED BHUTTO (ACCOUNTANT MEMBER).-- These cross-appeals preferred at -the instance of the assessee for the assessment years 1993-94, 1994-95 and 1995-96 and by the department in respect of the assessment years 199.1-95 and 1995-96 are directed against the appellate order, dated- 1-4-098 passed by the learned A.A.C.. Shahiwal, dated 18-7-1995 passed by the learned A.A:C.. Sukkur Range. Camp at Rawalpindi and, dated 29-10-1998 -passed by the learned' CIT (A), Rawalpindi.

2. We have heard the learned representatives of both the parties and considered the facts and circumstances of the case relevant to the assessment years under appeal. Since common grounds are pressed before us for each assessment year, these appeals arc being disposed of through this combined order. .

Assessment Year 1993-94

3. The original assessment in this case was finalized under section 62 of the Income Tax Ordinance, 1979 (hereinafter called the Ordinance) vide order, dated 3-8-1994. This assessment was cancelled by the IAC, Range-II, Rawalpindi vide order. dated i6-4-(995 made under section 66A of the Ordinance on the basis that the assessment was erroneous in so far as prejudicial to the interests of revenue as the Assessing Officer had wrongly accepted the trading results where purchases/sales as well as the trading expenses were completely found unverifiable. This order of IAC made under section 66A of the Ordinance was not challenged in appeal by the assessee. However, when tile fresh assessment order under section 62 was passed by the Assessing Officer in consequence of IAC's order under section 66A of the Ordinance, it was challenged in appeal on a number of grounds mentioned in the appellate order, dated 1-4-1998 passed by the learned AAC, Sahiwal. The assessment records were consulted by the learned AAC, in the light of arguments advanced by the learned AR of the assessee, who gave the finding that the Assessing Officer had failed to bring any material evidence on record to justify his estimation of sales at Rs:9,00,000 as against the declared sales of Rs.7,90,000. The income computed was also found to be purely a guesswork. The case was set aside with the direction to the Assessing Officer to bring, material evidence on record to justify his estimation after providing a fair and reasonable opportunity of being heard to the assessee. While the department has riot challenged this appellate order,. the assessee has preferred appeal on the grounds being dealt with by us hereinafter. It is prayed that the assessment order under section 62 passed in consequence of order under section 66A of the Ordinance may be annulled being ab initio illegal, void and barred by time. It is, contended that the disagreement on the point of limitation between the assessee and the learned AAC, Sahiwal is bald and against the canons of adjudication. In this connection, it is argued that the return of income for the assessment year 1993-94 was filed under section 55 of the Ordinance and the first assessable year ended on 30-6-1994. It was first assessed under section 62 vide order, dated 3-8-1994 which was within the limitation as provided under section 64(1) of the Ordinance: Then it was cancelled by JAC under section 66A vide order, dated 16-4-1995 which was also within the limitation under section 66A(2) of the Ordinance. Thereafter, the Special Officer completed assessment under section 62 in compliance to order under section 66A on 10-5-1997 which was not within the period of limitation because section 66A(2) provides limitation for proceedings initiated by an JAC and not by any other income-tax authority. The learned counsel for the assessee has argued that the impugned order of the Special Officer was not the first order as it stood merged with the order passed by the JAC under section 66A, therefore, provisions of section 64 do not come to rescue here. In addition, it is argued that sections 59(4), 64 and 66 are founder provisions of the Ordinance whereas section 66A is inserted by the Finance Act, 1980. Since no corresponding amendments were made in section 64 or 66, the limitations as provided under these provisions cannot be applied in such a case. Having referred to various decisions reported as PLD 1957 (SC Ind.) 448, PLD 1982 Lah. 109, PLD 1974 Lah. 458, PLD 1965 (W.P.) Kar. 69 and 1981 SCMR 267, which lay down the settled principles of law enunciated by the superior Courts, but are not relevant to the case in hand, the learned counsel for the assessee has summed up his argument on the point of limitation in the following words:---

though, no limitation is provided under section 66 or 64 in such cases. Yet, it is generally said that where there is no end then there will be no start. But in the light of principle laid down and in accordance with the Code of Civil Procedure, the institution of suit i.e. return of income, for the assessment year 1993-94, filed on 30-9-1993. The original assessment was made under section 62 vide order, dated 3-8-1994, cancelled by learned JAC under section 66A vide order dated 16-4-1995. Since there is no assessment in the field and the only returned version is available in record, therefore, in terms of section 64 of the Income Tax Ordinance, order may have been finalized before 30-6-1995 in order to save law than to destroy, it. As such, it is submitted that the assessment finalized by the Special Officer under section 66A/62 vide order, dated 10-5-1997, is barred by time."

4. We have given anxious consideration to the arguments of the learned counsel for the assessee on the point of limitation and feel that he has unnecessarily plunged into deep waters, without touching the bottom of the ocean, in an attempt to find out whether or not there was any limitation prescribed for making fresh assessment after the cancellation of original assessment by the JAC under section 66A of the Ordinance. If he were to remain firm on the ground and not to plunge into the water, he would have known that the provisions of the Ordinance are very much there in respect of limitation for the assessments to be made in consequence of or to give effect to any finding or direction contained in any order made under section 66A of the Ordinance. It is very clearly provided in section 66(1) of the Ordinance that assessment in such a case can be made at any time within two years from the end of the financial year in which order. of the JAC made under section 66A (which falls under Chapter VII) is received by the Assessing Officer. In this case, the JAC made order under section 66A on 16-4-1995 and the fresh assessment was finalized on 10-5-1997 by the Special Officer in consequence of IAC's order which was before the period of limitation of two years prescribed under section 66(1) of the Ordinance.

5. Another legal objection taken by the learned counsel for the assessee is. that the entire reassessment proceedings by the Special Officer are ab initio illegal, void, without lawful authority and jurisdiction. It is contended that Special Officer is not mentioned in the administrative hierarchy as one of the income-tax authorities in section 3 of the Ordinance, unlike the provisions of the repealed Income-tax Act of 1922 where Special Officers were listed. It is further contended that Special Officer, as an authority, is neither listed under section 3(1) of the Ordinance nor it is provided to be subordinate to the C.B.R. or any other authority, including the Regional Commissioner of Income-tax (RCIT). Therefore, the orders passed by the RCIT under section 4(2) for appointment of Special Officers are coram non judice because the Inspectors of Income-tax appointed as Special Officers could not come within the purview of the definition "Deputy Commissioner" as per clause (17A) inserted in section 2 of the Ordinance by Finance Act, 1993. According to the learned counsel. this clause lays down that any person of any designation, such as Assistant Commissioner of Income-tax. Income-tax Officer; Special Officer, Deputy Director of Income-tax (Withholding), Assistant Director of Tax (Withholding), Deputy Director of Intelligence and Investigation. Assistant Director of Intelligence and Investigation or a Tax Recovery Officer has to be first appointed as "Deputy Commissioner' under section 4 of the Ordinance. The learned counsel has given explanation of section 4 of the Ordinance in the following words:---

"The Regional Commissioner of Income-tax Authority, listed at clause (aa) of section 3(1), is neither any 'other Income-tax Authority', as provided under section 4(2) nor such 'other Income tax Authority' is listed under section 3(1) in addition, the definition of 'Deputy Commissioner of Income-tax', authority listed at clause (e) of section 3(1) - as provided under section 2(17A) is enlarged to. include Special Officer. But no such authority is listed under section 3(1) so as to appoint Deputy Commissioner of Income-tax, an authority listed at clause (e) of section 4(1), under section 4 for the purposes of Ordinance. Furthermore, no authority under Nomenclature 'Special Officer' is provided to be subordinate to Regional Commissioner of Income-tax, the authority listed in clause (aa) of section 3(1).

Similarly, the said Special Officer is also not subordinate to any authority as provided under subsections (IA), (113), (2), (3) and (4) of section 3, thus appointment orders," of Inspectors of Income-tax Authority listed in clause (f) under section 3(1) as Special Officer under subsection (2) of section 4, issued by the Regional Commissioner of Income-tax, the authority listed under section 3(t) (aa) is coram non judice and of no legal authority. The assessments finalized by an Assessing Officer, i.e., Special Officers,-are not an authority and do not fall within the kingdom of authorities as provided 'under section 3(1). Therefore, the entire assessment proceedings as well as order passed, in consequence of this basic - requirement, are without lawful authority anal jurisdiction."

The conclusion drawn by the learned counsel for ,the assessee is that the RCIT, listed in section 3(1)(aa) of the Ordinance was neither empowered to appoint any Special Officer nor the said Special Officer is listed as an income-tax authority under section 3 for the purposes of the Ordinance and, therefore, the assessment order finalized by the Special Officer is of no legal effect, ab initio illegal, void and without lawful authority. These objections have been given careful consideration by us: It is our considered view that RCIT, being one of the income-tax, authorities specified in section 3(1) of the Ordinance, is competent to appoint an Inspector of Income-tax subordinate to him under section 3(lA) as Special Officer by virtue of the powers vested in him under subsection (2) of section 4 of the Ordinance. Once such an income-tax authority, subordinate to RCIT, is appointed under section 4(2), it becomes income-tax authority of higher status than Inspector of Income-tax and falls within clause (e) of subsection (I) of section 3 of the Ordinance. An Inspector of Income-tax, when appointed as Special Officer under section 4(2), becomes competent to function as Deputy Commissioner of Income-tax within the jurisdiction assigned to him under section 5 of the Ordinance. Since the term "Deputy Commissioner" defined in clause (17A) of the Ordinance includes a Special Officer and is treated as an income-tax authority under section 3(1), it was not necessary for the Legislature to make a special mention of Special Officers in the said section. Besides, the hierarchy of Income-tax Administration and appointment of income-tax authorities mentioned in sections 3 and 4 of the Ordinance cannot be questioned if such income-tax authorities are legally empowered to perform functions of "Deputy Commissioner" within their jurisdiction under section 5 of the Ordinance. It is also well-settled proposition of aw that administrative orders issued by the officers in administrative hierarchy of Income-tax Department are not amenable to the appellate jurisdiction of the appellate authorities in the judicial hierarchy established under the Ordinance. Any administrative error, irregularity or excess of jurisdiction lies exclusively within the domain of the administrative hierarchy meaning thereby CIT v. RCIT, C.B.R.. etc. and cannot be contested before the appellate authorities under the Ordinance. The objections raised in this regard 'by the learned counsel are, therefore, untenable and rejected.

6. On other facts of the case, it is our considered opinion that the learned AAC who consulted the assessment records and found defects in the assessment order, was justified to set aside the case with the directions to the Assessing Officer to bring material evidence on record to justify his estimate after providing a fair and reasonable opportunity of being heard to the assessee before finalizing proceedings in pursuance of his direction. Other grounds of appeal relating to estimation of sales, application of GP rate and disallowance of various P&L A/C expenses have become infructuous and do not merit further consideration in view of our finding that the assessment has rightly been set aside by the learned AAC. No other ground of appeal is pressed by the learned counsel especially in respect of the order made by IAC under section 66A against which appeal, under section 134(1) of the Ordinance was not filed by the assessee.

Assessment year 1994-95

7. In addition to the legal objections of the learned counsel, discussed above, an objection is raised that the draft assessment order of the Special Officer which had the approval of the IAC is bad in the eyes of law and against the decisions of superior judicial authorities. It is contended that the Hon able Supreme Court of Pakistan in a case cited as 1993 SCMR 29 had affirmed the verdict of the august Sindh High Court, Karachi, reported as 1991 PTD 219 wherein it was held that the approval under section 65(2) of the Ordinance from IAC was necessary but not for the order proposed to be passed thereafter by the Income-tax Officer because the Assessing Officer, having once obtained the approval under section. 65, had to apply his Mind independently, free from guidance or direction of his superior officers, and, therefore, any assessment made in pursuance of such a direction was without lawful authority and of no legal effect. The Hon'ble Supreme Court of Pakistan in the case reported as 1993 SCMR 29 also expressed the view as tinder:---

"We may observe that above section 7 envisages obtaining of assistance, guidance or instructions by an ITO from any other Income-tax Authority to whom he is subordinate during the pendency of any matter before hire in case he feels any difficulty in tackling the, same because of its complicated nature. However, we may point out that the above provision was not intended and designed to allow an 1T0 to abdicate his functions and duties in favour of someone else. The above section cannot be pressed into service by an ITO even during the pendency of a case before him, in such a manner that it may defeat the other provisions of the Ordinance. For example, an ITO cannot get assessment order drafted by an Appellate Commissioner who is to hear an appeal against his assessment order under section 129 of the Ordinance. If he does so or frames assessment order under the advice of the Appellate Commissioner, the right of appeal of the assessee would become as illusory, as the letter in appeal before him will not be able to act fairly and justly as an appellate forum."

8.We have considered the facts and circumstances of the above-stated two cases in which the superior Courts expressed their views and find them clearly distinguishable front the facts of the case before us. Here, the assessment record shows that the IAC whose approval for the draft assessment order was obtained had not prejudiced or influenced the mind of the Special Officer in any manner and had not given any orders or directions against the interest of the assessee. What really happened was that, having completed the assessment proceedings in a normal manner, the Special Officer submitted the first draft order which contained grammatical mistakes and was not in a proper format. This was returned by the IAC ,without any adverse directions, orders or instructions to cause any prejudice to the case of. the assessee. The Special Officer then submitted another draft of assessment: order to, the IAC which was approved by him, subject to the observations for taking a lenient view in the case of the assessee. Such an approval of the f draft assessment order in favour of the assessee was an internal I administrative matter and was. not against any provision of the Ordinance, including section 7 dealing with assistance, guidance or instructions by the superior income-tax authorities. This objection is without force and is, therefore, overruled.

9. Another legal objection raised by the learned counsel for the assessee is that in spite of selection of the case for total audit under para.4(i) of the Self-Assessment Scheme (SAS) for 1994-95, the assessment could not be made under section 62 of the Ordinance. It is contended that if the return had been selected for total audit under para. 4(ii) of the SAS, as provided under section 59(1 A) of the Ordinance, the Assessing Officer was empowered to pass an order under section 62 or 63 of the Ordinance as the case may be. But where the return was selected under para. 4(i) of the SAS through computer -random ballot, it still remained in this scheme itself and should have been assessed under section 59(1) within the limitation provided under section 59(4) of the Ordinance. Thus, it is argued that the order should have been passed under section 59(1) of the Ordinance irrespective of its selection for total audit and that such order should have been passed within the limitation as provided under section 59(4) of the Ordinance. This legal objection of the learned counsel is based on the arguments given as under:---

"Under Self-Assessment Scheme made Circular No.9 of 1994. dated 11-7-1994, it is provided in para. 1 that all returns of total income filed under section 55 shall qualify for acceptance under SAS except mentioned in clauses (a) to (n). Among these clauses. clause (h) provides that:---

(h) Returns set apart for audit.

Contrary to para. 1, in para. 4 of the Scheme, it is provided that:---

(4) From amongst those qualifying for, the Self-Assessment Scheme, returns may be selected for audit.

(i) Through. computer ballot up to five percent. of the returns received. This percentage may vary within a trade or income group or from circle to circle:

Provided that cases qualifying for immunity as mentioned in para. 5 will not be included in the computer ballot.

(ii) by the Regional Commissioner of Income-tax on initiation by the Commissioner of Income-tax'. "

From plain reading of above, it reveals that contents of both the paras. contradict each other. Thus, it is held in a decision cited as 1980 SCMR 156, that:---

Extraneous considerations cannot be employed to make it redundant or to detract it from meaning which it conveys.

The Scheme is made under delegated powers conferred to Board under section 59 of the Ordinance. The Board in exercise of such powers made scheme for returns to be accepted under Self Assessment Scheme. It provides two methods for selection of returns for total audit amongst returns qualified to be accepted under said scheme. One method is to select certain percentage of returns through Computer Ballot, the other by an authority, as provided under section 59(lA). Even return is deemed to have been selected for audit, it still remain well. within the circumference Scheme of -Self-Assessment made under section 59. As such, it should have been processed accordingly under section 59."

10. We have examined the above legal objection and arguments in support thereof and are not convicted that it is based on correct interpretation of law especially in view of the provisions contained in section 59(lA) of the Ordinance which permits assessments under section 62 where returns are selected for audit in accordance with the scheme of self-assessment. A plain reading of section 59(1) also shows that only those returns of total income can be accepted for assessment orders under section 59(1) which qualify for acceptance in accordance with the provisions of a scheme of self-assessment made by the C.B.R. for the relevant assessment year. Where, however, such returns do not qualify for acceptance in accordance with the provisions of the said scheme, no assessment order can be made under section 59(1) for which the period of limitation is specified under subsection (4) thereof. Selection out of returns filed under the Self-Assessment Scheme can be made for audit as stated in subsection (IA) of section 59 which empowers the Deputy Commissioner to make assessment under section 62 or section 63, as the case may be. There is no distinction between the returns selected for audit through computer ballot or selected otherwise for .the reasons mentioned in the scheme made under section 59(1) of the Ordinance. All returns selected for audit fall outside the ambit of section 59(1) and assessments in such selected cases are to be made under section 62 or section 63 as provided in subsec tion (IA) of section 59 of the Ordinance. It is, therefore, wrong to assume that the order in respect of a case selected for audit through computer ballot must be passed under section 59(1) and that too before the 30th June of that very year as stipulated in section 59(4) of the Ordinance. Had this been the intention of the Legislature, there was no need to provide for selection of returns for assessment under section 62, after proper examination and scrutiny, within a reasonable period of time, i.e. before the expiry of two years from the end of the assessment year in which the total income was first assessable as provided in section 64 of the Ordinance. That undesirable intention would have defeated the very purpose of audit of selected returns and the provisions of section 59(lA) and section 64 would have become meaningless. This objection of the learned counsel for the assessee is, therefore, not sustainable.

11. On other facts of the case, for the assessment year 1994-95, one of the grounds of appeal of the assessee

is that the estimation-of sales by the Assessing Officer at Rs.25,00,000 as reduced by the learned A AC at Rs.15,00,000 is still arbitrary, harsh, excessive and without any cogent reason. On the other hand, it has been agitated by the department that the learned AAC was not justified to reduce the sales without giving any reason. We find that the assessee had failed to support his declared version with proper evidence and being a no account case, the sales were estimated at Rs.25,00,000 for reasons stated in the assessment order, dated 30-4-1995. The learned AAC considered these reasons and reduced the estimation of sales to Rs.15,00,000 keeping in view the history of the case and the sales declared in the previous year. In our opinion, this reduction in the estimation of sales is fair and reasonable and does no warrant our interference.

12. As regards application of GP rate at 25%, the learned counsel for the assessee has not been able to point out any other parallel case .where GP rate of 20% may have been applied by the department, as claimed in the grounds of appeal. The GP rate of 25 % was applied in the instant case because this was the rate declared by the assessee in the preceding years which was confirmed in appeal. Such being the history of the case, any reduction in GP rate by us will not be justified.

13. The department has also stated in the grounds of appeal that the learned AAC was not justified to delete the addition of Rs.15,000 which had been made under the head Salaries on the ground that the assessee had not maintained any salary register. The learned AAC deleted this addition as copies of National Identity Cards of all the employees were furnished alongwith proof of payment of salaries. This treatment was also justified and does not call' for our interference.

Assessment Year 1995-96

The legal objections raised by the learned counsel for the assessee in respect of the assessment year 1.995-96, being common for the earlier assessment years, have already been dealt with in the preceding paragraphs. On factual plane, it is contended that the estimation of sales at Rs.27,50,000 as against the declared sales of Rs.10,01,500 and reduced by the learned CIT (A) to Rs.16,00,000 is still not justified, arbitrary and excessive in the light of assessment finalized in consequence of order under section 66A of the Ordinance when the Assessing Officer made assessment under section 62/66A vide order, dated 10-5-1997 for the assessment year 1993-94. We have already given the finding in para. 6 of this order that the learned AAC who consulted the assessment records and found defects in the assessment order was justified to set aside the case for the assessment year 1993-94 with the directions to the Assessing Officer to bring material evidence on record to justify his estimate after providing a fair and reasonable opportunity of being heard to the assessee. Therefore, any reference to set aside assessment and the estimation of sales made for that year, would be irrelevant. Since the reduction of sales to Rs.15,00,000 made by the learned AAC for the assessment year 1994-95 has been upheld by us and there is no reason to make deviation from such reasonable treatment, we hold that the learned CIT (A) has rightly reduced the estimated sales of Rs.25,00,000 to Rs.16,00,000 in view of facts and circumstances of the case relevant to the assessment year 1995-96. This reduction does not call for interference despite the argument of the department that the sales were totally untouched, unverifiable and were rightly estimated at Rs.27,25,000 in accordance with the history of the case and the extent of the assessee's business. This argument is not supported by any material on record and is not in accordance with the history of the case.

The treatment given by the learned CIT (A) is, therefore, held to be fair and reasonable. The application of GP rate at 2.5% is also not disturbed in view of the position stated in paragraph 12 of this order.

15. The objection of the department against the deletion of an amount of Rs.5,920 out of salary expenses claimed at Rs.55,920 is not sustainable because of the reasons stated in para. 13 of this order and the fact that non -maintenance of salary register alone could not justify disallowance of 10% of

16. In the result, these cross-appeals are disposed of to the extent and in the manner indicated above.

C.M.A./M.A.K:/37/(Tax Trib.)Appeals disposed of.