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Issues involved:
The judgment involves two main issues: 1. Whether the chartered accountant representing the assessee had the legal competence to make an agreement with the Income-tax Officer binding the appellant. 2. Whether the addition of Rs. 15,000 to the appellant's income was correct and legal. Issue 1: Chartered Accountant's Authority The assessee, a private company engaged in chitties business, claimed a deduction of Rs. 44,316 for commission payments to individuals for canvassing subscribers. The Income Tax Officer (ITO) initiated an inquiry due to payments to close relatives of company officials. The company was represented by a chartered accountant who agreed to disallow Rs. 15,000 of the claimed deduction during discussions with the ITO. The Tribunal found the chartered accountant had the authority to make such representations on behalf of the assessee, as per the letter of authority executed by the company in favor of the chartered accountant. The Tribunal concluded that the chartered accountant's actions were within the scope of his authority, and the ITO's decision based on this representation was valid. Issue 2: Addition of Rs. 15,000 to Income The ITO added back Rs. 15,000 to the company's income based on the representation made by the chartered accountant. The company appealed this addition, arguing that the chartered accountant had exceeded his authority. However, the Tribunal upheld the addition, stating that the chartered accountant had the competence to make such representations as per the authority granted by the company. The Tribunal emphasized that the chartered accountant's statement was made to facilitate the assessment proceedings and was binding on the company. The High Court affirmed the Tribunal's decision, ruling in favor of the department and holding that the chartered accountant's actions were within the scope of his authority as per the letter of authority issued by the company.
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