2023 (2) TMI 447 - AT - Income Tax

Assessment based on the admission/surrender made by the AR - survey u/s 133A - professional misconduct against the AR who has surrendered before the A.O. without the consent by the assessee - Whether assessee can retract the admission made by his representative before the A.O.? - As submitted assessee did not get proper opportunity of being heard wherein the Ld.CIT(A) has sustained the addition after being aware that the assessee had not agreed for addition made and as the case was being barred by limitation - HELD THAT - As informed to the Bench by the Ld. Counsel for the assessee that, the assessee has not taken any action against the AR who claimed to have been surrendered before the A.O. without the consent of the assessee. Therefore, the said allegation made by the assessee against the AR who has represented the assessee before the Ld. A.O. cannot be believed merely based on an affidavit filed by the assessee, that too when nothing brought on record by the assessee regarding the action taken against the said AR for alleged professional misconduct. The fact remains that, the Ld. A.O. has not decided the issues involved before him on its merit and passed the assessment order only based on the admissions/surrender made by the AR, the Ld. A.O. ought to have decided the matter on merit in accordance with law, not based on the admission or refusal of the assessee. The principle of estoppels is not applicable to income tax proceedings and the authorities should bear in mind that the right income of the assessee to be taxed in the right assessment year and well within the limitation as prescribed in the Act. Therefore, we deem it fit to remand the matter to the file of the A.O. for de-novo consideration with a direction to ignore the surrender made during the assessment proceedings and decide the matter on merit. Grounds of Appeal filed by the Assessee are allowed for statistical purpose by remanding the matter to the file of Ld. A.O. for de-novo consideration to decide the matter on merit, subject to condition that the assessee shall pay a sum of Rs. 5,000/- to the Prime Minister s National Relief Fund.

Summary

Issues:
Appeal against addition of Rs. 23,15,360 in income tax assessment for AY 2014-15 based on surrender made by representative without consent of assessee.

Analysis:
1. Background: A survey under section 133A was conducted on the assessee's business premises, leading to the assessment of total income at Rs. 48,21,376 against the returned income of Rs. 25,06,020.

2. Grounds of Appeal: The assessee challenged the addition of Rs. 23,15,360, contending that the representative's admission was without consent and the assessee was not given proper opportunity to be heard.

3. CIT(A) Order: The CIT(A) dismissed the appeal, upholding the addition based on the representative's admission during assessment proceedings.

4. Appellate Tribunal Proceedings: The assessee argued that the admission by the representative was unauthorized, seeking to set aside the assessment order. The Tribunal noted that the admission was made without the assessee's consent.

5. Decision: The Tribunal emphasized that the assessee did not agree to the addition, and the admission by the representative was not binding on the assessee. It directed a de-novo consideration by the Assessing Officer, disregarding the surrender made during assessment proceedings.

6. Principle of Estoppels: The Tribunal clarified that the principle of estoppels does not apply in income tax proceedings, emphasizing the need for assessments based on merit within the statutory limitations.

7. Remand Order: The matter was remanded to the Assessing Officer for fresh consideration on merit, with a direction to ignore the unauthorized surrender and decide the issues based on their merits.

8. Outcome: The Tribunal allowed the appeal for statistical purposes, requiring the assessee to contribute Rs. 5,000 to the Prime Minister's National Relief Fund. Other grounds of appeal were not adjudicated due to the remand.

9. Conclusion: The Tribunal's decision highlighted the importance of due process and proper authorization in income tax assessments, emphasizing the authority of the assessee in such proceedings and the need for assessments to be conducted on merit within legal frameworks.

Judgment: The Appellate Tribunal ITAT, Delhi remanded the matter to the Assessing Officer for de-novo consideration, setting aside the addition made without the assessee's consent and emphasizing the need for assessments to be conducted on merit and within statutory limitations.