1994 (1) TMI 132 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the additions made by the Assessing Officer.
2. Binding nature of the actions of the authorized representative on the assessee.
3. Competence of the appeal filed by the assessee.

Summary of Judgment:

1. Legality of the Additions Made by the Assessing Officer:
The Assessing Officer made estimated additions to the assessee's income for the assessment years 1985-86 to 1988-89 due to deficiencies in the books of account, such as poor drawings compared to family size, unverifiable commission payments, and high traveling expenses. The additions were as follows:
- 1985-86: Rs. 23,000
- 1986-87: Rs. 22,000
- 1987-88: Rs. 24,000
- 1988-89: Rs. 25,000

2. Binding Nature of the Actions of the Authorized Representative on the Assessee:
The DC (Appeals) dismissed the appeals, stating that the assessee's authorized representative, Shri V. Ramachandran, had agreed to the additions and signed the order sheets, making the actions binding on the assessee. The Tribunal examined whether the actions of the authorized representative were binding on the assessee. It was noted that the authorization included the words "whatever explanations or statements he gives or makes on my behalf will be binding on me." However, the Tribunal referred to various High Court decisions, including CIT v. Dayaram Vasudeo and Smt. Parbati Devi v. CIT, which indicated that agreements made by representatives could be contested if made erroneously or without proper authority.

3. Competence of the Appeal Filed by the Assessee:
The Tribunal considered whether the assessee was an "aggrieved person" u/s 246 to file an appeal. It was argued that the assessee was aggrieved due to the additional tax burden resulting from the additions. The Tribunal referred to the Madras High Court's judgment in Ramanlal Kamdar v. CIT, which held that an assessee who agreed to an addition could not be considered aggrieved. However, the Tribunal distinguished this case, noting that the agreement was made by the authorized representative, not the assessee himself. The Tribunal also referred to the Kerala High Court's decision in Jayasree Chit Funds & Services (P.) Ltd. v. CIT, which allowed for retraction if the agreement was made under misapprehension or mistaken belief.

Conclusion:
The Tribunal set aside the orders of the lower authorities and restored the matter to the Assessing Officer. The Assessing Officer was directed to frame fresh assessments as per law after ascertaining the correct facts and affording the assessee a reasonable opportunity of being heard. The appeals were treated as allowed for statistical purposes.