1985 (4) TMI 147 - AT - Income Tax

Summary

Issues:
1. Estimation of business income by the ITO.
2. Appeal against agreed assessment.
3. Authority of counsel to make concessions on behalf of the assessee.
4. Validity of assessment based on irrelevant evidence.

Estimation of business income by the ITO:
The appeal pertained to the assessment year 1980-81, where the ITO estimated the business income of the assessee at Rs. 23,770 as no stock was maintained, based on the books of account produced. The AAC dismissed the appeal, stating no appeal lies against an agreed assessment. The assessee contended that the assessment was made on irrelevant evidence as the ITO examined books related to the wrong accounting year. The Tribunal found the assessment based on irrelevant evidence and remitted the matter back to the ITO for proper examination of the books of account for the correct accounting year.

Appeal against agreed assessment:
The assessee raised an additional ground of appeal challenging the validity of the assessment based on an agreed figure. The counsel argued that the representative lacked the authority to concede on behalf of the assessee beyond the scope provided by the IT Rules. The Tribunal noted that the assessment was agreed upon a figure beyond the powers delegated to the counsel and allowed the appeal for statistical purposes, remitting the matter back for proper assessment.

Authority of counsel to make concessions on behalf of the assessee:
The counsel for the assessee contended that the representative had no inherent authority to make concessions unless expressly instructed by the assessee. The Tribunal agreed that the admission by the counsel for a higher income was beyond the delegated powers and cited relevant legal provisions. The Tribunal emphasized the need for explicit instructions for concessions and found the assessment invalid based on the counsel's actions.

Validity of assessment based on irrelevant evidence:
The ITO estimated the business income based on the wrong accounting year's books of account, leading to an assessment on irrelevant evidence. The Tribunal highlighted the discrepancy and remitted the matter for proper assessment based on the correct accounting year's records. The Tribunal found the assessment invalid and unsustainable in law due to the use of irrelevant material for determining the income.