2017 (1) TMI 1838 - HC - Income Tax

Bogus claims for agricultural income - AO held that 65% was bogus claim and only 35% of the agricultural income was accepted to be correct - CIT(A) held that the claim for agricultural income was genuine and Assessee was entitled to claim deduction/exemption of 90% of the income claimed as agricultural income and 10% would be the expenses for generating agricultural income - ITAT in its order has made certain observations with regard to the correctness of the order indicating that it was not satisfied with the order of the CIT (Appeals). HELD THAT - Assessee before the ITAT had made a submission that with a view to avoid unnecessary litigation and peace of mind he was ready and willing to accept the order of the AO. He also filed three handwritten letters/notes in this regard with respect to the three different Assessees. Thereupon ITAT permitted the counsel to withdraw the Appeals since he was ready to comply with the order of the AO. Appeal of the Revenue did not survive and it was also dismissed. Now the only submission of Appellant is that the counsel for the Assessee has made this statement without informing or without taking any consent of the Assessee. In our considered view the Appellant cannot be permitted to urge that his Counsel had no instructions. The remedy if any of the Assessee lies in taking action against the Counsel but not in filing the Appeal. No substantial question of law arises in this Appeal.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the appeal filed by the Assessee against the order of the Income Tax Appellate Tribunal (ITAT) is maintainable?
• Whether the Assessee's counsel had the authority to withdraw the appeal before the ITAT without the Assessee's explicit consent?
• What is the appropriate course of action if a counsel acts without the client's consent in judicial proceedings?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of the Appeal

• Relevant Legal Framework and Precedents: The court examined the procedural aspects of filing an appeal and the necessity for a substantial question of law to be present for an appeal to be maintainable.
• Court's Interpretation and Reasoning: The court held that the appeal was not maintainable as no substantial question of law was raised. The court emphasized that judicial records, including statements made by counsel, are presumed to be correct unless proven otherwise.
• Key Evidence and Findings: The court noted that the Assessee's counsel had explicitly agreed to withdraw the appeal before the ITAT, which was documented in the judicial record.
• Application of Law to Facts: The court applied the principle that an appeal requires a substantial question of law, which was absent in this case, leading to the dismissal of the appeal.
• Treatment of Competing Arguments: The Assessee argued that the counsel acted without consent, but the court rejected this, stating that the remedy lies in taking action against the counsel, not in filing an appeal.
• Conclusions: The court concluded that the appeal was not maintainable due to the lack of a substantial question of law.

Issue 2: Authority of Counsel to Withdraw the Appeal

• Relevant Legal Framework and Precedents: The court considered the principles of agency in legal representation, specifically the authority granted to counsel through a power of attorney.
• Court's Interpretation and Reasoning: The court reasoned that when a party grants power of attorney to a counsel, it includes the authority to make decisions such as withdrawing an appeal.
• Key Evidence and Findings: The court found that the counsel had made a clear submission to withdraw the appeal, which was recorded and not contested by the Assessee at the time.
• Application of Law to Facts: The court applied the principle that the counsel's authority includes making tactical decisions, such as withdrawal, unless explicitly restricted.
• Treatment of Competing Arguments: The Assessee claimed the counsel acted without authority, but the court dismissed this, emphasizing the need to respect judicial records.
• Conclusions: The court concluded that the counsel had the authority to withdraw the appeal, and the Assessee's remedy, if any, was against the counsel, not through an appeal.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "In judicial proceedings or quasi-judicial proceedings, we have to accept the judicial record to be correct."
• Core Principles Established: The judgment reaffirmed the principle that an appeal must raise a substantial question of law to be maintainable. It also emphasized the authority of counsel to make binding decisions on behalf of their clients when granted power of attorney.
• Final Determinations on Each Issue: The court dismissed the appeal for lack of a substantial question of law and upheld the authority of the counsel to withdraw the appeal before the ITAT.