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TMI Blog2006 (4) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... gold loan was agreed to be assessed at 30 per cent. Moreover, assessee s authorized representative had filed statement dated 20-3-2001 and stated that it was only for the sake of finality of the assessment that the assessee had agreed to be assessed by adopting the rate of 27 per cent. Hence, on the above reasons and considering the consent given by the assessee s Chartered Accountant, the Assessing Officer made an addition of Rs. 2,27,877 in the assessment year 1997-98 and Rs. 2,16,851 in the assessment year 1998-99. The assessee challenged the said additions in appeal before the CIT (Appeals). 3. Before the CIT (Appeals), it was contended that the additions were not justified as there was no material before the Assessing Officer for making the said additions. Moreover, whatever the alleged enquiries which were made by the Assessing Officer, no material was put to the assessee for rebuttal. It was further contended that the entire funds employed by the assessee were his own funds and hence there was no necessity for charging interest at a higher rate unlike in other cases in which the money lending business was done with borrowed funds. It was further contended that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r appearing before the Assessing Officer. The learned departmental representative has also filed a paper book which contains : ( a )Copy of written submissions made by the authorized representative before the Assessing Officer. ( b )Copy of letter of authority filed by the authorized representative dated 23-11-1998 before the Assessing Officer. The learned representative for the assessee submitted that the assessee is doing money lending business from his own funds. The assessee is regularly assessed and has been filing return of income from the assessment year 1992-93. It was further submitted that the assessee had filed his return of income for the assessment years 1992-93, 1993-94 and 1994-95 declaring interest income at 20 per cent and the returns filed by the assessee were accepted by the Assessing Officer under section 143(1)( a ). As far as the assessment year 1995-96 is concerned, no consent was given by the assessee or by his authorized representative to the Assessing Officer, and based on surmises, without putting the alleged enquiries made by him to the assessee or without disclosing the materials collected in the alleged enquiries, the Assessing Officer has made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may have the post-approval by the assessee; but on many occasions, the assessee may not give any post-approval to the action of the authorised representative and hence whatever agreement is entered into between the authorized representative of the assessee and the Assessing Officer will not be binding on the assessee. It was further contended that by virtue of the provisions of section 288, authorized representative is permitted to appear in the assessment proceedings on behalf of the assessee but his authority is restricted or limited in terms of authority given by the assessee to him. The learned representative contended that in the authority statement given by the assessee to the authorized representative, nowhere the authorized representative is authorized that he should agree or make any statement before the Assessing Officer. 6. The learned representative further submitted that the decision of the Hon ble High Court of Kerala in the case of Jayasree Chit Funds Services (P.) Ltd. ( supra ) is distinguishable on facts as in the said case specific authority was given to the authorized representative in writing that whatever the statements and explanations will be made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -10-1998] ( d ) C.K.G. Agencies v. Jt.CIT [IT Appeal No. 110 (Coch.) of 2000, dated 31-1-2003]. 7. We have considered rival submissions. We have also carefully considered the facts of this case. In this case, it is not disputed that the learned Chartered Accountant who is also appearing before us was the authorized representative for the assessee both before the Assessing Officer and the CIT (Appeals). It is also not disputed in this case that the authorized representative has agreed in writing vide statement dated 20-3-2001 for accepting the rate of interest at 27 per cent in place of 20 per cent. Now, as far as the assessee is concerned, the assessee has contested the agreement entered into by the authorized representative and the Assessing Officer, even before the CIT (Appeals). 8. By virtue of the provisions of section 288, the assessee can appoint authorized representative to attend any proceedings on his behalf except when he is required to attend personally for examination on oath or affirmation subject to the conditions of the said section. The relevant provisions of section 288 read as under : "288. (1) Any assessee who is entitled or required to attend b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is clear from the provisions of section 288 that the assessee is permitted to appoint authorized representative, may be for the following reasons : ( i )he may be unable to attend before the Assessing Officer due to his absence from the place of the office of the Assessing Officer. ( ii )the assessee may require legal help or help in the accounts and guidance. Sometimes, the assessee may be knowing the provisions of law, but at the same time, it may not be possible for him everytime to go and attend before the Assessing Officer. The word used in the section is "to appoint" where the assessee is required to attend before the Assessing Officer. The term "authorized" means to empower, to give right or authority to act, to cloth with authority or legal power. As far as section 288 is concerned, the authorized representative cannot attend on behalf of the assessee without power of authority in writing. Now, the power of authority means the authority conferred by the assessee on the authorized representative within the frame of which he has to act when he attends on behalf of the assessee before the Assessing Officer. Hence, the terms of the letter of authority are decisive to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the Chartered Accountant who represented before the ITO had acted beyond the scope of his authority in agreeing to the addition of Rs. 15,000. Ultimately, the matter was carried by the assessee to the Hon ble High Court of Kerala and after examining the letter of authority given by the assessee to the Chartered Accountant, the Hon ble High Court held as under : "Annexure-A appended to the statement of the case is a copy of the letter of authority given by the assessee to the Chartered Accountant. We have already extracted its test in full. By that statement, the assessee had conferred full power on the Chartered Accountant to represent it before the ITO in connection with the assessee s income-tax assessment proceedings for the assessment year 1970-71 and it is specifically stated that the statements and explanations given by the said representative before the ITO would be binding on the assessee. A faint attempt was made before us by the counsel for the assessee to contend that the "statements and explanations" referred to in annex. A can be only the statement which the chartered accountant is enjoined by rule 12( a ) to furnish to the ITO. No such point was raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,16,336 was finally deter-mined by the Assessing Officer at Rs. 23,28,394. The assessee appealed before the CIT (Appeals) who confirmed the said assessment with slight modification. Both the assessee as well as Revenue filed appeals to the Tribunal. After four years after presentation of the assessee, the assessee also filed certain additional grounds of appeal. In the additional grounds, the assessee took up the contention that the Advocate who had filed the petition on behalf of the assessee under section 146, had no authority to present such a petition, and as such, the Assessing Officer s action setting aside the original assessment under section 144 should be treated as null and void . On appeal before the Tribunal, it was held that since the proceedings under section 144 were initiated on the basis of the petition signed by the counsel for the assessee, he had no authority to submit such petition. Hence, the cancellation of the ex parte assessment was vitiated for lack of jurisdiction. The matter was carried to the Hon ble High Court of Kerala. The High Court examined the terms of authorization as found in the vakalathnama executed by the assessee in favour of his Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Funds Services P. Ltd. ( supra ) is concerned, that decision is rendered by the Hon ble High Court by examining the terms of authority given in favour of the authorized representative by the assessee. As far as the fundamental principles of binding nature of precedents are concerned, the ratio of the said decision will be binding if the facts are the same. We have already expressed our opinion that the decision in the case of Jayasree Chit Funds Services P. Ltd. ( supra ) is distinguishable on facts as the Hon ble High Court has examined the terms of the authority given to the authorized representative. On merit also, there is substance in the argument of the learned authorized representative that the reasons given by the Assessing Officer for adopting the rate of interest at 27 per cent are only surmises and vague. The Assessing Officer has given the same reasoning for the assessment year 1995-96. It appears that the assessee had agreed for the rate of interest at 27 per cent for the assessment year 1996-97. A lot of contradictions are there. As far as the assessment years 1992-93 to 1994-95 are concerned, rate of interest was adopted at 20 per cent, though the assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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