COMMISSIONER OF INCOME TAX Vs. CHEMMEENS

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court :

(2.) THE respondent is a registered firm. We are concerned with the assessment year 1977-78. THE only question that arises for consideration is whether the addition of Rs. 1,00,000 made to the trading results is valid and justified in law. THE addition was made stating that the assessee agreed to the disallowance of a total sum of Rs. 1,00,000 in the profit and loss account. It seems that one Mr. T. K. Gopalan Nair, who was stated to be the financial adviser of the assessee-firm, appeared before the Income-tax Officer and signed on a sheet of paper agreeing to the disallowance of Rs. 1,00,000. THE assessee pleaded that Mr. Gopalan Nair, aforesaid, was neither authorised to represent the assessee, nor had he informed the assessee about the agreement and, therefore, it was not binding on it. THE addition was deleted by the Commissioner of Income-tax (Appeals) as per his order, dated March 26, 1983, holding that, in the light of the complete accounts maintained, the addition was unjustified and unwarranted. Before the Appellate Tribunal, the Revenue contended that the addition was made on the basis of the agreement and so it should not have been interfered with by the Commissioner of Income-tax (Appeals). In disposing of the above plea, the Appellate Tribunal held that Mr. T. K. Gopalan Nair was not an authorised agent of the assessee ; nor was there any material to show that in fact Mr. T. K. Gopalan Nair agreed to the disallowance as authorised by the assessee. In coming to the conclusion aforesaid, the Appellate Tribunal relied on Section 288 of the Income-tax Act as well and concluded that any agreement made before the assessing authority by an unauthorised person is not binding on the assessee. No written authorisation was available in the files to show that Mr. T. K. Gopalan Nair was authorised to act on behalf of the assessee. In this view, the addition of Rs. 1,00,000, stated to be on agreed basis, is unauthorised. THE appeal filed by the Revenue was dismissed. It is thereafter, at the instance of the Revenue, that the question of law formulated hereinabove has been referred by the Appellate Tribunal for the decision of this court.

(3.) WE, therefore, answer the question referred to this court in the affirmative, against the Revenue and in favour of the assessee.