Law:

Section:

Section 143 of the Income-tax Act, 1961 read with rule 12A of the Income-tax rules, 1962 - Assessment - Additions to returned income - Whether, under letter of authority given by assessee, chartered accountant legally competent to make agreement with ITO for certain additions to assessable income so as to bind assessee - Held, yes Facts The assessee, a private limited company, was carrying on business in chitties. During the accounting year, relevant for the assessment year 1970-71, it claimed a deduction of Rs. 44,316 paid as commission to 10 persons for canvassing subscribers to the chitty. The assessee had executed a letter of authority in favour of a chartered accountant to represent it and to produce accounts and documents in connection with its income-tax proceedings for the assessment year 1970-71 and authorising chartered accountant to make statements and explanations that shall be binding on him. In the course of the said assessment proceedings for the assessment year 1970-71, the assessee's chartered accountant conceded in writing before the ITO to the addition, inter alia, of an amount of Rs. 15,000 out of the aforesaid commission, and that no penalty should be levied. This disallowance was sustained by the AAC who negatived the assessee's contention that the chartered accountant had acted beyond the scope of his authority in agreeing to the impugned addition. The Tribunal confirmed the AAC's order. On reference under section 256(2): Held There was no merit in the assessee's contention that the expression "statements and explananations" occurring in its said letter of authority should be given a restricted connotation by linking it with the obligation cast on the chartered accountant under rule 12A of the Income-tax Rules. No such point was raised by the assessee either before the AAC or the Tribunal. Rule 12A would get attracted only if the chartered accountant had prepared the return of income furnished by the assessee. There was absolutely no material on the record to show that its return for the assessment year 1970-71 had been prepared by the chartered accountant to whom the letter of authority was issued. It was, therefore, not possible to…

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