1987 (1) TMI 39 - HC - Income Tax

Appellate Assistant Commissioner lacked jurisdiction to admit belated ground on suppressed sales; partner's statement binds assessee, appeal invalidated

HC held the Appellate Assistant Commissioner lacked jurisdiction to entertain the belated ground challenging an addition for alleged suppressed sales ... Voluntary acceptance by the assessee - competency of appeal against assessment founded on assessee's admission - rectification application as prerequisite to challenge a recorded admission - appellate jurisdiction to admit additional grounds based on prior admission - mistaken belief of fact or law and remedyVoluntary acceptance by the assessee - competency of appeal against assessment founded on assessee's admission - rectification application as prerequisite to challenge a recorded admission - appellate jurisdiction to admit additional grounds based on prior admission - mistaken belief of fact or law and remedy - Whether the Appellate Assistant Commissioner had jurisdiction to consider and decide an additional ground attacking an addition to income where the assessee (through its partner) had expressly accepted the discrepancy and agreed to the addition in proceedings before the Income-tax Officer. - HELD THAT: - The assessee's partner, in response to a specific query about a discrepancy, executed a written statement accepting the facts and requesting that the amount be added to income; the Income-tax Officer recorded that admission on the file and made the assessment accordingly. No rectification application was made to the assessing officer to correct or disavow that recorded statement before the appeal was pressed. The Appellate Assistant Commissioner admitted an additional ground at the hearing (when the Department was unrepresented) and deleted the addition. Applying the principle that an assessee cannot complain of an assessment made in accordance with facts voluntarily accepted by him, the Court held that, while an assessee who claims that an admission was wrongly recorded or made under a mistaken belief may have a remedy, the proper course is first to apply for rectification to the authority which passed the order. Until such rectification is sought and obtained, an appeal against an assessment founded on the assessee's admission is not competent. The Court rejected the contrary view that an appeal lies as of right without seeking rectification where there is an express admission on the record, and held that the Appellate Assistant Commissioner was in error to entertain and decide the additional ground attacking the admitted addition without antecedent rectification proceedings.The Appellate Assistant Commissioner had no jurisdiction to entertain and decide the additional ground attacking the addition which the assessee had voluntarily accepted on the record; the appeal was not competent in the absence of rectification, and the Tribunal was right in restoring the addition.Final Conclusion: The reference is answered in the negative in favour of the Revenue; the Tribunal was correct in holding that the Appellate Assistant Commissioner should not have entertained or allowed the appeal against an addition which the assessee had voluntarily accepted on the record, and the assessee must pay the costs of the reference. Issues involved: Jurisdiction of the Appellate Assistant Commissioner to consider appeal against addition of Rs. 18,052 relating to alleged suppressed sales of sarki.Summary:Jurisdiction of Appellate Assistant Commissioner: The High Court considered a reference u/s 256(1) of the Income-tax Act, 1961, regarding the jurisdiction of the Appellate Assistant Commissioner to entertain an appeal against the addition of Rs. 18,052 for suppressed sales of sarki. The assessee, involved in trading oilseeds, initially accepted the discrepancy but later appealed the addition. The Income-tax Officer's order was based on the partner's acceptance of the discrepancy. The Appellate Assistant Commissioner deleted the addition, leading to an appeal by the Revenue to the Income-tax Appellate Tribunal. The Tribunal, following precedent, held that the Appellate Assistant Commissioner erred in entertaining the appeal and deleting the addition. The High Court upheld the Tribunal's decision, emphasizing that if a statement is voluntarily accepted, no appeal can be made against it. The Court also referenced a similar case from the Punjab and Haryana High Court, highlighting the necessity for rectification before appealing against a statement made to tax authorities. Ultimately, the Court ruled in favor of the Revenue, stating that until rectification is made, an appeal is not competent.