G.K.MATHANAGOPAL,POLLACHI vs. ITO, CHENNAI

PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER :

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2. The first issue in the grounds of appeal is that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of �.7,94,000/- made under sec.40A(3) of the I.T. Act.

The second issue in the grounds of appeal of the assessee is that the Commissioner of Income Tax (Appeals) erred in sustaining the disallowance of �.1,43,910/- made towards difference in stock value.

As far as the second issue is concerned, we notice that the assessee has not raised this ground before the Commissioner of Income Tax (Appeals). Therefore, this ground does not arise out of the order of Commissioner of Income Tax (Appeals) and accordingly we reject this ground as not emanating from the order of Commissioner of Income Tax (Appeals).

The Commissioner of Income Tax (Appeals) dismissed the appeal of the assessee on the ground that the assessee as well as the Authorised Representative of the assessee had given in writing the consent for disallowance and, therefore, the Assessing Officer rightly made the disallowance. The Commissioner of Income Tax (Appeals) is of the view that when the assessee agreed to the addition made by the Assessing Officer at the stage of assessment, he does not have any right to prefer any appeal before the Commissioner of Income Tax (Appeals) and, therefore, rejected the appeal of the assessee.

4 ITA 2031/Mds/12 for the mistake committed by the Authorised Representative. The Counsel for the Assessee submits that the assessee is a small trader in Onions. He had made purchases from various agriculturists who does not have bank account to provide Crossed Cheques to them for making purchase. The Counsel for the Assessee submits that whenever the assessee had made purchases from the persons other than the agriculturists, he has made payments only by way of crossed cheques. Only to those agriculturists who does not have bank account, cash payments were made exceeding �20,000/-. The Counsel for the Assessee further submits that Onions come under agricultural produce and Rule 6DD of the I.T. Act provides for exemption for the payments made to purchases where the assessee procures agricultural produce from the agriculturists, cultivators etc.

Therefore, he submits that in any case, the provisions of sec.40A(3) of the Act does not apply to assessee’s case warranting any disallowance. Therefore, the Counsel for the Assessee submits that the Authorised Representative who represented the case before the Assessing Officer mis-guided himself and agreed for the disallowance by putting the assessee into great hardship. Therefore, he submits

5 ITA 2031/Mds/12 that for no fault of the assessee, the assessee should not suffer because of the mistake committed by the Authorised Representative and requested that mater may be sent back to the Assessing Officer for fresh examination.

6 ITA 2031/Mds/12 under sec.40A(3) of the Act. The Assessing Officer apparently made the disallowance based on the statement of the assessee and his Authorised Representative agreeing for addition. On 21.7.2010, the assessee and the Authorised Representative have signed in the Order Sheet of the Assessing Officer agreeing for disallowance of cash payments made in excess of �.20,000/-. The Commissioner of Income Tax (Appeals) following the judgment of Hon'ble Jurisdictional High Court in the case of Ramanlal Kamdar v. CIT (108 ITR 73), held that once the assessee agreed for the addition, the assessee does not have any right to prefer the appeal since he is not aggrieved by the order of Assessing Officer. While holding so, the Commissioner of Income Tax (Appeals) held as under :-

“5. I have gone through the facts of the case and other materials available on record. It is clear from the order sheet entry made that both the assessee and his authorized representative had agreed to the addition made towards disallowance cash payments made to agriculturists u/s.40A(3) of the Income-tax Act.

5.1 This issue is squarely covered by the decision of the jurisdictional High Court in the case of Ramanlal Kamdar vs. CIT reported in 108 ITR 73(Mad). The facts of the case cited supra decided by the jurisdictional High Court is that in the original assessment for the assessment year 1962-63 a mistake had crept in while working out interest under section 139(1)(iii). Thereafter, the ITO issued a notice to the assesse, proposing to rectify the 7 ITA 2031/Mds/12 mistake under section 154 and calling upon the objections of the assessee. A partner of the assessee appeared before the ITO pursuant to the notice issued by him and stated that the assessee had no objection to the revision proposed by the ITO. Thereafter, the ITO passed an order rectifying the mistake under section 154. Notwithstanding the fact that a partner of the assessee had appeared before the ITO and stated that the assessee had no objection to the proposed revision, the assessee preferred an appeal to the AAC. That officer dismissed the appeal, upholding the order of the ITO. The assesse preferred a further appeal to the Tribunal, which was also dismissed. Then the matter had been taken up for appeal by the assesse before the Hon’ble jurisdictional High Court and the same was decided in favour of revenue.

5.2 In the case cited supra, the Hon’ble High Court held as under:-

“Once the assessee had stated that it had no objection to the proposed revision and the ITO had also revised the original assessment as proposed by him, the assesse could not be said to have been aggrieved by the order of the ITO. Only if the assessee was aggrieved by the order of the ITO, he had the right to file an appeal before the AAC and once the assessee could not have had any grievance in view of the statement made by the partner, the appeal to the AAC was incompetent and equally the appeal to the Tribunal was incompetent. If so, the instant reference arising out of the order of the Tribunal was also incompetent. Under such circumstances, the reference was to be returned unanswered.”

5.3 In the instant case also, the assesse as well as the authorized representative had given in writing in the order sheet itself declaring their consent to the addition proposed to be made by the assessing officer to the tune of ` 7,94,000/- u/s.40A(3) of the I.T. Act. Hence the assessee can not have a second thought later on and prefer an appeal before the CIT(Appeals)II, Coimbatore. The assessee having agreed to the addition made by the ITO at the assessment stage is bound by the order of the assessing officer and does not have any right to prefer an appeal

8 ITA 2031/Mds/12 before the Commissioner of Income-tax. Accordingly, this ground of appeal is dismissed.”

6. On going through the order of Commissioner of Income Tax (Appeals) and the judgement of Hon'ble Jurisdictional High Court in the case of Ramanlal Kamdar v. CIT (supra), we find no infirmity or good reason to interfere with the order of the Commissioner of Income Tax (Appeals) in holding that the assessee has no right of appeal since the assessee and his Authorised Representative agreed for the said disallowance during the course of assessment proceedings. The fact that the assessee and the Authorised Representative who appeared before Assessing Officer as well as Commissioner of Income Tax (Appeals) stated that the assessee had no objection to the proposed disallowance has not been disputed at any stage and even before us. In the circumstances, we up hold the order of Commissioner of Income Tax (Appeals).

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Order pronounced on Monday, the 18th day of February 8.

2013.