Agarwal Polysacks Limited Vs PCIT (Rajasthan High Court)
Rajasthan High Court dismissed the writ petition filed by Agarwal Polysacks Limited challenging the reassessment proceedings initiated under Section 147 of the Income Tax Act. The company received a notice under Section 148A on March 28, 2024, indicating that certain income had escaped assessment for the assessment year 2020-21. The Income Tax Department’s inquiry revealed that the company had sold 13 plots in Shri Shiv Nagar, Jodhpur, and received the consideration in cash. Since the company failed to provide a satisfactory explanation regarding these transactions, the department proposed an addition of ₹57,60,112 to its taxable income.
The petitioner contended that it was unaware of these transactions as the land was managed by its power of attorney holder, Kamlesh Kumar Deora, authorized by the company’s director. The company further argued that it did not receive any sale consideration and was involved in an ongoing civil dispute regarding the same land. The Income Tax Department, however, found these explanations unconvincing, citing registered sale deeds and other documentary evidence to confirm that the transactions were taxable events under the Act.
The High Court, while relying on the Supreme Court judgment in Tmt. Kasthuri Radhakrishnan & Ors. vs. M. Chinniyan & Anr. (2016), held that a principal is bound by the actions of its power of attorney holder. It reiterated that unless the power of attorney is revoked, the acts performed by the agent are deemed to be done on behalf of the principal. The court further stated that if the agent acted beyond the scope of his authority, the dispute was a private matter between the company and the power of attorney holder and did not affect the tax liability.
