TMI Blog2005 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the appeal-Form No. 35 not having been signed and verified by the Managing Director or even a Director, are opposed to the provisions of relevant rules and sections of the Income-tax legislation and that therefore merits are not required to be discussed. Hence the instant second appeal by the assessee before us. 3.1 The learned counsel for the assessee submitted that: 3.2 The Appellate Commissioner ought to have given a specific opportunity in writing to the assessee to rectify the defect in Form No. 35, which was signed by the Authorised Senior Vice President (Finance) of the company as the Directors of the company were out of the country. He failed to note that the non-signing of the Memorandum of Appeal in Form No. 35 by the Directors of the company who were out of the country was "Not invalid" within the meaning of section 292B of the Income-tax Act, 1961. Hence, he ought to have admitted the appeal and decided the issue on merits, by holding that the assessee was not liable for short-term capital gains, as there was no transfer of immovable property within the meaning of section 2(47) of the Act. Without prejudice to the grounds aforesaid, he ought to have set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the defence of the Revenue cannot be ruled out altogether, as in our view there is substance in it as compared to the stand of the assessee even though the latter could not be in some aspects ruled out altogether, for the reasons following. 5.2 The assessment year involved is 1998-99, and the date of assessment order is 9-3-2004, passed under section 143(3) read with section 147 of the Act. Notice under section 148 was issued, and the assessee furnished its return of income on 30-4-2003. Notices under section 143(2) and section 142(1) were also issued on 10-7-2003, besides a show-cause notice issued on the same day i.e., 10-7-2003 to the assessee, to explain certain factors. In response thereto, the assessee's representative and its Manager attended the hearings from time to time. Assessee has also given its explanation by its letter dated 29-7-2003. For the reasons detailed therein, the assessment order determined the total income at Rs. 35,12,443, besides initiating penalty proceedings under section 271(1)(c) of the Act, separately. On appeal before the CIT(A), and after the dates of hearing on 26-5-2004 and 3-62004, by his order dated 8-9-2004 the appeal of the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds shall also be numbered consecutively. 5.4 The assessee has also filed the appeal before the CIT(A) with a delay of 17 days, beyond the period of limitation within which he should have filed the appeal. In para 3 of the order impugned, the CIT(A) mentions that the affidavit filed states that the delay had occurred due to negligence on the part of the Chartered Accountant, and due to inadvertence. The said affidavit, admittedly, was signed and filed by the Senior Vice President (Finance) of the assessee-company, and not by the Managing Director or any of the Directors of the assessee-company, as it ought to be. Furthermore, at para-4 of the CIT(A)'s order, the CIT(A) has given a finding that Form No. 35 has also been signed by the Senior Vice President (Finance) and not by the Managing Director or any other Director. This fact has been brought to the notice of the assessee's counsel during the course of hearing by the CIT(A) on 26-5-2004, (which it is pointed out that mistakenly it has been mentioned as 25-6-2004). The assessee filed a letter on 3-6-2004 before the CIT(A) contending that the assessee-company's Board had only two Directors and that both the directors were not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed his finding that even such authorization would not entitle a person other than the Managing Director or a Director to file an appeal under the provisions of the Act. On these facts and circumstances, the appeal filed in Form No. 35 not having been signed and verified by a Managing Director or a Director, the CIT(A) dismissed the assessee's appeal in limine not being maintainable. 5.7 For the sake of ready reference, we may extract below rule 45, under the head 'Appeals' in Part-X of the Income-tax Rules, 1962, with the marginal note 'Form of Appeal to Commissioner (Appeals)', which runs as below:- "45. (1) An appeal to the Commissioner (Appeals) shall be made in Form No. 35. (2) The form of appeal prescribed by sub-rule (1), the grounds of appeal and the form of verification appended thereto relating to an assessee shall be signed and verified by the person who is authorised to sign the return of income under section 140 of the Income-tax Act, 1961 as applicable to the assessee." 5.8 Similarly, for the sake of ready reference, section 140 of the Income-tax Act, 1961, with the marginal note 'Return by whom to be signed' is also extracted as below. "Section 140.... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with or according to the intent and purpose of the Act. Hence, this contention raised by the petitioner is not sustainable." The question in that case was whether a return signed by Executive Director and not by Managing Director or Director as stipulated under section 140(c) was valid, and that ratio decidendi has no application to the facts of the present case and for the reasons discussed in paras 5.13 and 5.14 of this order. 5.11 Similarly, in the case of Masoneilan (India) Ltd. also and relied upon by the assessee, Hon'ble Kerala High Court has held as under- "It has been urged by learned counsel for the revenue that since the signature by an unauthorized person rendered the return non est, it was no return for any purpose. The question of there being a defect needing rectification does not arise. We do not find any substance in this plea. If there is no defect, the question of the return becoming non est does not arise. The signature of the unauthorized person renders the return defective to make it non est. "Defect" means a blemish, fault or imperfection. It is a lack of something necessary for completeness or perfection." In this case also, the issue before the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e President (Finance) to file the appeal before the CIT(A) on behalf of the company. That aspect has to be examined in the light of provisions of rule-45 extracted above. Inasmuch as that rule prescribed that Form of appeal 'shall be signed and verified by the person who is authorised to sign the return of income under section 140 of the Income-tax Act', a reference is warranted to that provision as well. That reference is limited to the extent of ascertaining who is authorised under section 140 to sign the return, so as to determine the person competent to sign the Form of Appeal. Therefore, the provisions of section 140 have limited application insofar as rule 45 is concerned. The ratio laid down in the context of section 140 for determining validity of the returns filed with the signatures of other persons, cannot have extended application to the provisions of rule 45 for determining the validity of the appeal with the signature and verification of someone other than the person specified in section 140 of the Act, the reason being that the filing of the return is in discharge of one's statutory obligation being mandatory, without any discretion as in the case of institution of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e signature on the appeal memo, did not call for any interference by the Tribunal, particularly when the fresh appeal memo duly signed by the applicant was submitted before it." In that case, the dispute related to the authenticity of the signature of the person who was competent to sign and verify the Form of Appeal before the CIT(A) in terms of rule 45. The dispute was only with regard to the authenticity of the signature and not the competence of such person. Once that question about the authenticity of the signature was raised notwithstanding the contention raised as to the authenticity of the signature on the original Form of Appeal, a fresh Form of Appeal with the signature of that person was again filed along with petition for condonation of delay. Proceeding on the basis of the fresh Form of Appeal thus filed, duly condoning the delay in its filing, the appeal was decided on merits. In the instant case, appellant declined to cure the defect notwithstanding several opportunities given by the CIT(A) and was only insisting all along that Authorised Senior Vice President (Finance) was competent to file the appeal on behalf of the assessee. Hence, the ratio of this decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed form or return it for being amended within such time as it may allow, and on revision after such amendment the Memorandum shall be signed and dated by the Officer competent to make an endorsement under rule 17. In our considerate view, the essential features of this part of the rule also equally apply to a reference application wherein the statement of facts in the enclosure is not in the prescribed form." As the applicant therein, the CIT, Central-II, Madras, did not rectify the defect pointed out by the Tribunal despite repeated opportunities given by the Tribunal insisting on the department's rectification of its defect, the Tribunal dismissed the reference application in limine, with the following observations- "12. As stated earlier, the reference application must be accompanied by a brief summary of the facts of the case. The enclosure is intended to contain the narration of three facts of the case admitted and/or found by the Tribunal. It should eschew any discussion on the merits of the Tribunal's order or on the question of law. The statement is intended to serve as the basis upon which the Tribunal may, subject to the right of the other party to object, draw up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and if there is a mistake apparent from law, it could be raised only in a reference application. Unfortunately in the instant case the caption and the contents raised by the applicant before us is at cross-roads arid purposes. Consequently, we are unable to pass over this hurdle of the preliminary issue that the statement of facts in the enclosure is not in accordance with the statutory prescription for coming to appreciate the stand of both the parties on merits of these applications. We may also further add that the provisions of ITAT rule 19 supports the appeal being treated as unadmitted by stating that mere issue of notice could not by itself mean that appeal had been admitted. Thus for the reasons detailed above, we view that these applications deserve to be rejected as unadmitted, the defect having been not cured by revising' the statement of facts narrated in the enclosure to the questions sought for reference in spite of opportunity having been granted by the Tribunal to the revenue to avail it." 5.16 On a writ petition filed by the revenue against the above order of the Tribunal, being W.P. Nos. 4738 and 4739 of 1998, Hon'ble Madras High Court, speaking through Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stated in such an application for a reference. Paragraph 3 of the Form reads as under: "... That the facts which are admitted and/or found by the Appellate Tribunal and which are necessary for drawing up a statement of the case, are stated in the enclosure for ready reference." What was thus required to be stated by the petitioner in the enclosure to Form 37 were the acts which were either admitted and/or found by the Tribunal, to the extent they were necessary in drawing the statement of the case. In that enclosure it was wholly irrelevant and unnecessary for the revenue to set out all its grievances in relation to the correctness of the order that had been made by the Tribunal, as an application for reference is neither an appeal to the Tribunal against its own order nor is it a petition for review of the order made by the Tribunal on the appeal. In the enclosure that was filed by the revenue along with Form 37 there was a long list of grounds running into several pages setting out the alleged errors in the order of the Tribunal. The Tribunal had, therefore rightly directed the petitioner's representative to delete that irrelevant materials and had given two weeks time to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side the order of the Tribunal impugned before it, to enable the petitioner Department to comply with what it has undertaken before the Hon'ble High Court, and which was failed earlier by the Department to be complied with before the Tribunal in spite of Tribunal's directions to the Department by giving ample time for such compliance, it is worthwhile to extract hereunder the concluding remarks of the Hon'ble High Court in its judgment- "6. The impugned order is set aside to enable the petitioner to do so. The Tribunal shall consider the application for reference on merits after the petitioner deletes the irrelevant portions from the enclosures to the application. The conduct of the representative of the revenue which has resulted in the revenue having come to this Court by way of this writ petition is strongly deprecated. The respondent assessee has been dragged to this Court wholly on account of the folly of the petitioner's representative. The petitioner shall, therefore, pay a sum of Rs. 1,500 (Rupees One thousand and five hundred) only as costs to the respondent. The WMPs are consequently dismissed." 5.17 Ratio of the above decision of the Madras Bench of the Tribunal, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, a Director of the assessee-company; (b) The assessee shall set forth the grounds of appeal before the CIT(A) without being argumentative or narrative but concisely and under distinct heads, numbering them consecutively, so that the provision of rule and law are strictly complied with; (c) The assessee shall pay to the Department by way of cost, an amount of Rs. 2,500 which we hereby award considering the facts and circumstances of the instant case revealing sheer obdurate behaviour of the assessee, as per the ratio decidendi of the Hon'ble Madras High Court in the case of Ashok Leyland Ltd.; (d) The assessee shall file before the CIT(A) a petition, duly signed by the competent person as mentioned under (a) above, supported by a sworn affidavit, for condonation of delay in the filing of the appeal before him till the defects therein are cured as indicated above. On the assessee's compliance of the aforesaid conditions and in the event of the delay being condoned by him, the CIT(A) may adjudicate the issues on merits after giving opportunity of being heard to the assessee and duly considering any relevant stand and material that may be relied upon in support thereof befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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