TMI Blog2008 (3) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee whereas the appeals (I. T. A. Nos. 534 and 535 of 2006) relating to the assessment years 2000-01 and 2001-02 respectively have been preferred by the Income-tax Department. 2. For the purpose of this order, the facts have been taken from C. W. P. No. 2715 of 2006 (the assessment year 2000-01). As per the averments made in the petition, the assessee filed its return of income on November 30, 2000 (annexure P-3) declaring an income of Rs. 31,71,87,310 wherein it made a claim for refund in the sum of Rs. 50,26,733. The verification to this return was signed by one Kultar Krishan (who is neither the managing director nor the director of the petitioner-company). According to the petitioner, Kultar Krishan signed the verification in the capacity of an authorized signatory which authority had been bestowed on him by virtue of a resolution passed by the board of directors of the petitioner-company in its meeting held onApril 1, 1998. The Assessing Officer after processing the return under section 143(1) of the Act, computed the refund payable to the petitioner in the sum of Rs. 60,54,511 (Rs. 49,83,144 + Rs. 10,71,367 on account of interest payable under section 244A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, inter alia, for taxation matters which as per legal advice, included signing and filing the return. There being a reasonable cause to do the same, there being a deadlock in the management, this was done to comply with the legal provisions. The return was duly processed and the assessee has received the refund order too. That the signing of the return by Sh. Kultar Krishan is only a technical defect, if any, and in fact all efforts have been made for the necessary compliance of the legal requirements of filing the return with the Department and for paying the legitimate taxes on the basis of all the information available and to disclose all the affairs, the return was filed on time. Hence it is a case of signing and verifying and filing the return and making the necessary compliance and not the case of avoidable escapement of the process of law and the legal formalities as required by the Department. Thus there is no mistake apparent from record. Further, since the return has been processed and even the refund has been received, the return not having been signed by the managing director but by Shri Kultar Krishan may be taken as a technical defect, if at all, under the above sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner pleaded that the defect as pointed out by the Assessing Officer in the return under reference stood rectified. 7. The Assessing Officer did not pay any heed to the pleas made by the petitioner that the non-signing of the return of income by the managing director as provided by section 140(c) of the Act was a technical and curable defect in view of the provisions of section 139(9) of the Act. Following the judgments relatable to the controversy, the return earlier filed by the petitioner was declared as invalid being void ab initio by order dated July 27, 2004 (annexure P-11) passed in exercise of its power under sections 154(6) and 244A(3) of the Act. Consequently, the interest paid in the sum of Rs. 10,71,367 and the refund of Rs. 49,83,144 were ordered to be withdrawn. 8. Dissatisfied with the impugned action of the respondents (annexure P-11), the petitioner preferred appeal. The Commissioner of Income-tax (Appeals), Jalandhar(hereinafter to be referred to as "CIT(A)") after considering various legal aspects and the judgments on the point and by placing reliance on section 292B of the Act held that if the return is not signed by the person mentioned in section 140 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner to remove the defect in the return. Vide annexure P-16, the petitioner reiterated the same version as reflected in annexure P-14. 11. The assessing authority finally rejected all the pleas raised by the petitioner, vide order dated May 2, 2005 (annexure P-1) whereby the respondents refused to entertain the claim made by the petitioner for refund, on the ground of the same having not been in order, inasmuch as the same was held to be beyond the permissible time-limit fixed under the Act. It was stated in the order (annexure P-1) that notwithstanding the fact that the Commissioner of Income-tax (Appeals) had held that the defect under reference was a curable defect, the claim for issue of refund could not be entertained. It was further observed that in the aforesaid facts and circumstances, the petitioner was not eligible for refund even after the order under section 154 of the Act (annexure P-11) had been quashed by the Commissioner of Income-tax (Appeals). The petitioner lodging strong protest against the order rejecting its claim, submitted vide letter dated July 18, 2005 (annexure P-2) that the order (annexure P-1) was contrary to law and violative of the appellate or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id return in the eye of law. It was reiterated that the claim for refund was governed by a separate and independent provisions of the Act (section 239) and the assessee had failed to fulfil the conditions specified therein and, therefore, the refund was rightly declined to the petitioner. 14. Adverting to appeals, it needs be mentioned that I. T. A. No. 534 of 2006 filed under section 260A of the Act by the Department, has arisen out of the order dated May 12, 2006 (annexure P-11) passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short "ITAT"). It requires a specific reference that the Income-tax Department filed appeal against the order of the Commissioner of Income-tax (Appeals). The Income-tax Appellate Tribunal concurred with the view taken by the Commissioner of Income-tax (Appeals) and consequently dismissed the appeal by order (annexure P-HI). The order impugned in I. T. A. No. 535 of 2006 (relating to the assessment year 2001-02) is also the same as in I. T. A. No. 534 of 2006. 15. Surprisingly, it deserves to be noticed that the appeals filed on behalf of the Revenue which were filed at a later point of time than the time during which writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt judgment in Sainik Motors v. State of Rajasthan, AIR 1961 SC 1480, the learned counsel urged that the word "shall" contained in section 140(c) of the Act is to be read as "may" and wherever possible, the return is to be signed by the managing director but that is not sine qua non for valid filing of the return as in the given circumstances it can also be signed and verified by a duly authorized person. 20. The learned counsel then next contended in the alternative that the defect which had resulted into the filing of the original return was a curable defect under section 292B of the Act and the Assessing Officer in terms of the provisions of section 139(9) of the Act ought to have provided an opportunity to rectify the said mistake in the return which was filed on November 30, 2000. He buttressed his submission by relying upon CIT v. Masoneilan (India) Ltd. [2000] 242 ITR 569 (Ker), Vanaja Textiles Ltd. v. CIT [2001] 249 ITR 374 (Karn) and Vidyawati Gupta v. Bhakti Hari Nayak [2006] 2 SCC 777. 21. Learned counsel projected that once it was held that the defect in the return was a curable defect and in terms of section 139(9), the Assessing Officer was under duty to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner as the non-signing of the return is not a curable defect which otherwise goes to the root of the validity of the return, and the said return thus, is non est and invalid in the eyes of law. The Assessing Officer having committed mistake apparent on the record in ordering refund in the original assessment order could invoke provisions of section 154 of the Act and rectify the said error which was apparent on the face of the record. The counsel placed reliance on a catena of judgments in CIT v. Dr. Krishan Lal Goyal [1984] 148 ITR 283 (P H), National Insurance Co. Ltd. v. CIT [1995] 213 ITR 862 (Cal), Khialdas and Sons v. CIT [1997] 225 ITR 960 (MP), CIT v. Ram Lal Babu Lal [1998] 234 ITR 776 (P H), Electrical Instrument Co. v. CIT [2001] 250 ITR 734 (Delhi) and CIT v. Aparna Agency P. Ltd. [2004] 267 ITR 50 (Cal). 24. We have thoughtfully considered the respective submissions of the learned counsel for the parties. We find force in the arguments of learned counsel for the assessee. 25. The controversy raised in the present petition can be categorized into four sub-headings as mentioned herein below :- (a) Whether a return filed under the Income-tax Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be essential to refer to the legislative history of the said provision. The Taxation Laws (Amendment) Act, 1975 substituted the existing clause (c) with effect fromApril 1, 1976. Prior to its amendment, the provision provided that in the case of a company, the return could be signed by the principal officer of the company. However, after amendment, it has specifically been provided that a valid return shall be signed by the managing director of the company and in his absence, by any director thereof. It is well settled that wherever the statute provides for carrying out a particular thing in a specified manner, then it has to be done in that manner and in no other manner. The tenor of the language used in the aforesaid provision leaves no manner of doubt that the provision is mandatory and the word "shall" has to be read in that con-text and it cannot be read to mean "may". In Khialdas and Sons' case [1997] 225 ITR 960 (MP), the hon'ble Chief Justice speaking for the High Court of Madhya Pradesh, observed that (page 962) : "Section 140 says that a return under section 139 shall be signed and verified. The word `shall' has been used which shows that it is mandatory that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report ; (c) the return is accompanied by proof of- (i) the tax, if any, claimed to have been deducted at source and the advance tax and tax on self-assessment, if any, claimed to have been paid ; (ii) the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974) ; (d) where regular books of account are maintained by the assessee the return is accompanied by copies of- (i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet ; (ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to rectify the same within the stipulated time and in a case where any of the specified defects is not removed within the time allowed under section 139(9), the return shall be treated as an invalid or non est return. 32. It would, thus, be concluded that a return of income filed by a company which is signed and verified by a person other than the one authorized under the Act, the return in such circumstances shall be treated to be defective which shall be amenable to the provisions of sections 292B and 139(9) of the Act. The assessing authority in such circumstances shall provide an opportunity under section 139(9) before treating the same to be invalid and non est. However, a different situation would arise where a return is not signed and verified at all. The question of removal of defect in such a situation does not arise as the defect goes to the very root and jurisdiction of the validity of the return. A Division Bench of this court in CIT v. Norton Motors [2005] 275 ITR 595 while interpreting section 292B of the Act had observed (head note) : "A reading of section 292B of the Income-tax Act, 1961, makes it clear that a mistake, defect or omission in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is rendered only academic. The assessee was afforded an opportunity to remove the defect in the return under the provisions of the Act and the assessee having fulfilled the same, the return could not be held to be non est or invalid. The return having been held to be valid, the initiation of proceedings under section 154 of the Act could not be taken recourse to. 36. Lastly, it may be noticed that the fourth limb of argument of the learned counsel for the petitioner again has considerable force. A Division Bench of this court in Baldev Singh Giani's case [2001] 248 ITR 266, while describing the scope of remand proceedings had laid down as under (page 272) : "We have thoughtfully considered the respective submissions. In our opinion, the initiation of reassessment proceedings by respondent No. 3 and the direction given by respondent No. 2 to the said respondent to continue with the said proceedings are vitiated by patent error of law and deserve to be quashed. At the cost of repetition, we may mention that while allowing the appeal filed by the petitioner against the order dated March 24, 1995, passed by the Commissioner of Income-tax (Appeals), the Tribunal had directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P H), the issue before the Division Bench of this court related to an unsigned return prior to the incorporation of the provisions of section 292B in the statute book. The observations made therein in this behalf would have no bearing on the issue under consideration. 40. In Ram Lal Babu Lal's case [1998] 234 ITR 776 (P H), the question before the court was with regard to the scope of section 154 of the Act. As observed earlier, in the present case there was no occasion for the Assessing Officer to have taken recourse to section 154 of the Act. The said decision also does not help the Revenue. 41. The Madhya Pradesh High Court in Khialdas and Sons' case [1997] 225 ITR 960 wherein the return was not at all signed, held that return of income shall be non est. The relevant observations are extracted as under (page 962) : "Section 292B of the Act only says that no return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of the Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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