TMI Blog2009 (4) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice and letter both dated 16th October, 1992 and the notice dated 1st January, 1993 being Exhibit A to the petition and letter dated 1st January, 1993 being Exhibit B. A few facts may now be set out. In November, 1990, petitioner sold shares of Pudumji Pulps Paper Mills Limited and Noble Soya House Ltd. to Great Eastern Shipping Company Ltd. which company was the petitioner's holding company. On 31.12.1991 petitioner filed return of income for the assessment year 1991-92, in which the capital gains arising on the transfer of shares of Great Eastern Shipping Company Ltd. were claimed as not chargeable to tax in view of the provisions of Section 47(v) of the Income-tax Act (In short 'The Act') . This return was signed by the company secretary. In March,1992, the petitioner had issued fresh shares to entities other than its holding company as a result whereof the shareholding of Great Eastern Shipping Company Ltd. came down from 100% to 43% of the petitioner's share capital. 2. By letter of 9.10.1992 respondent no.1 informed the petitioner that the return it filed on 31 st December, 1991 was invalid inasmuch as the return was signed by the Company secretary and not by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er filed a reply with respondent no.1 and petitioner pointed out that the petitioner's chartered accountant had by its letter dated 15 th October, 1992 replied to the earlier letter dated 9 th October, 1992. It was also pointed out that by virtue of Section 139(9) an assessee is entitled to be given an opportunity to rectify a defect that may exist in the original return and accordingly, the petitioner treated the letter dated 9 th October, 1992 as an intimation of a defect and had accordingly cured the defect. Respondent's attention was also invited to the provisions of Section 292B of the Act and it was submitted that in view thereof the original return must be regarded as having been substituted by the return filed on 15 th October, 1992. It was also submitted that the decisions relied upon in the show cause notice were in respect of the provisions as they existed prior to the insertion of Section 139(9) and Section 292B. Respondent no.1 was requested to treat the original return filed on 31 st December, 1991 as a valid return and rectify the intimation wherein it was stated that the return was filed on 15 th October, 1992. 4. On 6.11.1992 petitioner filed a reply in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (9) of the Act, it was incumbent on the respondents in law to inform the defect to the petitioner and permit the petitioner to rectify the defect. On the defect being pointed out on 9.10.1992, the same was corrected on 15.10.1992. This aspect has not been considered by the respondents while issuing the notice. At any rate in alternative, it is submitted that in view of the provisions of Section 292(B) of the Act, original return of the income filed on 31 st December, 1991 cannot be declared as bad and invalid. Once Section 292(B) has been inserted by the Taxation Laws (Amendment) Act, 1975, with effect from 1.10.1975, the return is not to be treated as invalid merely by reason of if mistake, defect or omission, if the return was in substance and effect in conformity with or according to the intent and purpose of this Act. It is not necessary to refer to some other submissions. On the other hand, on behalf of the respondents, the learned counsel submits that the return being nonest, respondents were within their jurisdiction to issue the notice. At any rate, they submitted that the petitioner ought not to have approached this Court but awaited the final outcome of the proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Bench of the Orissa High Court in Addl. Commissioner of Incometax, Orissa v. K. Padmalochan Sahu (1974) 95 I.T.R. 113. These judgments were brought to the attention to contend that at the highest failure to sign by the director was an irregularity and as such, was curable. 7. In our opinion, once Section 140 of the Act mandates that the return has to be signed in the case of a company by the Managing Director and where Managing Director is not available by any Director thereof, it is not possible to hold that the signing of the return by the Company Secretary is merely an irregularity. When the law provides for a particular thing to be done in particular manner, it must be so done. Apart from that the language used in Section 140 is "Shall be signed and verified". In our opinion, therefore, the principles as laid down by the Supreme Court in Sri Keshab Chandra Mandal (Supra) will have to be applied. Such a defect, therefore, will not amount to a mere irregularity and the return filed on 31.12.1991 will have to be treated as defective. 8. Having so held, we may now consider the second contention based on Section 139(9) of the Act. Section 139(9) reads as under: "13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have earlier held that not signing the return by the proper person results in the return being defective. Can then the defect in the return be cured by virtue of Section 139(9). In our opinion, the answer is in the affirmative. Failure to sign by a proper person is a defect. The expression defect will have to be understood as it is naturally understood. Even if the defect has the effect of treating the return as nonest, the legislature still has provided for curing such defects. If the defect is cured then the return becomes a valid return. Petition on that count will have to be allowed. 10. The last submission is the consequence flowing from the provisions of Section 292B. It was introduced by Taxation Laws (Amendment) Act, 1975, with effect from 1.10.1975 and reads as under: "292B. 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 this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1967, making cash compensatory support taxable. The Income tax officer issued notice under Section 143(2) of the Act to the company for the assessment year 1989-90. After notice under 143(1)(a), additional tax was levied and a demand was raised. Company in that event filed revised return and on September 7, 1990, filed an application under Section 154 of the Act against the intimation under Section 143(1)(a) of the Act. A learned Single Judge of the Calcutta High Court was pleased to observe that the date for judging the question of adjustment must be the actual date of the return in the light of the law then prevailing. The Court held to hold otherwise would manifestly shock one's sense of justice that an act, correct at the time of doing it, should become incorrect by some new enactment. In the case before the Supreme Court, assessee had filed return for the assessment year 1989-90 in December, 1989. It received cash assistance from Government of India in respect of exports, which it had not included as income. Consequent to Section 28 being given retrospective effect from 1.4.1967, the Cash compensatory assistance was made chargeable as business income. Question was whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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