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Issues Involved:
1. Validity of income tax returns signed by an employee instead of the managing director or director as required by section 140(c) of the Income-tax Act. 2. Whether the refund issued based on such returns can be withdrawn under section 154 of the Income-tax Act. Issue-wise Detailed Analysis: 1. Validity of Income Tax Returns Signed by an Employee: The primary issue was whether the income tax returns filed by the assessee, which were signed by an employee instead of the managing director or director as mandated by section 140(c) of the Income-tax Act, were valid. The Department argued that the returns were invalid ab initio because they were not signed by the appropriate person as specified by section 140(c). The Department cited the Supreme Court's decision in Commr. of Agrl. IT v. Keshab Chandre Mandal, which emphasized that the personal signature required by statute must be that of the specified person. The assessee contended that due to a deadlock in the board of directors, an employee was authorized to sign the returns through a board resolution. The returns were later signed by the managing director, curing any defect. The CIT(A) quashed the Assessing Officer's orders under section 154, which had declared the returns invalid and withdrawn the refunds. 2. Withdrawal of Refund Issued Based on Such Returns: The second issue was whether the refund issued based on the returns signed by the employee could be withdrawn under section 154 of the Income-tax Act. The Department maintained that the returns were invalid, and the issuance of refunds was a mistake apparent from the record, which was correctly rectified under section 154. The assessee argued that the defect was curable under section 292B of the Act, which states that a return shall not be invalid due to any mistake, defect, or omission if it is in substance and effect in conformity with the Act's intent and purpose. The assessee also contended that a refund cannot be withdrawn by invoking section 154 and that the issue was, at best, debatable and not a mistake apparent from the record. Judgment Analysis: The Tribunal upheld the CIT(A)'s decision, stating that the returns filed by the assessee, though signed by an employee, were in substance and effect in conformity with the Act's intent and purpose. The Tribunal emphasized that section 292B, introduced after the Supreme Court's decision in Keshab Chandre Mandal, allows for curing procedural defects if the return conforms to the Act's intent and purpose. The Tribunal noted that the Department's reliance on the Supreme Court's decision and other similar cases was misplaced, as those decisions predated the introduction of section 292B. The Tribunal also cited several case laws, including B.F. Goodrich Co. v. Dy. CIT and CIT v. Masoneilan (India) Ltd., which supported the view that defects in signatures are curable under section 292B. The Tribunal concluded that the issue of whether section 292B saved the returns was debatable and not a mistake apparent from the record, thus falling outside the scope of section 154. Therefore, the orders withdrawing the refund were not sustainable, and the CIT(A) correctly quashed them. Conclusion: The Tribunal dismissed the Department's appeals, upholding the CIT(A)'s order that the returns signed by an employee were valid under section 292B and that the refunds issued based on such returns could not be withdrawn under section 154. The Tribunal emphasized that procedural defects could be cured, and the returns were in conformity with the Act's intent and purpose.
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