2008 (3) TMI 495 - HC - Income Tax

Return Rectification of mistake - non-signing of the return of income by the managing director - technical and curable defect in view of the provisions of section 139(9) of the Act Held that - if the return of income is not signed by the person mentioned in section 140, it is only a curable defect and a notice for curing the defect has to be given and the return not be treated as invalid Appeal allowed

Issues Involved:
1. Whether a return filed by a company must be signed by its managing director under section 140(c) of the Income-tax Act.
2. Whether non-signing of a return by the managing director is a curable defect under section 292B of the Act.
3. The legality of the Assessing Officer's assumption of jurisdiction under section 154 of the Act.
4. Whether the claim for refund could be denied as time-barred under section 239 of the Act.

Detailed Analysis:

1. Mandatory Signing by Managing Director:
Section 140(c) of the Income-tax Act mandates that a company's return must be signed by its managing director or, if unavailable, by any director. The legislative history indicates that prior to the 1975 amendment, the principal officer could sign the return, but post-amendment, it must be the managing director or a director. The court held that the provision is mandatory, and the word "shall" must be interpreted as such. Therefore, the return signed by an unauthorized person, Kultar Krishan, was not valid under section 140(c).

2. Curable Defect under Section 292B:
Section 292B 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. Section 139(9) allows the Assessing Officer to intimate the defect to the assessee and provide an opportunity to rectify it. The court concluded that a return signed by a person other than the authorized signatory under section 140(c) is a curable defect. The return signed by Kultar Krishan, an employee authorized by a board resolution due to a management deadlock, was later rectified by the managing director's signature. Hence, the return could not be treated as invalid or non est.

3. Assumption of Jurisdiction under Section 154:
The court found that since the defect in the return was curable and had been rectified, the initiation of proceedings under section 154 was not justified. The return, once validated by the managing director's signature, did not warrant rectification under section 154.

4. Denial of Refund as Time-Barred:
The court rejected the Revenue's argument that the refund claim was time-barred under section 239. The Commissioner of Income-tax (Appeals) had remanded the case to cure the defect and give effect to the order. The Assessing Officer could not raise new issues inconsistent with the remand order. Furthermore, under section 240, the Revenue is obliged to issue a refund without requiring a claim if it arises from an appeal or other proceedings. The court directed the Assistant Commissioner of Income-tax to refund the amount to the assessee.

Conclusion:
The court dismissed the Revenue's appeals and allowed the writ petitions, quashing the order dated May 2, 2005. The Assistant Commissioner of Income-tax was directed to refund the amount to the assessee. The court emphasized the mandatory nature of section 140(c), the curable nature of the defect under sections 292B and 139(9), and the improper invocation of section 154. The refund could not be denied as time-barred under section 239.

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